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Search for the ideal hydrogen storage

Search for the ideal hydrogen storage

Interview with Thomas Korn, CEO of water stuff & sun

Startup company water stuff & sun has developed a novel technology that is designed to provide a safe and easy way to store hydrogen. The solution’s key component is its microvalve system. A pressure regulator controls the release of hydrogen progressively from 1,000 bar down to just a few bar. H2-international spoke to Thomas Korn, CEO of water stuff & sun, about how it works and the challenges encountered.

H2-international: Mr. Korn, the storage and refueling of hydrogen is a challenging issue. How do you solve that problem?

Korn: As it stands, the storage of hydrogen in conventional compressed gas tanks is complex and expensive. There is a trade-off between performance, safety and cost. We have a surprising solution to this: Instead of using a small number of large cylindrical tanks, our technology allows us to store the same amount of hydrogen in multiple spherical carbon-fiber vessels the size of a tennis ball. The silicon microvalve system, which is built into every pressurized ball, means that all the vessels act identically and in unison, just like a large tank. The expense involved in ensuring the safety of hydrogen stores can be significantly reduced if the energy is split into multiple small vessels. As a result, we save almost half the carbon fiber material compared with a standard pressurized tank. We call these ball-shaped high-pressure storage vessels Sfeers.

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They allow hydrogen cells to be scaled as required and integrated into hydrogen batteries of any shape. Green hydrogen can thus be used in a variety of motive and stationary applications such as trucks, drones and airplanes. The next generation of these energy stores will be 95 percent lighter and up to 30 times cheaper than lithium ion batteries – while still carrying the same amount of energy.


Fig. 2:
Doing the rounds: a Sfeer ball at the EES trade fair in Munich

How does the hydrogen battery work?

Hydrogen batteries are low-pressure hydrogen tanks containing Sfeers which are filled at up to 1,000 bar. The hydrogen battery enclosures are designed for low pressures and can therefore be perfectly adapted to the available installation spaces in a wide array of mobility products. When hydrogen is extracted, the pressure in the hydrogen battery enclosure decreases and activates the microvalve system in all the Sfeers once the pressure drops below a mechanically programmed ambient pressure range. These then release hydrogen, together providing the energy required for a hydrogen engine or a fuel cell.

The pressure in the hydrogen battery rises again above the pressure activation level that is set during the manufacture of the micromechanical components. Once the pressure level has been reached, all the microvalves close. The pressure in the battery stays constant or reduces further if the consumer withdraws more hydrogen. The activation pressure is set to the supply pressure of the consumers. The hydrogen battery can be thought of as a low-pressure tank, but with the capacity of a high-pressure tank.

The concept increases the safety level while at the same time reducing the amount of material used. Since their highly adaptable shape means they can make best possible use of the available space, hydrogen batteries outperform conventional pressurized tanks in terms of volumetric and gravimetric power density.

Microvalve technology has its origins in satellite technology. How is this technology produced?

Satellites have a gas propulsion system that secures their position within the communication window. Even in the early days, industrial developers started to use microsystem technology to regulate gases due to financial pressure to make ever smaller and lighter satellites. Our innovation centers on the development of micromechanical switching elements that don’t need electrical energy for their control; instead they are controlled passively by the ambient pressure. As in semiconductor engineering, highly industrialized manufacturing processes are used that can create thousands of identical parts on large silicon wafers. Valves, gas channels and the five-stage pressure regulator are produced and joined in four silicon layers. All chip components are built into a space measuring 4 x 4 x 2.5 millimeters (0.16 x 0.16 x 0.1 inches).

How did you come up with the idea of spherical high-pressure vessels?

The technology was invented by Prof. Lars Stenmark, who taught microsystem engineering in the Ångström Laboratory at Uppsala University and who had already applied earlier inventions to the aerospace industry. When he told me about his hydrogen storage invention, I was all for it. A physical hydrogen storage vessel that combines two existing technologies and resolves the trade-off between safety, cost and performance in hydrogen tanks – we couldn’t resist and founded the company water stuff & sun in January 2017.


Fig. 3:
A view of the lab shows the test setup for microchip evaluation

Is there already a prototype?

