The press conference for the second quarter delivered a number of results that allow a very optimistic outlook for the future of the company. Ballard is positioning itself perfectly in its most important markets: buses and trucks, rail vehicles, maritime transport and stationary energy. This involves optimizing the production processes of all important components, cost reductions (scaling), local-for-local strategies (supply chains in the specific countries where Ballard maintains production) and ramp-up in the various regions of the world in which the company operates. A few examples:
In buses, the Canadian company is ahead of the pack in the fuel cell segment with a formidable market share of still over 70 percent. Recently, the largest single global order came in from customer Solaris for 96 FC buses (52 of them for public transport company Rebus in Güstrow near Rostock). In the next two years, it’ll be an astounding 10,000 FC buses (Europe and USA), a large share of which is sure to be Ballard. The USA is just beginning to pick up speed in this regard, and Ballard sees itself well placed to accept larger orders from, among other, New Flyer (have market share of about 66 percent in transit buses). Individual orders from municipalities have now grown from units of 1, 2, 5 to 100 FC buses.
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The China card
In China, a lot is finally happening at the government level regarding hydrogen (see above). The chance of a comprehensive funding program starting in 2024/25 is increasing. Will China do it in dribs and drabs or, similar to the US government with the Inflation Reduction Act, launch a mammoth hydrogen program (investment incentives, subsidies for H2 production)? China could use hydrogen as a climate-friendly economic stimulus package for itself, given the current problems in the construction sector and with the infrastructure programs. In addition, new markets within electric transport can be established that could supplement or alternatively replace battery-electric ones, which would deliver a turbo boost to the world market for fuel cells.
For Ballard and its joint venture with Weichai (49:51), this allows a lot of possibility. CEO Randy MacEwen said: “We are believers in the long-term market opportunity for China. It is the largest market for production and use of hydrogen today and based on my recent visits there, I expect that to continue through 2030 – 2050. There is an enormous level of activity.”
Wisdom Motor sends 147 FC trucks to Australia
With Wisdom Motor – headquarters in province Fujian in China –Ballard has already started a strategic partnership in May 2022, which also includes the companies Templewater Group and Bravo Transportation (trucks and buses). Wisdom Motor in turn signed a cooperation agreement (MoU) with the Australian companies Pure Hydrogen and HDrive in November 2022, where Wisdom would supply over a five-year period 12,000 heavy-duty hydrogen-powered trucks (among them rubbish trucks).
Now, the first order has been completed, which entailed the delivery of 147 hydrogen-powered trash collection vehicles. Order value: 63 million USD. Supplier of the modules/stacks: The joint venture of Ballard and Weichai in China – exclusive even. Could this already mean that Ballard via the China JV is now supplying 2,400 FC modules per year here from this deal alone? The FC capacities of the JV currently correspond to 20,000 units per year, so this order is a very good start looking at the future.
Investments in China will be adjusted
Originally, Ballard wanted to establish its own MEA production with an investment volume of 130 million USD in China, among other things to counter import tariffs. This investment will be postponed for now, until there is clarity on the subsidy program. They are sticking to the plans, but don’t want to invest in land and all that until the FC market gets going there. However, they have concerning the supply chain all of the important connections already and can quickly act at the opportune time. To put it another way, this allows the interpretation that Ballard is first investing more in markets (USA, Europe) where the company expects to have better chances of winning orders in the near future. All this can also quickly be modified, however, if China accelerates its hydrogen strategy through subsidies and incentives.
Platform partnerships as a turbo
Ballard has been working for a long time on building so-called platform partnerships. This refers to customers who know how to use the fuel cell know-how (stacks & modules) for their own benefit and integrate this into their own hydrogen strategy, and acquire the FC modules exclusively from Ballard. They fully rely on Ballard in this regard and the company’s experience as well as the quality of its FC products. For Ballard, this means being able to deliver large quantities of modules/stacks to these partners in the future. In the bus sector, these are companies like Van Hool or Solaris, and with rail vehicles, Siemens Mobility and Stadler, to name a few examples. There could probably become 30 or more such partnerships, which means enormous and, above all, secure sales potential in the medium to long term.
Selection procedure of Ford speaks for Ballard
Ford Truck has decided, after comprehensive market analysis, to employ Ballard FC modules for its trucks of the F-MAX series. Two 120-kW FCmove XD modules be employed per truck. First, a letter of intent (LoI) was signed and the delivery of some modules for test purposes agreed on. From this will then come a large series. You can compare this with Bosch and Nikola, where Bosch supplies the FC modules.
