The Impact

Forget Mobility: This is hydrogen’s most critical application

To: The Impact Readers

Howdy 👋

New features, new week – At the bottom of this newsletter you can now share feedback with us within one click! So use it, but don’t abuse it.

Also, a company we previously covered is hosting a webinar we’re pretty intrigued by so we figured we’d share it with all of you as well!

Ocean-based Climate Solutions is hosting a live webinar about their artificial upwelling pumps (AUPs), which can remove 20 to 25 thousand tons of CO2 over their lifetime and replenish the oceans with 375 million servings of fish.

If you wish to participate and learn how they arrived at those numbers, register for the live webinar here: https://bit.ly/2VKiTh1

– Swarnav S Pujari

In Your Inbox: An interview with Steelhead Composites; A new podcast with Orbillion Bio; Dissecting the real customer for clean energy

🚀 STARTUPS & TECH

Storage Innovation Is Key To Hydrogen's Next 5 Years

By Max Melnick • Max is a Business Analyst at Cleantech Ventures, LLC, an international consulting agency assisting early-stage cleantech startups. He is an aspiring managing director of an early-stage clean energy accelerator.

Storage is hydrogen's most critical application in the next 5 years. (Image: Steelhead Composites)
Storage is hydrogen's most critical application in the next 5 years. (Image: Steelhead Composites)

Innovation milestones in nascent industries are most effectively met when policy environments delicately orient themselves to reinforce the changes already being pushed by the market. Take a look at the leap in interest that has emerged in green hydrogen since legitimate discussions involving the European Green Deal took place at the end of 2019. Can such a drastic change in sentiment be attributed solely to technological innovations and convergences?

Andrew Coors, the CEO of the hydrogen storage and aerospace pressure vessel manufacturer Steelhead Composites, is lucky enough to have a pulse on the hydrogen market as an emerging market leader himself. Not many people know how to store the smallest element in the universe at nearly 700 times the pressure of our atmosphere (1 atmosphere= ~14.69 pounds per square inch). As it turns out, in the hydrogen economy, such knowledge is deeply coveted.

Here, Andrew explores the impact of the European Green Deal, the most important application for hydrogen in the next 5 years, how to set hydrogen free of some of its limitations, and some of the challenges with the government agencies that set the stage for new mobility technologies.

I was told something by the head of investment at a prominent west coast accelerator a few years ago, he stated that "hydrogen has been the ‘next big thing’ for the past 30 years." What is different now? And is Steelhead enabling this transition?

I would say hydrogen has been 5 years out for 40 years.

At Steelhead we design, engineer, manufacture, test, and certify pressure vessels that are used to hold a whole slew of compressed gases.

Our biggest customers are in aerospace, where our vessels hold pressurized gas and propellant for pretty much all the players in the new space economy.

I don’t have a huge team of people that are out there trying to convince people to buy something they don’t need. People come to us when they need something that has the right weight, with the right safety, delivered within the right timeframe, and at the right price. And so, we are not actively out there trying to create markets that don’t exist today.

Because of that, we have surveillance into the market, which is a little unique in that we were not trying to get grants, we’re not out trying to create new markets, instead, we’re there to respond to customer needs.

So, over the last eight years since I started the company, we’ve had a great database of [customers] from incoming inquiries: who they are, where they are, what industry they’re in, and what they need. Up until about two years ago, there was always a monthly inquiry from somebody that was a hydrogen evangelist or needed something for hydrogen. These inquiries were sometimes large, sometimes small, but they were very casual.

Then about two years ago, the inquiries became more frequent from companies that have been involved in hydrogen for the last 20 years.

These companies were interested in our technology, and how it applied to their projects that were [exploring] hydrogen. A good example of that would be automotive OEMs. They were saying “O.K, we see electrification coming.” We never expected Tesla to have the success that it had. And Tesla showed that there was an ability to create a new auto company, or at least a new paradigm.

I think this really shocked the OEMs and the Tier ones: that it was possible to come in and take a meaningful amount of market share with new technology in automotive.