We have already produced and tested prototypes of switching valves and the key element of the valve system – the pressure regulator – in the clean room of the Ångström lab in Uppsala. We have also put a carbon fiber Sfeer prototype through a burst test and validated our simulation model with the results. At the moment we are building the first system prototype of a hydrogen battery with three Sfeer cells. The prototype and its use in a micromobility application will reach technology readiness level 5 in the first half of 2024. At that point we’ll start to develop hydrogen batteries for specific mobility products with several manufacturers and go on to industrialize them in the next stage. There is a great deal of interest from industry. For example, we have already submitted a joint funding project with an aircraft manufacturer and the German Aerospace Center. We are working with our partner Keyou to develop hydrogen batteries for converting and retrofitting trucks and buses. Additionally, we’ve managed to stimulate interest from a mining machinery manufacturer and a truck OEM.

Returning to the refueling process: Am I right that you are intending to swap the tanks?

Hydrogen batteries don’t need to be refueled in the vehicle; they are exchanged at swap stations or, in the case of small applications, they can also be exchanged by hand. That way, refueling can take place quickly and cost-effectively. The empty hydrogen batteries are refilled at central compressor stations and returned to the swap stations. The low operating pressure and the limited quantity of H2 in the hydrogen battery enclosure makes this ease of handling possible. In comparison with conventional high-pressure or liquid hydrogen refueling stations, the expense and complexity are significantly reduced, which in turn lowers the capital and operating costs and thereby also the hydrogen price. For heavy-duty vehicles, for instance, with hydrogen, several hundred liters of fuel energy equivalent need to be compressed, cooled and transferred. By simply swapping the hydrogen battery, the process can be completed in just a few minutes.

The financing required will be considerable. What are the next steps for your company?

The need for capital in a tech startup is always an issue – it’s a continuous process. We have just started a new financing round in which our existing investment partners, such as the investment arm of Kreissparkasse Esslingen-Nürtingen, or ES Kapital for short, the company Besto, run by the entrepreneurial Beyer and Stoll families, and machinery and tooling factory Nagel, have already registered an interest. I would refer to them as relatively down-to-earth, regional investors that have been involved from an early stage. The plan is to invest the new cash in the development of a prototype in the motive application area, as mentioned earlier, among other things. The raw materials for the production of semiconductor chips are all affordable. Carbon fiber and silicon are readily available on the market. That is an advantage in terms of further scaling. If everything goes according to plan, we will see the first of our batteries in a vehicle or aircraft by 2025.


Fig. 4:
The H2 battery should be quick and easy to swap in and out of a truck

When and how will the market for your solution evolve?

The transformation of energy systems is well under way. Infrastructure for natural gas- and oil-based fuels is being replaced by hydrogen and liquid hydrogen derivatives such as ammonia, methanol or synthetic fuels. The competition for technology leadership and, ultimately, energy leadership began long ago. In China and the USA, many billions of euros are now being invested in hydrogen technologies and their infrastructure; we Europeans are attempting to counter this with the Green Deal. Hydrogen projects are sprouting up all over the place. As far as we are concerned, the market has already started; we’re currently concluding cooperation agreements with initial vehicle and machinery manufacturers.

Where will the first market be that manages to develop?

We need to take a multitrack approach and are therefore also looking at the USA and the Arab world. The country that achieves the lowest hydrogen prices by investing will attract a lot of companies and investment. In the EU and Germany I hope that the greenhouse gas quota gives us an instrument that is competitive.

You won a prize at the World CleanTech StartUPs Awards, otherwise known as WCSA 2023. What particularly impressed the judges?

Firstly, the award as a platform is a very interesting network in itself. Applications for WCSA 2023 were invited by ACWA Power in strategic partnership with Dii Desert Energy and the French institute for solar energy CEA-INES, among others. The judging panel recognized the transformative potential of the hydrogen battery. The innovation could create an efficient and flexible infrastructure for H2. The electricity costs for hydrogen production from renewables are very low in Dubai. That’s why ACWA invited us again at the end of 2023 to present our solution locally. That will be extremely exciting.

In November we received two awards at the Global EnergyTech Awards: the prize for the Best CleanTech Solution for Energy and a special prize for Best Stand Out Performer. We were the only winners from Germany. That helps.

Interviewer: Niels Hendrik Petersen


Fig. 5:
Thomas Korn

Thomas Korn has been working in the hydrogen field since 1998. The engineer’s experience includes work at BMW on fuel cell development. In 2015, he co-founded the hydrogen startup Keyou in Munich. The startup water stuff & sun was launched in 2017 in Unterschleißheim, Bavaria. The fledgling company now has 15 members of staff and a branch in Uppsala, Sweden.

Is exponential growth slowing down?

Is exponential growth slowing down?