This is an accolade for Ballard that underlines its expertise. Ford Truck builds, in addition to heavy trucks, many other vehicles such as construction vehicles and tractors that could in the future have Ballard inside. The truck production in Turkey is to be the first Ford site for this. Over 10,000 vehicles roll off the assembly line here every year.
Ford can itself install the Ballard modules perfectly on its own truck chassis, is the plan. It will surely take another year or two until, after test runs, the first large orders are given over to Ballard. The foundation, however, has now been laid. What would happen if Ballard were to supply 1,000, 5,000, 10,000 or more FC modules in a year – alone for this one platform partnership? According to Ballard: “As Ford’s fuel cell F-MAX truck platform matures, we anticipate this partnership to evolve into a long-term scaled-deployment-level module orders and supply arrangement.”
Canadian Pacific (CPKC) too has ordered for its production facility in Kansas City 20 FC modules for use in various locomotive types in order to gain experience from the test operation. They are also working together with railroad company CSX to make locomotives H2-ready or break away from diesel operation. A very large order can come out of this. Further orders are expected further in the course of 2023.
Figures
The reported loss for Ballard lay, as expected, at minus 0.10 USD per share for the quarter. The order volume rose strongly in terms of value to 147.5 million USD and will continue to do so. In the bank still lies a good 815 million USD in liquid assets. The ratio of sales development between the first and second half of the year is described as 30:70 percent, so the current second half of the year promises positive surprises regarding this. Really exciting will then be 2024/25.
Summary: The calm in the share price development of Ballard should end in 2024 at the latest and lead to a gradual rise in the share price that finds its foundations in the rising number of orders for the FC products in all the various platform partnerships, markets and regions. A turbo could be China, when clarity on subsidization is created. Therefore: Buy and leave alone. No hasty reactions. Think about Facebook, Amazon and Google in the first years: There were only “logical” huge losses – until the business models started to soar – the shares as well.
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.
The past few months have been extreme for Hyzon Motors, but all figures for the past two years since the IPO had to be reprocessed because of the accounting debacle, in order to comply with accounting guidelines and the conditions for listing on the stock exchange (quoted share price needed to be above 1 USD again, all quarterly reports available, deadlines met). All this has now been accomplished and there is clarity. In addition, the board of directors was newly formed and expanded to include experienced professionals.
The stock market has translated this – as I predicted – in the form of rising share prices, which involved a rapid increase from about 0.50 USD to just over 2 USD (company value rose from 150 to over 400 million USD). Recently, a marked decline in the price occurred again, which however in view of the company prospects should be transitory in nature.
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To the figures: At the end of the second quarter, cash and cash equivalents still amounted to 172.4 million USD. The loss for the quarter in the amount of 60.2 million USD contains the high legal costs in connection with the SEC investigations and the necessary legal measures, for which 32 million USD was recorded and 28.5 million USD of that can be regarded as non-recurring.
The capital requirement per month is estimated at 9 to 12 million USD, with between 73 and 81 million USD of capital expected to be put to use in the second half of the year, and then in total 110 to 120 million USD in 2024. So the company is still well financed, but will surely have to raise capital in the course of 2024 (issuance of shares, loans, subsidies under the Inflation Act, etc.) or seek other forms of financing (convertible bond, participation by a strategic partner). Still unclear, however, is what the costs for the final report from the Securities and Exchange Commission for Hyzon will come to in year 2024.
Matthew Foulston new board member
Matthew Foulston has over thirty years of experience mainly in the automotive industry and there especially in the heavy haul industry. Among other things, he was CFO at Navistar Truck and CFO of Mazda North America as well as in top positions at Ford Motor. Hyzon will certainly have made a good choice in this regard that serves the company’s goals.
In addition, on August 24, 2023, current board member Erik Anderson was elected Chairman of the Board of Directors. Anderson succeeds George Gu, who stepped down from his position.
200‑kW fuel cell has reached milestone
The site in Rochester, New York will be closed down or sold to reduce costs. The 200‑kW stack that was developed in the production facilities and the corporate-owned research center in Bolingbrook, Illinois, on the other hand, is in test series and on the road. The start of production there and commercialization can therefore begin in 2024. In parallel, the fully automated production of the MEA (membrane electrode assembly) was set up. Now it’s on to the product design and acceptability. Another 16 prototypes are still to go through testing.