You had Toyota who was heavily invested in hydrogen, and Hyundai who said they were going to be invested in it. And then you had Honda, GM, BMW, and Daimler that all had fits and starts in their hydrogen programs. They all reached out to us and said “you know, we’re interested, maybe.” These were all major companies that had internal teams that were tasked with looking at hydrogen. Then about a year ago, I believe post-COVID, the European Green Deal changed the type and quantity of people that were coming to us. It really spurred a global consensus on hydrogen being a viable technology across multiple industries, for either reducing petroleum dependence, or decarbonization.

Since that time, we went from having big companies asking us for proposals, to where we are today – where there are between 4 and 7 hydrogen inquiries per day. From the latter half of last year, we got 283 inquiries from 36 countries. The amazing thing is the diversity of applications that we are looking at, exploration of if they can use hydrogen and how they can use hydrogen.

I think that most new programs get funneled into companies like us. And while we don’t see all of the different opportunities coming to fruition, it gives us a pretty good insight into who’s doing what and where, and, and how the market is evolving.

Is there any particular sector that you are seeing as having the most growth? Drones, electronic aircraft, marine, data centers, microgrids, are any one of these poised for outsized growth?

I am going to answer but let me start with a caveat.

I was talking about the number of inquiries we are getting. I do think we have somewhat of a selection bias, that we do get inquiries from smaller companies, and we do have a pretty large potential bias toward marine and aerospace since those are the two industries where Steelhead should have a number one or two market position.

So, our data is skewed. [Maritime and aerospace] will have the highest growth rate for us as a company. But the market that I do believe will have the highest growth over the next 4 to 5 years will be stationary applications.

Why do you feel that way?

I feel that way because there is more of an infrastructure issue; no refueling stations or anything along those lines. There are immediate cost benefits.

Think of things like cell phone tower backup systems where you don’t have to store your diesel. You have a more reliable system using hydrogen, and you do not need so much power that the economic disadvantage that currently exists with hydrogen relative to petroleum products would cripple it.

I see the same thing for microgrids. The brownouts in California, the problems with the Texas grid, events like these created a market pain that people have [experienced]— especially in areas where you have higher incomes— [accepted] a little more price elasticity. People want to have a system to provide [reliable] electricity for them when the grids are not there or to have backup power.

As an example, I think there are 10 or so companies that I have encountered that want to use our hydrogen cube system to charge EVs in an emergency.

Does pressuring the hydrogen affect those economics at all? I see the pressure that your tanks can handle as an undeniable advantage, but then I naturally wonder what the energy required is to reach that pressure. Can the system still be cheaper than batteries despite this extreme pressurization?

Compared to batteries, the marginal cost of storage using hydrogen is significantly less expensive than batteries. Our cost to the market is about $30/kwH. I am involved in an electric vehicles company that buys batteries at $500/ kWh today. The cost of the fuel cell is substantial, and the efficiency of generating the hydrogen is much less than charging a battery, but if you need to store an additional marginal unit of potential power, storing hydrogen is much less expensive than batteries.

So, the efficiency of green hydrogen is very low. But once you have it compressed and stored, it is quite advantageous. There is no real good answer to “what is the right pressure or the optimal compression to use to get the lowest economic cost.” It is strangely linear. That is, the really high pressures — 700 bar or 10,000 psi — your cost gets very high at that point. And it’s not on the tank side, it is on the valve side, it is on the compression side, it is on the balance of the plant.

The unfortunate, or fortunate, thing about hydrogen is that it is the smallest element on the periodic table. And it does not like just being hydrogen, it likes bonding with things and it will escape anything. It’s really challenging, but it is a pretty great energy carrier. If you do not want it to bond with carbon, then you have to store it in some media. Right now, compression has the biggest bang for your buck.

Could we have used existing technology such as the technology used to store propane? How might you explain your innovation to someone who sees plenty of existing technology for pressurizing and storing gases?

It goes back to the fact that storing hydrogen is very different from storing gasses that are larger, such as in LPG tanks. Those tanks are really not that high pressure.

We are storing at pressures that are really kind of mind-blowing when you consider that we are storing the smallest element in the universe at 10,000 lbs per square inch. And you’ve got an element that attacks standard strong metals such as steel. [The hydrogen] gets in between the grain boundaries and causes some of the elements in the alloys of steel to weaken.