Fuel Cell Industry Review 2022

Year 2022 saw fuel cell shipments creep up over 2021 numbers, though the latter was a remarkable year. When 2021 exceeded 2020’s MW numbers by over 70%, we thought we were finally seeing the uptick that had been anticipated – the classic “hockey stick” pattern. But the structure of the industry – and its reliance on only a few players for the majority of shipments – means that growth comes in spurts.

E4tech’s eighth annual Fuel Cell Industry Review showed just under 86,000 units shipped in 2021, or just over 2,300 MW, even with the COVID pandemic still hanging over markets. But this rapid growth was largely due to the activities of two vehicle OEMs, Hyundai and Toyota, together accounting for over 70% of the megawatts. But even after taking these out of the picture, growth continues – slowly but surely.

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E4tech is now part of ERM and the team is continuing to research and write the Review. The ninth FCIR shows that 2022 shipments were similar to the year before – with the continued but slow growth still led by Hyundai and Toyota, at over 60% of MW shipments, and by fuel cell buses and trucks into China. In 2022, we estimate nearly 89,200 fuel cells to have been shipped, amounting to almost 2,500 MW.

Analysis by region

For vehicles (which by far is the largest contribution, at 85% of all shipments by megawatts), much of the demand was localized to China and South Korea. China saw over 4,150 units being shipped, across all modes of mobility (including forklifts, now slowly taking off in the country), while South Korea saw nearly 10,400 deployments, dominated by Hyundai’s Nexo. Together with 831 Toyota Mirais going into the home market of Japan, Asia now accounts for around 15,600 units into transportation markets, or 17% of global shipments of fuel cells by number, but rather more impressively some 1,500 MW (60%) of the shipped megawatt count.

Hyundai is benefitting from the 50% subsidy for fuel cell vehicles in South Korea. South Korea is now also the single largest market for large stationary units, in CHP and prime power modes. Stationary shipments into the country grew from 147 MW in 2021 to 196 MW in 2022 (8% of the global MW count). These numbers illustrate the importance of South Korea for fuel cell shipments – and, moreover, the key role of sustained policy and subsidies in helping fuel cell companies and OEMs to achieve volume.

In context of the Japan’s Ene-Farm program, across all markets (stationary, mobility and portable), Asia accounts for 60,850 units (two-thirds of global shipments) and 1,770 MW (71% of global shipments). Behind Asia is North America, with around 14,550 fuel cell shipments (nearly 485 MW, or 19% of global shipments in megawatts), led by Toyota and Bloom Energy shipments to the United States. Europe accounted for roughly 13,250 of fuel cell shipments in 2022, down from just over 14,000 units in 2021. The fall in unit shipments followed the completion of the PACE program of the US Inflation Reduction Act and the imminent closure of KfW-433 grant funding by Germany. In megawatts, the count slightly increased, from a corrected 204 MW in 2021 to 228 MW in 2022, about 9% of the global market. Fuel cell vehicle shipments to Europe are lower than for Asia and the US because of the low subsidies provided by the national governments.

Analysis by application

Fuel cells for mobility, primarily cars, continued to dominate the overall count. Across all modes of mobility (including forklifts), 85% of shipments (2,100 MW) fell into this category in 2022, 150 MW more than in 2021. In units, mobility accounted for 35% of shipments in 2022, a slight fall from 2021’s share. So, the message is transportation is growing, but other fuel cell markets are growing too.

The next main contributor to vehicle shipments is China, with a record 3,789 units (buses and trucks) being shipped over 2022. Together, these are estimated as contributing 387 MW to the overall count in 2022.

While nearly 1,000 fuel cell buses were shipped into China in 2022, fewer came to Europe in 2022 (only 99 registrations). According to CALSTART figures, as many as 82 new fuel cell buses were fielded in the US in 2022, mostly in California. Outside China, fuel cell truck shipments globally in 2022 remained minuscule. This could change, given the business plans of Cellcentric, Plastic Omnium, Hyzon and others.