The 200‑kW stack (single stack) has many advantages compared to the competition, according to the press release on it, regarding the size, weight, range (more km per kg hydrogen), but also the price (25 percent lower). In addition, the service requirement is lower. Ten trucks have already been equipped for test runs with these 200‑kW stacks, three of them in Europe and seven in Australia. All very good news.
A global market of 68 million diesel-powered trucks can be retrofitted with such and thus contribute to decarbonization. The Inflation Reduction Act would come into play here to, as 60 million USD have been made available for processes for the reduction of diesel emissions, another 2 billion USD for related production facilities on US soil, another 3 billion USD for technologies that help technologically improve motor vehicle production, etc. Hyzon will surely be named some figures, as they expect subsidies out of these for themselves, since they’ve classified themselves as a “technology innovator.”
A good sign: The short sellers are stocking up. Over 20 million shares were still sold short a few months ago, so this number has fallen to under 13 million. After prices around 2 USD, it went back down, to 1.20 USD, although this could be seen as a reaction to the rise from 0.50 USD to 2 USD (profit taking, technical reaction). The current prices around 1.20 USD invite considerations again of buying.
Hyzon, likewise to Nikola and Ballard, is engaged in exactly the right market – the fuel cell in the commercial vehicle segment. Some orders in 2024 will drive the share price of Hyzon in the positive direction. Also the participation of a strategic investor is conceivable at any time. Hyzon is thinking about pursuing partnerships like that with Fontaine Modification (system integrator in USA) in others regions as well, like with partners present in Europe.
Tests with 110‑ and 120‑kW modules
Hyzon Motors also is transitionally positioning itself with its 110‑kW and 120‑kW modules. Already 15 test trials of FC trucks with customers (Performance Food, Airgas, Bison Transport, Talke, Total Transportation Services, MPREIS, Hylane and lastly Seaboard Transport) were able to be successfully completed. They were tested under extreme weather conditions and in all conceivable daily operations. Over 2,900 hours of continuous use of the FC systems and over 68,000 miles (110,000 km)in distance were clocked in the process. This test program is underway in Europe and the USA and is to be extended to Australia – with customer Remondis. The number of employees is to remain at around 380.
Partnership with Fontaine Modification
Hyzon builds, in contrast to Nikola Motors, no truck chassis of its own, but supplies the complete fuel cell module. The installation is carried out by companies such as Fontaine Modification from the USA as a system integrator for Hyzon. After all, Fontaine alone converts over 44,000 trucks for customers every year. With it, Hyzon has the perfect partner.
Fontaine Modification belongs to the holding company Marmon Holdings, which has a stake in over 100 companies from, among others, shipping and logistics, machine building and medical technology, with an annual turnover of 10 billion USD. Marmon Holdings in turn belongs to the investment portfolio of billionaire Warren Buffett, Berkshire Hathaway. For me, this can be used to justify the speculation that Marmon could make a stake in Hyzon in order to use the FC knowhow (patents, products) in-house for subsidiaries like Fontaine.
So you can well imagine that Hyzon is going with FC modules a way similar to Ballard Power with Ford Trucks or Nikola with Bosch, but could also become part of a larger strategic whole. Fontaine/Marmon could be this, but also companies like Cummins or automotive suppliers such as Dana or Magna could be considered. Or truck producers who themselves would like to have the FC powertrain in house, but have “slept through” the development. So Hyzon is becoming highly interesting, in addition to the growth prospects around the FC stacks, as an acquisition speculation.
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.
The results of the European Union’s HyResponder and HyTunnel-CS projects have been awaited with great anticipation. Numerous experts from industry, the fire service and research institutes been involved in these initiatives over the past few years, tasked with tackling the issue of fires and accidents connected with hydrogen applications. Now the International Fire Academy, the IFA, writes: “Hydrogen vehicles in tunnels: great danger for emergency response personnel.”
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The publication of Germany’s national hydrogen strategy saw the German government set out a framework for action for the future production, transport, use and reutilization of hydrogen and related innovations. Hydrogen can make a significant contribution to mitigating climate change – as a fuel for cars, a feedstock for industry or a fuel for heating systems. A multifaceted energy carrier, it can be applied across all sectors and therefore has a key role to play in the energy transition.
In power-to-gas plants, a carbon-neutral process is employed to produce green hydrogen using renewable energy, allowing this energy to be stored effectively in the gas grid and carried onward. Hence its proponents are suitably upbeat about the technology.