In a steel tank under high pressure with hydrogen, you’d have a brittle tank [that can rupture] — it wouldn’t work. So, we have to use either plastic liners or aluminum liners to hold the gas and then we reinforce it with carbon fiber to [allow for] that pressure. For a metal tank like a propane tank to hold the pressures that we are holding with our composite reinforced vessels, you would need to have walls 5 inches thick.

But the hydrogen itself will escape through anything, it doesn’t like welds very much, it doesn’t like any seam, it goes right through [these openings]. So, storing compressed hydrogen is a challenge, just because of how small hydrogen is. And it is more difficult to liquify than natural gas. There is really no clear best way of storing hydrogen.

Your approach also has the advantage of releasing the geographic limitations that emerge from things like salt mines.

It does. But I see a trend toward moving away from large, centralized generation and large centralized storage, and more towards customers wanting to generate hydrogen closer to where it is being used. With electrolysis in particular.

So, if you have a large geological formation like an empty salt cavern, that might be a great way to store it sometimes, but you do not have that everywhere.

This is an interesting question, however. That is, as hydrogen becomes more of the grid-scale energy storage solution as more and more renewables are put in the grid, and those excess renewables are used to electrolyze water and create hydrogen, I think it is going to be an interesting discussion on how you store that much hydrogen. We are talking about an unbelievable amount of hydrogen that’s going to be needed to be generated as we move to a fully renewable grid.

There was an awesome study by I think it was the University of Irvine, maybe three years ago, that looked across all technologies that can be used for [storing] excess renewables either inter-seasonally or throughout the day. And the number one approach they came up with was reverse pumped hydro.

So at 2 pm when the sun is shining and you do not have a huge amount of grid use, you pump water back into your reservoirs, you run [the water] through your hydroelectric dam, and [this method is currently] the number one use or way to solve what is called the duck curve. But the second most beneficial way is hydrogen. You electrolyze water and create hydrogen. Even with the 14% round trip efficiency today.

Interesting. I had thought at the start of the conversation that these heavy-duty applications were going to be the area your company was going to have the biggest impact.

The largest programs I am seeing right now are on the stationary, bulk storage side. That is what I am seeing but that is not necessarily Steelhead’s perspective.

I think what is interesting is the diversity of uses. We do have a very interesting data set that we haven’t really fully analyzed. With more than 5 inquiries a day coming in from the hydrogen side, it is interesting seeing who is doing what and where.

[Aerospace and maritime] are where Steelhead will play in as those decarbonize. And they will decarbonize.

The difficulty in creating a new aircraft or having a full review of your yacht/ ferry means that there, the timing of adoption will take longer. But putting in stationary applications can be much quicker because you do not have the difficulty of making the entire system from scratch.

So it is not only the technology that makes you believe stationary applications will see the most immediate growth. It is also that the environment in which this technology operates is also experiencing a revamp.

That is exactly right. On the maritime side, the primary regulatory agency for the marine industry, the DNV, have been very prolific in their support of hydrogen through their research. But from a regulatory standpoint, they are quite archaic. They are so worried about something bad happening that their acceptance of hydrogen as an energy carrier in maritime has been frustrating.

What would be the bad thing that could happen? I would think that hydrogen is safer than a combustion engine. Even when these hydrogen systems "explode" the flame does not radiate heat to the extent of other energy carriers, and as soon as hydrogen is exposed to the air it shoots up into the atmosphere. I would imagine that even if someone shoots your tank with a gun it would likely not explode. So how exactly do they think it is more dangerous?

The question is not whether or not it is more dangerous. And the FAA is going to have a similar [challenge].

It is that there is an inherent conservatism in any regulatory agency that tends to [maintain the status quo] and resist technology that could be risky, whether it is or not.

An example of this might be autonomous vehicles.

Hydrogen should and will be safer than internal combustion engines, but internal combustion engines have a long history, so we accept its risk.

Thoughts and Outlook

Finding the right environment to kick off a technology/market/decarbonization movement is rather difficult as it would turn out. What’s more, what has worked rather well thus far in Europe will not work in the US given the uniquely different modes of operation, incentives (both cultural and market), and institutional structures.