Fuel cells for ships and for aviation remains exploratory, now with a growing emphasis on propulsion rather than hotel loads or auxiliary power. Forklifts continue to be a major application for fuel cells, albeit with fewer unit shipments in 2022 (over 9,650 units) compared to 2021 (over 13,400 units). Prime power and CHP comprise a large part of the remaining demand, in unit numbers and in MW. By number, micro-CHP still dominates, with Japan leading with its Ene-Farm program. ACE shows 42,877 units being installed in 2022, over 3,000 units more than the previous year. Outside Japan and Europe, micro-CHP shipped in negligible numbers, further demonstrating the criticality of country-to-country policy in supporting fuel cells. Together, prime power and CHP across the power range contributed 364 MW shipments in 2022, up from 335 MW in 2021. Although a growing emphasis for developers, fuel cells for grid support and off-grid power has remained subdued, at 14 MW (for both years). Shipments of portable fuel cells (including smaller ported APUs, less than 20 kW in power output) showed an increase, from just over 6,000 units in 2021 to nearly 8,000 units in 2022. These are supplied globally, but most feed into European and North American industrial and consumer markets.

Shipments by fuel cell type

PEM continues to outweigh other fuel cell types in shipments, both in volume and in MW capacity. Of the nearly 90,500 fuel cells shipped in 2022, over 55,000 were PEM. By megawatts, PEM fuel cells recorded 2,151 MW, 86% of the overall volume of shipments.

High-temperature PEM, generally utilizing methanol rather than hydrogen as a fuel, continues to grow, led by Advent Technologies. While still a fraction of overall PEM units at present, shipments are set to grow more aggressively given the improved logistics and increased runtimes enabled by the methanol fuel. DMFC (direct methanol) had a good year, with nearly 8,000 units shipped over 2022, mostly from SFC Energy.

SOFC (solid oxide) grew to nearly 27,000 units in 2022 (mostly micro-CHP, by number). The MW count grew from 207 MW in 2021 to 249 MW in 2022. Much of this is attributable to stronger sales from Bloom Energy. PAFC (phosphoric acid fuel cell) shipments fell, and while no new MCFC (molten carbonate) system placements were recorded over 2022, FuelCell Energy continues to produce significant volumes of stacks, for mid-life refurbishment of systems. AFC (alkaline) shipments increased to over 100 units in 2022, way down on other fuel cell types despite the lower cost potential, both for the fuel cell stack and the hydrogen purity requirement.

Summary

Fuel cells had a good year in 2022. Despite shipments being dominated by a few key suppliers into just a few countries, we are at last beginning to see shipments into Australia and South America, buoyed by the greater interest in hydrogen generally. And while interest is helpful, it remains the case that fuel cells have yet to break through the high capital cost threshold, and (for the hydrogen-fueled units) high fuel prices. We are slowly seeing this happen, through big changes to the supplier landscape, the IPCEI initiative in Europe, significant capacity upgrades to fuel cell production, and the Inflation Reduction Act in the US. But for now, the message remains the same: sustained support from governments is still needed to allow fuel cells to fully support the energy transition. Some fuel cell companies are now also purposing their designs to electrolysis, to help push the market, and with it the hockey stick.

ERM’s Review, a digest of the year’s activity, together with an analysis of fuel cell shipments by region, type and application year on year, is available at http://FuelCellIndustryReview.com. The 2022 edition is delayed, but coming soon. We would like to thank all the fuel cell shippers who graciously provide shipment numbers to us each year, which helps underpin our review.

Author: Stuart Jones, ERM, London, UK, Stuart.Jones@erm.com

Stracke other H2Now managing director

Stracke other H2Now managing director

BMV Energy GmbH is entering the market as another player in hydrogen refueling stations. The owner-managed, medium-sized company together with Score founded H2Now GmbH in August 2023 and appointed Stefan Schwarzer as managing director to advance the establishment of refueling stations with green hydrogen, particularly for commercial vehicles. In November 2023, the Berlin-based company announced that the company will be co-represented with second managing director Andrew Stracke in April 2024. Stracke was prior to this a member of the executive board at Westfalen AG.

H2Now was brought to life jointly by the petroleum company BMV and Score, a gas station operator with headquarters in Emden, to bundle the synergies of the medium-sized companies. To the BMV corporation belongs a gas station network with 145 stations of the brands Sprint and Go. According to the management, there are “already established locations suitable for the addition of a hydrogen refueling station with the help of H2NOW, to become part of the Germany-wide hydrogen station network and be supported with extensive know-how in project planning, funding, realization and operation.”

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Starting points for a comprehensive hydrogen ramp-up

Starting points for a comprehensive hydrogen ramp-up

Industry congress GAT 2023 in Cologne

To establish a functioning hydrogen economy, the entire value chain must be addressed. It is important to keep in view the market and regulatory aspects as well as the technical aspects (standardization). At the event GAT 2023 in September in Cologne, it could be seen how intensively the industry is working on the implementation. Exciting here are, among other things, the conversion plans of the gas grid operators towards climate-neutral gases. The second phase of the GTP also shows the great interest on the part of municipalities and the industrial sector.