However, hydrogen is – as a quick glance at the safety data sheet will tell you – a highly flammable gas and one which is now being stored and transported with increasing frequency and in ever-larger quantities. This poses a challenge for fire services and public authorities when handling approvals procedures and inevitably when responding to emergency situations, as the following call-out examples show:
Truck catches fire at a hydrogen refueling station
Two persons seriously injured following a hydrogen tank explosion
Hydrogen refueling station exploded
Difficult salvage operation – accident with “hydrogen vehicle”
Fire services are well used to dealing with traditional fuels such as gasoline and diesel on their rescue missions. Alternative fuels like liquefied natural gas, better known as LNG, or hydrogen have so far played only a very minor role, which is why emergency crews have fairly limited experience of them.
Now the energy transition is starting to gain momentum. Due to the conflict in Ukraine, the demand for LNG and hydrogen has risen sharply. In addition, natural gas grids are expected to convey hydrogen in the future, initially in blended form. A great deal of technical research and regulation will be needed to make it possible, and is currently being agreed and established in various committees.
This requires appropriate resources to be made available to public authorities and emergency organizations in order to handle the arrangements, train up staff and ensure the provision of special firefighting equipment.
We have observed that there are already established hydrogen applications for which fire crews often do not yet have the appropriate skills to carry out an emergency response.
HyResponder and HyTunnel-CS projects
In the past few years, the EU’s HyResponder project has developed a European Emergency Response Guide which is currently being presented at a country level. In Germany, an event took place in Oldenburg at the end of May 2023 in order to communicate the proposed hydrogen emergency responses to German firefighting experts. The same event was held in Austria in April.
The most important outcome from the European HyTunnel-CS research project, to which the IFA contributed its views from a fire service perspective, is: “Firefighters can protect themselves against smoke, heat and fire spurts, but not against the blast waves from explosions of hydrogen vehicles in tunnels. Therefore, it is vital to keep a safe distance. However, how can people be saved and fires be fought effectively? There is still no satisfactory answer to this question – although more and more hydrogen-powered vehicles are being registered. That is why the fire services need to work on suitable solutions immediately.”
Alongside recommendations from the research projects, there are other national and international means of support for emergency services, for instance ISO 17840 – the first global standard for firefighters. Knowing how the energy is stored on board a vehicle can mean the difference between a successful rescue and a possibly unexpected explosion, gas leak, shooting flame or a fatal electric shock.
Several hundred thousand users have downloaded the Euro Rescue app. It offers access to 1,400 vehicle rescue sheets in four languages. The international association of fire and rescue services CTIF is pushing its distribution and takeup.
Nevertheless, this presupposes that rescue teams are able to identify the type of vehicle. In cases of fires occurring in tunnels or underground parking lots, this is difficult to accomplish. It is this particular circumstance the IFA was referring to in the earlier quotation. This is because fire crews would proceed as usual and then suddenly happen upon a fuel cell vehicle. Even if the correct rescue data sheet is found, the information about the necessary safety distances for emergency crews in the event of a hydrogen vehicle fire can be best described as “leaving room for improvement.”
When dealing with fires and accidents, the overall scenario always has to be considered. This must include the area surrounding the rescue site and account needs to be taken of this in response planning. A fuel cell bus, for example, could be on fire at night in the parking lot because it is parked next to another burning vehicle. The hydrogen bus is not the cause here, yet it does make the scenario much more serious. Two basic situations need to be contemplated: One in which hydrogen equipment (hydrogen bus, hydrogen car) is itself the cause and the other, much more likely case where hydrogen equipment will be affected by an external event. It is essential that the approvals procedure takes both variations into consideration.
Artificial intelligence has great potential
On the other hand, new digital applications, particularly artificial intelligence or AI, are offering up possibilities for rapid information gathering in the future which could support the emergency response. The long times taken by public authorities to process approvals have come under much criticism. Policymakers are promising to speed up procedures significantly in this respect. Here too, AI can come into play and save a lot of time.
In particular, a suitable AI module can allow the fire service to quickly analyze the documents received and check plausibility. Robots and drones – with AI – can bring decisive benefits for emergency responses in explosive ranges. For example, a robot can scan an underground parking lot. Especially relevant here is the ability to identify fuel cell vehicles in underground parking lots and tunnel systems without endangering emergency crews.
One solution would be to fit vehicles that run on alternative fuels with a chip so that robots or drones are able to identify the vehicles more quickly. Measurement technology on the robot could also be used to detect leaking hydrogen.
