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1 July 2021

HSA adds to surge of green hydrogen companies targeting 2024 parity

Yet another green hydrogen start-up cropped up on our radar this week, promising cost-competitive production with fossil-fuel methods by 2024. While we can’t be certain that Hydrogen Systems Australia (HSA) will fulfill this ambition – in the same way that we can’t for any of its competitors – the growing number of those that believe this benchmark is achievable has made it almost certain that at least one of them will.

The Melbourne-based start-up claims to have invented a new type of electrolyzer, which can cut the cost of green hydrogen production by a factor of three, with intentions to reach just $1.50 per kilogram by 2024.

This marks a three-fold improvement in the production efficiency of conventional electrolyzers on the market today, which produce hydrogen at a cost of between $5 and $7 per kilogram.

Most of HSA’s cost reduction is set to come from a 90% reduction in capital requirements for its new electrolyzer unit, with the rest set to come from improved technical efficiencies. The $1.50 per kilogram figure is based on electricity prices of $35 per MWh, which are already available through PPAs in many parts of the world, with a system operating for 12 hours a day.

Rather than conventional electrolysis, HSA’s patented technology will use plasma – often referred to as the fourth state of matter – in which an ionized matter, similar to gas, becomes highly electrically conductive to the point that both electric and magnetic fields can dominate its behavior.

Inside a plasma chamber, HSA’s electrolyzer uses electrical power at resonant frequencies which can liberate the hydrogen and oxygen atoms in water molecules. “We’re letting the frequencies do all the work” said executive director Brian Power in an interview, while a standard electrolyzer “lets the electricity do all the work” he added.

Plasma has been proposed for small-scale hydrogen production since the 1980s, with methods like the Kvaerner process producing plasmas through electron beams, dielectric-barrier discharge, gliding arcs, plasmatron arcs and microwave discharges. Several processes – including the likes of pyrolysis and partial oxidation – can then be used to extract and separate the hydrogen from the plasma.

HSA is naturally keeping quiet about which combination of technologies it is using for its electrolyzer and how it exactly works. The company is currently fine-tuning its systems in the lab, with a view to completing testing and making demonstrator units available by the end of this year. It hopes to launch its first line of small-scale electrolyzers to the market in 2024, at a price that will immediately make Green hydrogen cost-competitive with fossil-fuel based methods.

In every one of its public statements, the company has also made it clear that it is not hoping to compete with the utility-scale hydrogen players such as Nel and ITM Power, which have both also made recent announcements regarding cost-competitiveness by the mid-2020s. Instead, the company is hoping to target smaller units of around 150 kW – compared to utility-scale units of around 5 MW – focusing on a more distributed approach to green hydrogen production. The small and medium scale projects that HSA will hope to address will initially focus on sites where renewable capacity and where energy storage has already been installed.

This distributed/modular approach is one that is starting to gather momentum across the energy industry for instance in residential solar, battery storage and V2G technology. It’s worth highlighting that cost reductions in lithium-ion systems were largely due to reductions in cell prices – and the same sized cells are used in various quantities over systems of all sizes. The common analogy that players in these sectors like to use is that of computing; that PCs advanced so quickly that mainframe computers were made largely redundant, and that if Google had just focused on large-scale computing, then we wouldn’t have cloud networks today.

Rather than developing its own supply chain, HSA is also hoping to license its technology to existing manufacturers like ITM and Nel, which will be able to mass-produce green hydrogen at a much lower cost at their upcoming gigafactories. The company claims that it has several of the largest companies already knocking at its door.

Given that the electrolyzer gigafactories would already be equipped with pumps, manifolds, pressurization and other facilities that would not need changing, retooling would only be necessary for 10% of the manufacturing process – primarily focused on the plasma chamber.

HSA is currently seeking funds of approximately $7.5 million to fund its ongoing testing and production, and could be one of the beneficiaries of Australia’s national science agency CSIRO’s mission to get green hydrogen production below $1.50 per kilogram by 2030 – to which it has dedicated $51.4 million.