Dr. Kirsten Westphal made clear how the German association for energy and water economy (Bundesverband der Energie- und Wasserwirtschaft, BDEW) see the heating market of the future: “Instead of natural gas, in the future especially hydrogen and its derivatives will be employed,” said the member of top management at the event in Cologne. The hydrogen will come from domestic production as well as a considerable portion from imports. The BDEW is not worried that it will come to a deficit situation. “The studies show that sufficient quantities of hydrogen will be able to be made available,” stated Westphal.

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However, the ramp-up of hydrogen production requires the right framework conditions. Regarding this, the BDEW representative counts in addition to the acceleration and strengthening of the expansion of renewable energies in Germany also the quick notification of IPCEI projects (Important Projects of Common European Interest) for hydrogen production by the EU, which will then actually occur at the end of the year (see p. 20), as well as other supplementary funding programs to reach the electrolysis capacity target of 10 GW in year 2030.

On the import side, Westphal is calling on politicians to present an import strategy in the short term. Furthermore, the financing of import projects should also be flanked by measures such as Hermes cover (export credit guarantees) or capital subsidies.

Establishment of a functioning H2 trading market

One aspect of particular importance, however, is to embed the ramp-up of hydrogen production in the development of a market. In each of the various phases in this, different political instruments are needed: to begin, more steering and support; later, a growing market and less support. The visualized goal is a functioning trading market in which hydrogen volumes are efficiently distributed according to market-based mechanisms.

But what characterizes the image of the targeted steady-state hydrogen market? In Cologne, the BDEW expert named a whole bundle of criteria:

  • Production and trade of hydrogen and its derivatives in Germany, the EU and globally in sufficient quantities
  • The combination of long-term contracts (particularly at import level) with competitive prices that reflect current market conditions as well as increasing spot deliveries
  • The trading of guarantees of origin, certificates and commodities on a uniform, standardized European market that includes an international connection
  • Competition for access to end customers as well as transparent price signals and sufficient market liquidity on the supplier side
  • A fully functional and comprehensive network infrastructure. Non-discriminatory grid access for all competitive players on the hydrogen market. H2 grid access is essentially based on the entry-exit system.
  • Climate-neutral hydrogen is used wherever there is demand. Demand is based on the market price.
  • Storage options ensure security of supply for hydrogen and derivatives and open up various ways to make the hydrogen market flexible. There is decentralized generation and purchase as well as central storage.

In all these projects are, according to Westphal, a transparent and reliable standardization as well as certification needed, to also create acceptance for hydrogen and its derivatives, which also needs a stable regulatory framework.

Standardization of particular importance

The establishing of standards is also the means of choice from the view of Dr. Thomas Gößmann. According to the Thyssengas chairman, it should be borne in mind that the approval offices have had little contact with the topic of hydrogen until now and therefore have no experience in most cases.

For Germany as an export country, the agreement on international standards is of particular importance, stated Oda Keppler, ministerial director at the German ministry for education and research (BMBF), at GAT. This applies, among other things, for the quality criteria for the product hydrogen, as otherwise the international trading of it could not be done.

For the success of the hydrogen economy, it is crucial, according to Gößmann, to involve the people. “If the country of engineers succeeds in taking the people with it, then we will also succeed,” the Thyssengas chairman is certain. It is also important not to focus too much on the color principle of the hydrogen. This is hardly comprehensible for many people anyway. “We are colorblind. We’re setting up the highway. It doesn’t matter to us who drives on it,” said the grid operator.

Dr. Frank Reiners is certain that the hydrogen economy will only really take off when the entire value chain is populated. According to the member of the management board of Open Grid Europe, however, pipeline construction is of particular importance. Germany as a hub has a special role and responsibility here, as many gas pipelines come on land or come together here. “We cannot afford to do nothing,” stated Reiners in Cologne.


Prof. Gerald Linke, chairman of the DVGW, said at the opening of the industry event GAT in Cologne, “The backbone network must provide all regions in Germany with access to climate-neutral hydrogen.”