Explosive situations cannot be practiced in real life which is why training using virtual reality or augmented reality techniques lends itself to this purpose. As Figure 3 shows, useful training for incident commanders can be carried out with regular free-of-charge programs.
Balancing act
If the fire service needs training and special resources, it doesn’t necessarily mean that the hydrogen technology is faulty or susceptible. It is the new scenarios, such as a multi-vehicle accident in a tunnel involving a hydrogen truck or bus, that are significantly increasing the risk for responders.
This is all “politically controversial” in terms of getting action, since the desired message is that hydrogen is virtually problem-free. Financial support for emergency response is “not likely” to be provided. Emergency service organizations are increasingly confronted with a variety of new technologies and fuels. Many different fuels are being used in parallel during the transitional phase. For those working in fire and hazard prevention and in incident planning, this often means they come across new situations and are learning by doing. Not only does workplace health and safety need to be ensured for staff at hydrogen refueling stations and tanker drivers but equally so for emergency crews as part of a risk assessment.
How much extra training do we want to provide our fire service members? At the moment there are still no special training facilities in Germany. The German interior minister warns of “attacks” on energy infrastructure, and violent action by activists also needs to be taken into consideration. This requires incident planning by fire services. Alternative forms of energy are “closely” linked to this: In terms of emergency response, it makes sense to exploit synergies, for example by including LNG and CNG in hydrogen training courses.
ISO 17840: The First Worldwide Firefighters’ Standard | CTIF – International Association of Fire Services for Safer Citizens through Skilled Firefighters
Petter, F.: First on site: Decision-making training for incident commanders in vehicle fires, internal study, unpublished
200,000 users have downloaded the Euro Rescue app – access to 1400 vehicle Rescue Sheets in 4 languages | CTIF – International Association of Fire Services for Safer Citizens through Skilled Firefighters
Author: Franz Petter, Chief Fire Officer, Hamburg, Germany, FranzPetter@aol.com
Germany’s Climate Change Act of 2021 tasked the country’s transport sector with reducing carbon dioxide equivalent emissions by 85 million metric tons by 2030. The target means approximately halving emissions in 10 years. Around 35 percent of transport emissions originate from commercial vehicles, more than half of which is caused by long-distance transportation. Hydrogen is considered a promising fuel for bringing down carbon dioxide emissions from commercial vehicles used on long journeys. The following article summarizes selected content from a recent study on the state of development and the prospects for hydrogen refueling infrastructure for long-distance commercial vehicles.
Current prototypes and small fleets of hydrogen trucks generally use 350-bar compressed storage technology. This was originally developed for bus applications for local public transportation and therefore is tried and tested and readily available. This storage technology, fitted in existing installation space, enables a range of about 400 kilometers (250 miles) which is sufficient for many applications (e.g., back-to-base modes of operation).
For long-haul trucking, longer ranges of around 1,000 kilometers (620 miles) are desirable. To make this possible within the existing installation space, hydrogen storage technologies with a higher energy density are required. Three alternative hydrogen fuel options form the subject of current discussion: 700-bar compressed hydrogen, subcooled liquid hydrogen (sLH2) and cryogenic compressed hydrogen (CcH2).
Various manufacturers such as Nikola Motor and Toyota have already been trialing the 700-bar technology in pre-series vehicles. It can therefore be assumed that this technology will come into use for long-distance transportation. Due to the early stage of technical development, for example, it is still impossible to estimate at the moment whether one of the other two storage technologies will also penetrate the market.
In terms of realizable refueling quantities and speed, there is little to distinguish the three hydrogen fuel options. In each case, refueling 80 kilograms of hydrogen for a range of 1,000 kilometers (620 miles) can be completed within 10 to 15 minutes (see fig. 1). Nevertheless, these achievable refueling speeds and times are industry estimates which first need to be confirmed in real operation.
Prior to being launched onto the market, all three hydrogen fuel options will need to go through the international standardization process, both for the refueling process and for the refueling couplings. This will ensure the interoperability between vehicles and filling stations of different manufacturers and in different countries. Initial ISO standardization procedures have already begun.
Road tanker, pipeline or on-site electrolysis
There are marked differences in how hydrogen is supplied to a refueling station and to a refueling system itself depending on which particular hydrogen fuel type is used (see fig. 2). In the case of 700-bar compressed hydrogen, the fuel can be delivered to the filling station either in gaseous or liquefied form. If it is provided as a gas, the fuel is supplied to vehicles by means of high-pressure compressors and high-pressure buffers that are operated at pressures of up to 1,000 bar. Hydrogen is dispensed either via overflow filling or via direct compression into the vehicle tanks through booster compressors.
