As plans to develop hydrogen infrastructure continue to develop across the US and around the world, companies are racing to raise money and build out manufacturing capacity for the critical components needed to make hydrogen happen.
Hydrogen gas is billed as the green fuel of the future because it can be made by zapping water with electricity made from renewable energy. Once it's made, hydrogen can be stored or converted into something like ammonia that can then be easily transported and moved (or in some cases used as a fuel).
There are billions of dollars in the recent U.S. government spending package earmarked for the creation of hydrogen hubs and the development of new hydrogen production technologies. Those incentives are driving an unprecedented pace of investment into companies taking different approaches to hydrogen production, storage, and transportation.
Total investments into the hydrogen value chain reached $10 billion in 2022, up from just $700 million four years ago, according to data from the climate industry tracker Net Zero Insights. While the investment chill in financial markets coming from rising interest rates and inflationary pressures have walloped certain sectors, folks are still spending on hydrogen companies.
Last month, the startup company Ohmium, which makes a crucial component for hydrogen production, raised $350 million in one of the biggest climate investments of the year.
Ohmium's financing comes as some of the biggest American energy and chemicals companies are announcing plans to build huge hydrogen hubs and plants to convert that hydrogen into chemicals.
Take the recently announced deal between CF Industries and NextEra Energy. The two companies are planning to site a huge renewable energy and electrolysis plant in Arkansas -- near CF Industries' existing ammonia production plants.
The 100-megawatt (MW) electrolysis plant would be powered by a dedicated 450-MW renewable energy facility developed by NextEra Energy Resources, according to the companies.
CF Industries wants to use the power to make up to 100,000 tons of green ammonia production to support the transition of American agriculture to low- and zero-carbon fertilizers, helping to remove up to 130,000 metric tons of carbon dioxide emissions from the agriculture supply chain each year.
But with new technology on the horizon from companies like the Brooklyn-based Amogy, CF Industries may be able to sell other products like fuels.
Amogy has developed a way for heavy vehicles like boats and construction and mining equipment to use ammonia as a fuel source. It's far cleaner than the diesel that these vehicles currently use, according to the company.
And earlier this year some of the biggest names in industrial equipment and maritime manufacturing got together to pour $169 million into the company.
And other companies, like Nugen, are putting hydrogen directly into industrial vehicles like big ole mining waste and material haulers.
It's these kinds of deals that show why so much money is flowing into the venture space.
Especially because these technologies represent the tip of the iceberg of what would be needed to create a hydrogen value chain.
So what else does the industry need? Storage and logistics services and technologies to account for the development of new pipelines, liquefaction terminals, more efficient conversion technologies and other processing and refining technologies, according to Net Zero Insights.
Some of this is now a scaling issue. That's why companies are raising these huge rounds now.
It's so they can build tings like the new factory Electric Hydrogen Co. for electrolyzers at its new outpost in Devens, Mass.
That $90 million factory is spinning up to meet demand driven by things like the Next Era and CF Industries announcement -- and the spending spree coming from the federal government to support new hydrogen projects.
As Electron Energy's CEO Raffi Garabedian told one media outlet, “For us, it’s all about the market creation that the IRA has stimulated,” Garabedian said. “We’re building ahead of the market, anticipating that the market is going to be real.”
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