H2 core network for all regions

The German association for gas and water standards (Deutscher Verein des Gas- und Wasserfaches, DVGW) welcomes the federal government’s initiative, in an amendment to the energy industry act (Energiewirtschaftsgesetz), to establish a legal framework for the rapid approval and construction of a hydrogen core network. However, to the DVGW, this approach does not go far enough. “The backbone network must provide all regions in Germany with access to climate-neutral hydrogen, as otherwise an exiting of entire economy sectors is imminent, especially the small and medium enterprises,” said the DVGW chairman Prof. Gerald Linke at the industry event.

In a second step, transformation regulation for gas distribution grids is therefore also needed. Without an extensive conversion of the existing gas distribution infrastructure, it will not be possible to transform the connections of 1.8 million industrial and commercial customers toward climate neutrality, stressed Linke.

The basis for the transport to end customers has been laid out in the so-termed Gasnetzgebietstransformationsplan (gas grid area transformation plan, GTP) by the DVGW together with the initiative H2vorOrt. In the current second planning year, 241 gas distribution system operators have participated, a significant increase compared to the 180 companies in the previous year. Currently, the GTP covers pipelines with a total length of 415,000 km (258,000 mi) and reaches 381 of the total 401 regional districts of Germany.

The planning process with the GTP is deliberately designed to be open-ended and includes the conversion, decommissioning and partial new construction of pipelines. Considered are all new, climate-neutral gases, so in addition to hydrogen also for example biomethane. The aim of the GTP is to accelerate the transformation at the distribution grid level and, by the individual planning of the grid operators in coordination with the other stages of the supply chain, to create a coherent vision for the whole of Germany. As part of the GTP planning, the grid operators are analyzing on the basis of their specific situations on site the demands of their customers, the decentralized feed-in situation, the development of hydrogen availability by upstream network operators and the technical suitability of their networks for hydrogen.


For the first time in Germany, the conversion of a long-distance gas pipeline to transport hydrogen has begun at OGE Verdichterstation Emsbüren

Municipalities and industry are planning with hydrogen

Part of the GTP is also a survey of end customers by the respective network operators. This revealed a clear preference for the use of climate-neutral gases. Only five percent of the nearly 1,000 surveyed municipalities see no need in the long term for the use of climate-neutral gases. Of the nearly 2,000 major industrial customers who responded, more than three quarters are relying on hydrogen in the future. And 29 percent already see the use of hydrogen as an option by 2030, while a further 30 percent expect this in the coming decade.

Some current projects show that these visions are already currently being implemented. For example, mid-October at Verdichterstation Emsbüren, a compressor station of grid operator OGE in Niedersachsen, was the start of the conversion of the first long-distance pipeline to transport hydrogen (see Fig. 3). As part of the project GET H2 Nukleus, this is to establish the core for a nationwide hydrogen infrastructure. With the changeover, the participating network operators want to enable customers from industry and SMEs to connect to the hydrogen supply.

Most of the municipalities surveyed, according to the DVGW poll, are counting on climate-neutral gases in the long term

Another project started at the beginning of November in Energiepark Bad Lauchstädt with the start of the second phase of the conversion of a natural gas pipeline for the transport of hydrogen. For the technically seamless operation of the grid of the future of transmission system operator Ontras Gastransport, a pig launcher was placed in position. The following months will be preparation for putting into operation the hydrogen pipeline. For this, the construction of a transfer station as well as setting up a system for purifying and drying the gas are necessary. Once Energiepark Bad Lauchstädt is fully operational in year 2025, test transfers of hydrogen will follow, scientifically accompanied by DBI-GTI (DBI Gastechnologisches Institut gGmbH Freiberg), an independent laboratory of the DVGW.

Such projects help to increasingly address the locational advantages of the continent. At GAT in Cologne, Prof. Thomas Thiemann of Siemens Energy summed up the situation as follows: “With its large pipeline network and storage facilities, Europe has a huge asset compared to other areas. We must exploit this advantage.”


Out of the surveyed industrial customers, 76 percent are interested in hydrogen

Study: Green hydrogen not more expensive than gas in the long term

End customer prices for green hydrogen in the medium and long term could be in the range of natural gas or the current subsidization threshold of natural gas of 12 euro-cents per kWh (Gaspreisbremse). That is what the study by Frontier Economics on behalf of the DVGW determined. If total costs are compared – so costs for acquisition, building renovation and operation, – then the cost for both single-family and multi-family houses with a gas boiler powered by hydrogen, depending on building type and efficiency class, lie at a similar level to an electrically run heat pump. In the study, the total costs of various energy carriers for households as well as for exemplary heat supply solutions were compared with each other.