If liquefied hydrogen is delivered, the pressure is raised while in its liquid state by a cryopump. Next, the pre-compressed hydrogen is evaporated and dispensed to the vehicle. The electrical energy requirement for the filling station is much lower for the liquid hydrogen pathway than for the compression of gaseous hydrogen. Even so, the upstream liquefaction of hydrogen is associated with a high level of energy input.
If sLH2 or CcH2 fuel is offered, then liquid hydrogen is the first choice for supplying the filling station. This can be fueled directly into the vehicle from the filling station’s storage tank via a transfer pump or cryopump.
The availability of liquid hydrogen in Europe is currently extremely limited. Across the whole continent, there are three locations with liquefaction capacities which are, however, already used for other purposes. Furthermore, their capacity is insufficient to supply future truck fleets with fuel. This becomes clear if you compare the capacities of today’s liquefiers with the expected capacities of future hydrogen refueling stations.
Today’s hydrogen liquefiers usually have a daily capacity of 5 to 30 metric tons. At Germany’s only liquefaction site, in Leuna, the capacity is, for example, 2 x 5 metric tons a day. In the medium term, the capacities for hydrogen filling stations are anticipated to be between 1 and 8 metric tons a day per station. Different studies assume a hydrogen fuel demand for Germany of 1.2 million to 1.8 million metric tons per annum for the year 2045 which will largely be driven by the demand from long-distance trucking.
It is clearly evident that for this to be achieved the capacity for liquid hydrogen has to be greatly expanded and, if necessary, supplemented by importing liquid hydrogen. This is also the case if the demand for hydrogen fuel is partially covered by the provision of gaseous hydrogen (e.g., for supplying vehicles with 350-bar or 700-bar storage technology).
Figure 3 shows two different layouts of hydrogen refueling stations with a dispensing capacity of more than 2 metric tons a day. The particular components needed vary depending on whether the hydrogen is delivered as a gas or liquid. Both setups require gas supply components, valves, sensors and a process control system.
Falling hydrogen costs
If you look at fuel costs in relation to distance traveled, a diesel price of EUR 1.4 per liter (including taxes) roughly corresponds to a hydrogen fuel price of EUR 5 per kilogram. The meta-evaluation of present studies reveals a decrease in hydrogen fuel costs of more than EUR 10 per kilogram today to around EUR 4 to EUR 6 per kilogram (excluding taxes). Depending on the study, this cost level is expected to be reached by 2030 or in the years thereafter. The available cost data in these studies relates almost exclusively to 700-bar fuel. Cost data on sLH2 and CcH2 is only available to a very limited degree but indicates a comparable cost level.
Achieving these decreases in cost requires savings to be gained through mass production and scaling along the entire hydrogen delivery chain, from hydrogen production to the refueling system. Also the entire delivery infrastructure needs to be well utilized. In addition, optimized supply and logistics concepts must be put in place. In order for cost parity to be reached between diesel and hydrogen fuel for the end user in terms of distance traveled, differentiated charges and/or taxes must be levied on both fuels.
The energy tax for diesel in Germany is currently EUR 0.47 per liter. By 2025 a carbon dioxide levy of around EUR 0.15 per liter will be added on top of this. These charges indicate that mile-for-mile cost parity could be achievable provided that hydrogen for fuel cell vehicles remains exempt from taxes. If a tax is levied on hydrogen fuel in the future, the charges on diesel would also have to be increased in parallel so that cost parity between the fuels is maintained.
For fuel cell vehicles to become a means of long-distance transportation in the years ahead beyond subsidized projects, the total transport costs must not exceed the level of conventional trucks with diesel engines. The fuel costs considered in the study are only a single element in this. Lowering the costs for vehicles or applying appropriate carbon dioxide charges/emissions-related road charges or energy taxes could together ensure overall cost parity.
About the study
The study was commissioned by e-mobil BW and was published by the H2BW platform which amalgamates activities relating to hydrogen and fuel cell technology in the German state of Baden-Württemberg. The authors are the company Ludwig-Bölkow-Systemtechnik and the Institute of Vehicle Concepts at the German Aerospace Center. The study investigated the current state of development and the prospects for hydrogen refueling infrastructure for commercial vehicles used in long-distance transportation.
