Hydrogen Technology Developers at Cutting Edge

Hydrogen as an alternative renewable energy source as the world economy transitions away from climate-threatening fossil fuels.  It is vital investors should be well versed in all the developers attempting to resolve the problems associated with producing and deploying hydrogen to end-users.  The last three posts have highlighted hydrogen developers with publicly trade stock.  Now we turn to a handful of privately held companies in the early stages of technology development.

Early-stage or privately-held investment is not for everyone.  Far more difficult to sell than publicly traded shares, securities issued by private concerns carry considerable liquidity risk.  When it comes around to take profits (or cut losses) it takes time to find qualified and interested buyers.  Furthermore, there may be even fewer financial data available for due diligence as the financial reports are subject to the peculiarities of each management team’s presentation.  Individual investors can be at disadvantage relative to institutions that have the staff for ferreting out relevant information.  Most early-stage companies do not have the cash flow to pay interest on loans and thus favor raising capital through issuances of equity.  Taking an equity position may be restricted to qualified investors who must meet income and asset thresholds.

For the risk takers, following are five early-stage companies with emerging hydrogen fuel solutions.   

Fuel cells is an electrochemical chamber that converts the chemical energy of a fuel into electricity.  California-based HyPoint, Inc. is developing a new hydrogen fuel cell that offers some advantages over systems already on the market.  It features turbo air-cooling that uses compressed air for both cooling and oxygen supply.  This means the HyPoint fuel cell system has a smaller footprint and lower weight than many of the conventional hydrogen fuel cells.  To make the system work efficiently HyPoint engineers are using a high temperature member instead of a low-temp membrane that increases cooling efficiency by three times over. 

HyPoint is going after the aviation and air mobility market segments, where weight is a particular problem.  Fixed wing aircraft as well as the new electrical vertical takeoff craft and landing vehicles are two possible use cases.  Think air taxis.  Perhaps a more important application could be in logistic drones.

Piasecki Aircraft Corporation, a developer of experimental aircraft and unmanned air vehicles, has been impressed enough with HyPoint’s design to form a joint development agreement that is valued at $6.5 million.   The duo wants to create a system that has four times the energy density of existing lithium-ion batteries and at least double the power of existing hydrogen fuel cell systems.  Piasecki intends to use the resulting system in its manned PA-890 helicopter so that it can be the first to bring a hydrogen-powered rotor craft to market.

HyPoint is on the hook to deliver five full-scale, 650 kilowatt hydrogren fuel systems for testing by Piasecki.  Investors can watch for news from HyPoint on its progress in making that delivery.

Hydrogen production is the focus of Enapter (H20:  F) , which is working on an electrolyser to produce green hydrogen.  An electrolyser uses electricity to split water into hydrogen and oxygen and represents a clean production method than the conventional natural gas reforming process. 

Enapter uses an anion-exchange membrane it is design with the objective of lowering both capital and operating cost.  This differs from other electrolysers that use proton-exchange membranes or PEM that use a highly acidic and corrosive electrolyte that requires costly titanium components.  Enapters anion-exchange membrane uses an electrolyte composed of 99% water and gets along well with lower-cost steel components.  The company claims its system will cost about $500 per kilowatt to operate at scale compared to $800 per kilowatt for PEM units.

Enapter’s design is compact and stackable to make it usable for small footprint applications such as at a laboratory or in scaled applications such as a refueling station or large industrial facility.  Each Enapter electrolyser produces hydrogen at the rate of 1.1 kilograms per day.  The company claims customers in forty countries around the world.

Enapter leadership is going for the big brass ‘hydrogen’ ring with a new production facility in Germany.  The company is currently producing about 2.5 megawatts of electrolysers per year at its current facility, but the new facility will allow a scale-up to as much as 300-megawatt capacity.  The group broke ground in September 2021, on an 83,000 square meter plant that will have the capacity to product 10,000 electrolysers a month.

Enapter is a public company listed on the Frankfurt Stock Exchange.  However, the majority of stock is owned by the company’s founder, leaving it more like a privately-held entity than most public companies. 

Power-up Energy Technology wants to bring hydrogen power to the mobile market for backup power and off-grid applications.  Their patented back-up generator gives users bragging rights to using zero-emissions power in sensitive locations.  Power-up uses conventional proton-exchange membranes in its fuel cells, but has developed a proprietary catalyst derived from industrial biowaste and carbon dioxide. 

In August 2021, Power-up announced it had been selected by the European Space Agency to develop a one-kilowatt hydrogen fuel cells for use on lunar and Mars space missions.  The cathode in a conventional hydrogen fuel cell is typically open and pull oxygen from the air.  Since there is no oxygen available in space missions Power-up will need to develop a closed cathode. 

   

Washington-based HyTech Power wants to make internal combustion systems more efficient with hydrogen power augmentation.  The company has designed a low-pressure electrolysis cell that can deliver hydrogen gas directly to intake ports of the internal combustion engine.  It can be used in engines of both on- and off-road vehicles.  HyTech’s retrofit systems are composed of the electrolyser, a timing controller to communicate with the engine electronics, and a port injection system to deliver the hydrogen gas in the right quantity to the right location. 

HyTech engineers estimate their system can reduce operating costs by as much as 20%.  That savings rate could be meaningful for heavy fuel users such as trucking companies and heavy equipment operators.  HyTech has deployed a sales team, but keeps its customer relationships, if it has any, close to its vest.

Norway’s HYON promises a ‘blue’ economy with its hydrogen bunkering solutions for the maritime market.  Ocean-going ships have particular problems with fuel, so bunkering service providers supply fuel and assist with shipboard logistics in loading fuel and distributing it among tanks on-board. 

It is no surprise that the children of the ocean wandering Norsemen would be at the forefront of hydrogen applications in the maritime sector.  In June 2021, Saga Pure ASA (SAGA:  OSE) acquired 29% of HYON.  Through a subsequent deal with Nel ASA (NEL:  OI or NLLSF:  OTC) and Norwegian Hydrogen AS, the two were also each left with 29% positions in the company.  The balance of the outstanding shares or 13% remain in the hands of key employees. 

Valuation of HYON at the time of Saga’s acquisition and the terms of the Nel and Norwegian Hydrogen deal were not disclosed.  The company has already expressed an intention to expand with hydrogen bunkering services for harbors.  Investors can watch for news of development milestone and success with market penetration.  Expansion could lead to some sort of value step-up in the future at which time, Saga or on the other others may want to monetize their investment in the public equity market.

 

 

 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.