For the cost comparison, indicative end customer prices based on production costs were used. In addition to the prices for gaseous energy sources, the DVGW study also compares the total costs that households may incur depending on the heat supply solution. Because if the goal is to meet the climate targets, heat generation for buildings in Germany must be fundamentally changed, according to the DVGW.

The aim of the investigation is, on the one hand, to put the end customer prices of green hydrogen in relation to alternative energy sources for households in the years 2035 and 2045. On the other hand, the analysis focuses on the total costs of different heat supply solutions for two selected building types in the efficiency classes B and D. Considered are green gas boilers based on biomethane and climate-neutral hydrogen as well as heat pumps.

Overall, the comparison shows that the cost ratios of the energy sources change over the period under review. While end customer prices for climate-neutral hydrogen in Germany are expected to remain above those for natural gas and biomethane until 2035, they could reach a comparable level by 2045.

Households in Germany would therefore have to pay between 12 and 17 euro-cents per kWh for hydrogen in 2035. The price of natural gas, on the other hand, taking rising CO2 prices into account, would be between 9 and 11 euro-cents per kWh, and that for biomethane just above, at around 10 to 13 euro-cents per kWh, depending on the biomass used in its production.

After 2035, end customer prices for hydrogen could fall and approach those of natural gas. The main drivers for this include the degression of costs for H2 production and rising CO2 prices in the context of emissions trading. In year 2045, according to the study, purchase prices for hydrogen could then lower to around 11 to 15 euro-cents per kWh.

Author: Michael Nallinger

Nikola Motors: Capital increase at the right time

Nikola Motors: Capital increase at the right time

Short sellers are working massively against the company at the stock exchange. There were shortly even nearly 200 million shares sold short (on Nov. 16 still 193 million). But now, a price change upwards seems very likely. The reason could lie in the comments made at the press conference on the third quarter results, which Nikola – in my words – sees as being on the right track. The company amassed about 250 million USD in liquidity in the third quarter, and now has available 705 million USD in capital access.

The damage due to recalled battery-electric trucks was reported as 61.8 million USD (warranty reserve), where Nikola not only resolved this problem, but employed batteries from a still unnamed supplier that possessed advantages over the previous model, was the comment from the company. Additionally, the truck will be equipped with more features that will give the driver more options during use, for example from a distance using a smartphone app, the truck could be already prepared with heating in the winter and air conditioning in the summer, before the driver gets in. The battery-electric truck will, after the retrofitting in the first quarter, again find its way to customers.

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Now orders can come

There are 277 letters of intent for the purchase of the hydrogen-powered truck. In the fourth quarter, 30 to 50 of them are to be delivered and between 11 and 19 million USD turnover generated. With the battery-electric truck, meanwhile – despite the recall – an individual order of 47 units will be gained. In the next two years, Nikola is determined to deliver on average 250 to 300 trucks of both types per quarter.

The cash burn is at 100 million USD in the quarter, where for the current quarter, the financial effects of the recall on the battery-electric truck are still to be felt (61.8 million USD, of which about 38 million USD is capital that will be used). And the better the scaling of the truck production goes, the more cost-effective they can be manufactured, in order to at the end of the day come out with a good profit margin. Consider this: Money is the future will be earned especially with electricity and hydrogen and not with e-trucks per se. Nikola is at the start of its (success) story.

California setting the pace

Nikola is concentrating, for good reason, on the US state California. Firstly, the best subsidies (up to around 408,000 USD per truck) are there; secondly, the time pressure for shippers to replace diesel-powered by CO2-free trucks is very high. Already starting 2024, in California only the last-mentioned will be allowed at port facilities, so there will be new registrations only for battery-electric or hydrogen trucks. We’re talking about over 30,000 trucks alone in this market segment – a winning pass for Nikola Motors, since in the Inflation Reduction Act are provided also 2.6 billion USD in subsidies specially for port facilities and also drayage trucks as well as for the H2 infrastructure.

Additionally, the competition for Nikola in this truck segment will be sparse for years to come. The look at the already approved vouchers for e-trucks is cause to celebrate: 96 percent of the vouchers of the California’s HVIP program for hydrogen-powered trucks and 50 percent of the vouchers for battery-electric trucks are attributable to Nikola. After all, Nikola is to have received approval of already over 400 vouchers for the two truck variants. A respectable success.