Authors: Jan Zerhusen, Ludwig-Bölkow-Systemtechnik GmbH, Ottobrunn, Munich, Germany, Jan.Zerhusen@LBST.de
Mathias Böhm, Institute of Vehicle Concepts at the German Aerospace Center, Berlin, Germany, Mathias.Boehm@dlr.de
Interview with Lorenz Jung, speaker for H2 Mobility Deutschland
For years, H2 Mobility has been working on the establishment and expansion of the infrastructure for hydrogen refueling stations. Despite the ambitiously set targets, the 100-station mark has still not been exceeded. Although more new H2 refueling stations are being built and opened, old ones are being dismantled at the same rate. Six and a half years after its founding, H2 Mobility Deutschland executed a change of leadership in April 2023: Nikolas Iwan, who alone has managed the company since the beginning, moved to the advisory board, where he is to take over as chairman in the course of the year. Iwan was replaced by a team of three managing directors. H2-international talked to CCO and spokesman Lorenz Jung about the reasons for this restructuring as well as the further goals of the company.
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H2-international: Congratulations, belatedly, on your promotion and your new position at H2 Mobility Deutschland GmbH & Co. KG. How does it feel to be up in front?
Jung: Very good! But you also notice very quickly that the wind blows a bit stronger there.
You have been with H2 Mobility virtually since the founding and have worked your way up quickly. Initially, you were the team leader for the network construction, 2021 you were Chief Projects Officer (CPO) and 2022 Chief Commercial Officer (CCO). Now, you are also managing director and speaker for the company to the outside world. Did the appointment as managing director come as a surprise, or were you kind of working towards that?
The decision of Nikolas Iwan really surprised us. The management team – Frank Fronzke, Martin Jüngel and I – came quickly to the agreement, however, that we wanted to take over the management together.
Before your time at H2 Mobility, you worked at Siemens Energy and Linde. In what ways can you bring your experiences from then into your work today?
It helps me a lot, in fact, that I was able to gather a lot of previous experience and knowledge in plant engineering, in the gas industry, and in the power generation and power transmission sector. Because H2 Mobility at its core is not only about the transformation of transport; it is part of the greater energy transformation. So it helps to understand how large amounts of energy can be transported and stored, and what advantages and disadvantages molecules have over electrons.
You just mentioned that you share the management of the company: Frank Fronzke was at Praxair and has been Chief Operation Officer (COO) since 2016. Martin Jüngel changed over from Air Liquide to H2 Mobility as Chief Financial Officer (CFO) in 2020. Neither of them has really made a public appearance so far. What else can you tell us about them both?
I am very happy and grateful to share the management with these two colleagues. Both are absolute professionals in their fields of expertise. The three of us are united above all by the desire to lead the topic of hydrogen in mobility to success with our business. Frank Fronzke, our COO, is a brilliant engineer. He with the operations team in recent years has managed to raise the availability and reliability of our hydrogen refueling station network to a very high level, despite a number of challenges. Thanks to the competition that is now emerging, it will soon be possible to properly appreciate it. Frank is distinguished by the fact that with a great deal of creativity, ambition and foresight, he finds a solution to every technical problem, no matter how complicated.
Martin Jüngel, as CFO, is the mastermind behind our figures. He is not only responsible for the company’s finances; he is also responsible for accounting, monitoring and IT, purchasing and public funding. Martin combines the bird’s eye view and the long view, and can impart these very well. With acumen and care, he thus clears all commercial hurdles out of the way.
What will your division of tasks look like?
In principle, everyone is retaining responsibility for their previous task area. Martin additionally is assuming the role of speaker to our shareholders. With a colorful and not so small circle of partners, a big task. Frank concentrates completely on the technical topics. That is why we have now also located the project handling under him. As spokesman for the management board, I take care of the representation of H2 Mobility to the world, and additionally am responsible for sales, customers, and product and project development as well as digital solutions and human resources.
Fronzke, Jung, Iwan, Jüngel (from left to right)
Can you tell us something about what role Nikolas Iwan will take on in the future? On his LinkedIn profile, it says “in transition.” It is already clear where he will switch?
For us, he remains as Chairman of the Board. But since he won’t officially begin that role until the summer, “in transition” is an appropriate designation.
Let’s move from the people over to the material: What is the current status of the development of an H2 refueling infrastructure in Germany?
As you can gather from the press, increasingly more companies are now entering the market. A very good sign. Until the first hydrogen fueling stations materialize from the announcements, however, – so are available for customers – requires time, as we know from experience.
Why has there been no progress in this for years now? As a three-man team, will you now pursue a different strategy than the last? If yes, which?