But while the “right” structure to enable energy change is oriented, certain applications for green hydrogen, such as the stationary market, can advance nonetheless due to the system’s deeply valued physical advantages. But that can only be done with persistence and growth in mind if the operating environment supports the system’s continued integration.

This is why entities that act as the intermediary between technology and policy are immensely important. People that can speak the language of multiple domains in order to move the conversation forward may prove to be some of the most valuable components in the emerging clean energy economy. The flow of information needs channels that enable rapid adaptation and integration. Methods should be explored to facilitate these flows, and with that, an improved environment for clean energy integration will likely follow.

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⚡ DISTRIBUTED ENERGY RESOURCES

Why Clean Energy Startups Underestimate Selling To Utilities

By Swarnav S Pujari • is the CEO at TouchLight and Appointed Chairman of the Yorktown Climate Smart Communities Task Force.

Utilities think about procurement differently than you may think. (Image: Unsplash)
Utilities think about procurement differently than you may think. (Image: Unsplash)

Working and building in energy is a complex situation – especially for new energy tech startups.

Be it new geothermal solutions or even natural cave/mine based energy storage solutions – every single energy tech startup faces the same navigation hurdles in selling to utilities. They think differently and operate highly dependent on their local geography, political preferences and ISO.

It’s at a point where if in the US the grid nationalized 1000s of clean energy entrepreneurs would wake up in utopia as it would become at least a bit easier to estimate US wide what the economics of their new energy technology would have in each state.

These days if a clean energy startup has a team member with previous experience in selling to utilities – they may even be able to land governments as their initial customer.

You Need To Demonstrate Significant Revenue Gains Or Significant Loss Reductions

Help them avoid or reduce the losses on their balance sheet even more so. Given the regulations around being a utility or a retailer many times utilities will end up going deep into the red with a full region of customers. This could be due to the standard O&M costs they have with servicing those customers or even caused by the location + energy usage profile in turn driving up transmission costs.

Startups that can effectively demonstrate a significant loss reduction at a tenth of the price increase their odds of landing a contract significantly.

Even still plan for a 6 month to pilot and 18 month to contract sales cycle. If it’s a big enough purchase you’ll have to deal with the ISO, but that’s for a later article.

Innovation Departments Are Your Way In, But Not Where You Close

Innovation departments are great, they are paid to look for startups and have specific types of companies they are actively seeking. The best part is that they tend to know the right stakeholders within the utility you’re attempting to sell to – which means easier access when it comes time to sell to the right stakeholder.

However, many times startups get stuck in this part of the process – running pilots and losing money on deals.

Hardware is expensive and even cloud software costs money to operate. Pilot budgets rarely end up making startups net positive in terms of revenue. This strategy is perfectly fine until the startup realizes that the utility didn’t have this as a priority action within their needs list as innovation departments may run pilots for technologies they know are years away from the implementation stages.

When navigating a pilot with a utility via an innovation department the most important thing is ensuring frequent, pre-scheduled calls with the stakeholder(s) within the utility that you believe your technology makes the life easier of.

9 times out of 10 get to know the CFO…

Can You Really Beat The Economics Of Solar?

If you’re an energy tech company this answer has to be a resounding yes to even be considered a worthwhile conversation for a real sale.

Now where many energy tech startups tend to falter is forgetting to check all their region’s solar incentives. Speak with installers & engineering firms that specialize in utility grade solar projects – they tend to have people on staff who can do deep dives into finding and structuring solar projects in a way where tax incentives and intelligent deal structuring can effectively make your project not worth a single look.

This makes it challenging for frontier energy tech solutions like geothermal to truly take off at a large scale. While the Department of Energy funds many projects for pilot purposes, utilities rarely want to make the move to be a first mover on these frontier solutions until incentives significantly drive the cost down.

Does That Region Even Need Anymore Power?

This question alone can either save you months of heartache or if you’ve gone too far along it’s going to cost you months of your life and kill the project on the spot.

Community solar projects have been blocked by the Midwest ISO in Missouri because the grid already has too much capacity available, so solar would just be adding more to a system that can’t use everything available.