Lawsuit against Milton won

The lengthy legal dispute with company founder Trevor Milton was won. On October 20 came the decision. Milton must now pay 165 million USD to Nikola, which includes procedural costs Nikola first had to pay and now receives back. It should be noted here that there is still no indication of when the money will flow. Nikola still has to pay a portion to the SEC itself, as they reached a settlement of 125 million USD and must itself fulfill it. If 165 million USD flows from Milton soon, Nikola’s liquidity will rise, as the SEC payments will be divided over the next years.

Goals ambitious but realistic

Currently, Nikola can produce 2,400 trucks of either variant per year. In order to be profitable, sales of 1,000 trucks in 2024 and 1,500 in 2025 are needed. These targets are considered realistic from the company’s perspective, if Nikola delivers 250 to 300 truck per quarter. In my view, there will also be some large orders. Beyond this, declarations like the letter of intent (LoI) with Anheuser-Busch (800 trucks) will also flow into the orders on hand, is my expectation.

Nikola Motors – The Tesla of trucks?

For this hypothesis, I earned a lot of criticism. One cannot compare a startup like Nikola, though, with the success story of Tesla. One can say: Tesla started small, then came Elon Musk. The company reported heavy losses for many years and was even on the verge of bankruptcy before the breakthrough came. In the first three years, Tesla earned money, but not with the e-cars but with  emission rights that could be sold to other car manufacturers. Tesla solved the chicken-and-egg problem by providing the electricity for the battery-electric vehicles itself by establishing a charging network made of its own Supercharger stations. Who would have bought a car from Tesla if there had been no charging option – as a package, even free of charge for years?

Nikola is doing the same – only for trucks with the help of electric charging stations and H2 refueling stations. Nikola wants to earn money with electricity and the self-produced or purchased hydrogen. In the USA are waving high subsidies of three USD per kg. Tesla continues to address the market for e-cars, but Nikola the segment for trucks. Both companies can be considered disruptive – they change markets and business models. Both are first movers.

Tesla and its CEO was met with much skepticism, but they proved that change is possible. Nikola is doing the same – only for commercial vehicles. Whether both can be compared with regard to the development of their valuation or share prices time will tell. For Nikola I am extremely optimistic.

Chief financial officer leaves the company

Stasy Pasterick was just six months in office as CFO. She is going over to Universal Hydrogen in the same capacity. It will be interesting to see who her successor will be.

Capital increase secures the company

On December 6, 2023, Nikola’s plan to raise fresh capital on the stock market became known. It entails a convertible bond of a nominal 175 million USD with 8.25-percent coupon (green bonds) with maturity December 2026 (0.90 USD conversion price per share) and 100 million USD in new shares at 0.75 USD per share. The share price fell from around 1 USD probably because – no guarantee – a hedging took place, so the price was depressed, as one can retain and stock up on the share after the capital raise. The share also fell because short sellers wanted to use the capital increase as a negative for themselves.

In accordance with experience, this measure will have already been successfully implemented by the time you read these lines. With it, Nikola is then thoroughly financed and will ultimately have 500 million USD in the bank. That the share price is rising above 1 USD again is also in the nature of things, because the financiers (investment banks such as Nomura) will most likely not accept a delisting of the share (it will come to this if the price sinks below 1 USD for a longer time).

Summary: Nikola is well on the way to positioning itself as a first mover in CO2-free trucks in the USA – first in California, later across the whole country and in parallel in Canada, where likewise large subsidy sums up to 380,000 CAD per truck are waving. Comprehensive funding programs are acting as a turbo, as the buyers of the trucks can comply with the regulatory pressure and are financially incentivized as well. The H2 infrastructure is being established by the company itself, but will be financially accompanied by business partners such as Voltera (EQT) and is receiving a boost by a 7-billion-USD program of the Biden administration, in which seven hydrogen hubs are to be established in the USA. The stock market will not be able to avoid newly valuing Nikola as a startup: In the right market at the right time. Maybe Nikola will even be the H2 share that develops the most price potential. What’s the phrase? No risk, no fun.

Nikola’s management team is considered excellent. CEO Stephen Girsky pointed out that this includes top managers who no longer actually have to work in a start-up, but who are happy to contribute their expertise to make the company’s vision a reality. This is the right approach – out of conviction and with experience.

Disclaimer

Each investor must always be aware of their own risk when investing in shares and should consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid cap, i.e. they are not standard stocks and their volatility is also much higher. This report is not meant to be viewed as purchase recommendations, and the author holds no liability for your actions. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on medium- and long-term valuation and not on short-term profit. The author may be in possession of the shares presented here.