When judging by the number of units, this impression may arise. Actually, however, the conditions have changed. When H2 Mobility got started, we were preparing for an H2 passenger car market. The idea was to quickly build many, small stations. Now, the commercial vehicle market is developing much faster than expected. Larger vehicles with greater demand must now be supplied at fewer but more centralized and robust stations, in some cases using a different technology. Accordingly, we are not simply expanding the network further, but are upgrading where H2 commercial vehicles have been announced. Furthermore, our new stations, with a capacity up to 15 times greater, are a different dimension.
In February 2023, your press release stated that this change in managing director represented the completion of a fundamental realignment. This included, among other things, the addition of the eighth shareholder and partner in the meantime, Hy24. What did their entry mean for H2 Mobility?
The closing of the last financing round and the joining of Hy24 actually marks an important strategic shift: Our goal is to operate our network of hydrogen fueling stations economically and therefore sustainably. After the first few years, when the focus was primarily on proving the technical feasibility, this is a different direction. This also means that we are concentrating on high-volume commercial vehicle fueling stations with gaseous hydrogen. By the way: Hy24 is the first financial investor to invest only in H2 projects. And the fact that we were the first company to be selected in this is a big credit of trust. It also shows that hydrogen in mobility is an important component of the transport and energy transitions.
Were there any other restructuring measures?
Other than the ones mentioned above, no.
What do you see is the role of other players who are now also increasingly looking to install H2 refueling stations? Are you continuing with your collaborative approach until now or do you see GP Joule, Maximator, and so on, as competitors?
We are delighted that other companies are now risking the task. It shows that the market ramp-up is now beginning. Wherever possible, we like to work together with others. Competition additionally increases the number of offers to customers and gives us the chance to measure ourselves against the products of the competition. I am very excited about the first evaluations and the direct comparison.
Last question: How large is the share of green hydrogen at your fueling stations today and how do you plan to reach one hundred percent by 2028?
Let me first say that it is good and important that there is finally clarity on what is meant by green hydrogen with the passing of the corresponding EU delegated act. The proportion of green hydrogen still varies greatly depending on the sources in the vicinity of our hydrogen fueling stations. Until 2028 is no longer a lot of time. Many of the green hydrogen sources are just now getting established. With the demand we receive, we can be a support in this. It is therefore mutually beneficial to conclude offtake agreements with us. Since we aim to run our network exclusively on green hydrogen in the medium term, we’ve been working on this issue for some time now. We are talking to potential but also our existing suppliers, and are replacing old supply contracts, one at a time, with new ones. Here, the purchase price is – still – sometimes a major challenge. With the THG-Quote trading, however, the proper tool to lower H2 costs has been set.
Thank you very much for the interview.
Hy24
In March 2022, H2 Mobility Deutschland carried out a capital increase of 110 million euros, in which, in addition to the old industrial shareholders Air Liquide, Daimler Truck, Hyundai, Linde, OMV, Shell and TotalEnergies, Hy24 also participated. Hy24 is a 50/50 joint venture between Ardian, which is a world-leading private investment house, and FiveT Hydrogen, an investment platform for clean hydrogen. Together, they contributed 70 million euros to the capital increase. The money is to be used for the construction of new hydrogen stations. Target is 300 stations by 2030.
Hy24 acts as the fund manager for the Clean H2 Infra Fund, the – according to its own statement – world’s largest investment platform for clean hydrogen. This fund was established on the initiative of Air Liquide, TotalEnergies and VINCI Concessions as well as Plug Power, Chart Industries and Baker Hughes. Additionally participating are industrial anchor partners like LOTTE Chemical, Snam, Enagás and GRTgaz, and financial anchor investors such as AXA, CCR and JBIC, as well as other investors (Groupe ADP, Ballard, EDF, Schaeffler). The fund seeks a volume of 1.5 billion euros.
Pierre-Étienne Franc, CEO of Hy24 and Manager of Clean H2 Infra Fund S.L.P., said: “Hydrogen is a crucial part of the European Union’s ‘Fit for 55’ plans that were underlined again by the recent REPowerEU proposal. Our investment on the part of the pioneers also supports the European Commission’s efforts to implement the Alternative Fuels Infrastructure Regulation (AFIR) in order to significantly expand the European hydrogen refueling station network. This fits with our endeavor to act as a catalyst for a large-scale hydrogen economy – across the entire chain of systems and value creation, to reach a real change for our planet.”
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