Solar farms in locations that have no additional demand needs can kill an entire project and if the power lines can’t support the capacity expected to be flowing through it can throw the economics out the door entirely if not kill the project as well.

Also be prepared to speak in terms of capacity factor as opposed the traditional “kWh” lingo residential and commercial solar installers convince you to purchase on – working with the grid is a different beast altogether.

So how do new energy tech companies combat these challenges?

Unfortunately, they can’t easily – The best way is to come prepared.

  • Ensure your solution is fitting into locations where outdated peaker plants or soon to be retired coal plants are located – these are regions with capacity most likely needing to be filled
  • Explore every possible incentive or grant you can fall under to drive the project economics far below a solar project in the same region (don’t compare location, utilities think based on their service territories)
  • Most importantly find service territories where utilities actively lose money on every customer they service (utilities are obligated to service at a specified rate, even if it loses them money). If you can locate a region where your energy technology can be utilized and it results in significant savings to the utility by “islanding” customers which currently lose them money – you have a series project on your hands.

How To Think About Utility Sales Going Forward

A utility’s sole purpose isn’t to buy as much solar as they humanly can afford. Their purpose to ensure uptime across the grid and service all of their customers while making money and dealing with regulatory checks and balances.

Everyone – even those within utilities are mostly bought into the transition to clean energy sources. However, it’s the pace at which they can decommission and adapt solar or your energy technology into the grid that tends to make these projects complex.

While typically ill-advised in “Silicon Valley Startup Lingo”, you need to find a where you can fit your technology into the utility’s roadmap and needs for power across their service territory. Partnerships with developers may help with finding opportunities though it’s not a usually viable option in the early days.

The best way is to be intimately familiar with the region and likely state you decide you believe your energy technology will dominate in. Winning a single region in the US alone is a huge success – especially if it helps drive more trust into the type of clean energy solution you’re working on bringing into the market.

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📺 MUST WATCH CONTENT

Lab Grown Meat Could Cut 1/3 Of Agriculture Emissions • Orbillion Bio

Roughly a third of all emissions that come from the agriculture sector is driven by factory farming and meat production.

This stat alone has driven significant climate investment into the alternative meats sector in the hopes that a technology will eventually be able to reduce the carbon footprint of this sector. Orbillion Bio is one such company that is focused in the lab-grown meats approach to addressing this problem.

Why it's worth monitoring lab-grown meats as a potential solution

  • Meat production companies are incentivized to produce as much meat as consumers demand – and given demand continues to rise year over year it’s critical for the large players to being investing into alternative meats or alternative meat production methods. Orbillion Bio happens to provide a claimed faster production process for specific high end meats.
  • Targeting high end, low volume, specialty meats as an initial market for a lab-grown meat alternative actually delivers the ability to become a premium supplier to an audience that may be more willing to try an alternative purely on the basis of climate or increased “access”.

What it could take to make an impact

  • We are still in the early stages of lab-grown meats whereas there already has been a small, but passionate crowd that has adopted the soy or plant based protein alternatives so far.
  • Lab-grown meat options (for it to have a large scale climate impact) will likely require adoption from large animal producers to see a significant drop in carbon emissions from the agriculture sector.
  • Consumers will likely require significantly more education than plant based alternative meats – hence Orbillion’s methods of hosting tastings may drive positive experiences being shared early and frequently

Thoughts and Outlook

There is reason to believe that lab-grown meats will be a popular alternative going forward, especially if the cost can drop below current production costs. However, it seems that the market will most likely support a mix of lab-grown, plant based and “organic” offerings going into the future. These alternative meats will likely become the main player as companies begin to tune in taste + texture to make it truly indistinguishable from the “real meat” counterpart.

The decarbonization impact will likely be significant even in a market where we don’t only have lab-grown meat purely because the justification for large meat producers to continue to invest in factory farming becomes minimized. Lab-grown meat in theory will be far more scalable and profitable for these entities, in turn doing right by the climate.

Check out and subscribe to our Youtube Channel for future episodes!

Writers: Swarnav S Pujari, Daniel Kriozere

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