Historically, investors have harbored doubts about the viability of green hydrogen due to its high production costs, expensive infrastructure requirements, competition from battery technology, and limited government support. However, Electric Hydrogen (EH2), a green hydrogen technology firm based in Massachusetts, appears to have successfully convinced investors that its technology is a worthy investment.
EH2 recently achieved unicorn status, reaching a valuation of $1 billion after securing a substantial $380 million in a Series C funding round. This latest funding round brings EH2’s total funding to approximately $600 million and boasts support from prominent investors such as Microsoft’s Climate Innovation Fund, United Airlines, BP, and Fortescue Metals.
The funds will primarily be allocated to expanding the production capacity of EH2’s electrolyzers. Electrolyzers are devices that employ electrolysis to split water (H2O) into its constituent elements, hydrogen (H2) and oxygen (O2). These devices are known for their high costs and energy-intensive operation, resulting in limited hydrogen production.
EH2 claims to have developed a method for producing hydrogen more efficiently and cost-effectively. A key factor contributing to their success is their in-house design and construction of critical electrolyzer components in their Massachusetts laboratory. By improving performance while reducing costs, EH2 has made significant strides in the field. This progress can be attributed in part to the leadership of Raffi Garabedian, EH2’s CEO and former Chief Technology Officer at First Solar, and Dave Eaglesham, EH2’s co-founder and former CTO at First Solar.
Moreover, EH2 is seizing the opportunity presented by the Biden administration’s Inflation Reduction Act to maximize incentives and subsidies. This strategic move is expected to make green hydrogen more competitive in the current market and reduce reliance on cheap natural gas, which contributes to greenhouse gas emissions. In regions where renewable energy is abundant and tax credits surpass production costs, hydrogen may even become available to buyers at no cost.
While battery-powered technology has gained traction in the transportation industry, green hydrogen is increasingly viewed as the preferred solution for heavy-duty vehicles like trucks and airplanes, as well as for industrial applications such as steel mills, fertilizer factories, and chemical plants. It offers an efficient means of transporting green energy over long distances.
A distinctive aspect of Electric Hydrogen’s business model is its focus on selling cost-effective electrolyzers to hydrogen producers rather than selling the hydrogen itself. This approach mirrors the way solar panel manufacturers provide panels to clean energy developers.
EH2 is actively working to establish an electrolyzer factory in Massachusetts, with plans for launch in 2024. The company intends to supply and commission 100-megawatt electrolyzer systems, each capable of producing nearly 50 tons of green hydrogen per day at a competitive cost.
By 2030, EH2 aims to enable customers to produce hydrogen in renewable-rich states like Texas for approximately $1.50 per kilogram, a cost similar to that of hydrogen derived from natural gas.
Electric Hydrogen’s recent achievements include its selection to equip New Fortress Energy’s green hydrogen plant in Texas, with the expectation of commencing hydrogen production in Q4 2024 and achieving full commercial operation in 2025.
