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.
About The Author
Business Analyst at Cleantech Ventures, LLC
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.