MISSISSAUGA, Ont.—An Ontario company that has grown to become one of the world’s largest producers of hydrogen for industrial, transportation, utility and other uses believes it has come up with a solution for storing renewable power—such as wind or solar—and converting it into fuel, power or heat.
Hydrogenics Corporation’s power-to-gas technology can convert renewable energy to hydrogen, which is used worldwide in industrial applications and is growing in use as a clean alternative to fossil fuels.
Hydrogenics specializes in the design and manufacture of hydrogen generators and fuel cells based on water electrolysis technology and proton exchange membrane (PEM) technology. The company, which employs approximately 150 people, is one of the few hydrogen and fuel cell companies that is profitable. It reported $31.8 million in revenue in 2012, an increase of $8 million over the previous year, while reporting a gross profit of $5.24 million.
Publicly listed since 1995 (on the TSX and the NASDAQ exchange in the United States), it has applied for or has been granted 145 different patents, and more than 2,000 of its products are in use in 100 different countries.
It has some impressive investors, with Calgary-based pipeline industry giant Enbridge Inc., which has a large power division, holding a 13 per cent stake in the firm and working with it to develop a power-to-gas project in Canada.
By combining Hydrogenics’ expertise in water electro¬lysis with Enbridge’s expertise in natural gas pipeline networks, they can establish “a bridge between the electricity and natural gas networks to bring seasonal storage capabilities to electricity networks,” Chuck Szmurlo, Enbridge’s vice-president of alternative and emerging technology, said in announcing the investment in Hydrogenics.
Hydrogenics also signed a strategic agreement with CommScope Inc., a global leader in developing infrastructure for communications networks, to jointly build backup power systems. CommScope now owns about 25 per cent of Hydrogenics’ shares.
The holy grail of the hydrogen economy, particularly the use of hydrogen as a transportation fuel, has long been viewed as a way to shift away from a world dominated by petroleum use for transportation. Hydrogen releases no pollutants, such as particulate matter and CO2. When consumed in combination with oxygen in a fuel cell, it produces electricity and emits only water. It is also more efficient than internal combustion engines, using about 60 per cent of the energy available compared to less than 20 per cent.
However, as highlighted in a recent report by the U.S. Department of Energy, hydrogen-powered fuel cell vehicles are unlikely to reach critical scale in the near term, since it is costly to produce hydrogen and fuel cells, there is no fuelling infrastructure in place and large amounts of hydrogen would need to be stored on board a vehicle to use it as fuel.
Nevertheless, it is gaining traction as a fuel for fleet vehicles, such as buses and delivery vans, which have the capacity to carry large volumes and return frequently to a base (although low-cost and widely available natural gas is a more likely alternative). It is also gaining momentum as a source of backup power, as a replacement for diesel-powered generators, as a source of district power for single buildings or clusters of buildings and as a portable power source for boats or RVs.
Hydrogen has long been used for upgrading heavy oil and bitumen and as a feedstock in the petrochemical industry. Hydrogenics estimates the worldwide market for hydrogen is now worth $5 billion annually.
Canada has long been the centre of global hydrogen and fuel cell development, with an estimated 2,000 Canadians employed in the sector, according to the Vancouver-based Canadian Hydrogen and Fuel Cell Association (CHFCA). The CHFCA points out that hydrogen’s greatest merit is its flexibility, since it can be produced from fossil fuels, from renewables, at centralized manufacturing plants (from which it is then distributed by pipeline or tanker) or through on-site production.
Hydrogenics, which through its electrolyser business has been involved in the hydrogen sector for 60 years, is involved in several areas of the hydrogen market, including its OnSite Generation div¬ision—which is based in Oevel, Belgium, and generated $27.5 million in revenue in 2012—and its Power Systems division—which is based in Mississauga and Gladbeck, Germany, and generated $4.3 million in revenue in 2012.
Its HySTAT on-site generating units use water electrolysis technology, which involves the decomposition of water into oxygen and hydrogen gas by passing an electric current through a liquid electrolyte. The resulting hydrogen gas is captured and used for industrial gas and hydrogen-fuelling applications and is used to store renewable and surplus energy in the form of hydrogen gas.
Hydrogenics estimates the worldwide market for on-site generation equipment is worth as much as $200 million. It sells its technology now to merchant gas companies, such as Air Liquide and Linde Industrial Gases, and other end-users needing high-purity hydrogen for industrial purposes.
The company is also targeting the backup power market, aiming mostly at telecom and data centre installations, a market worth an estimated $6 billion. Its HyPM fuel cell products rely on a technology that transforms chemical energy created during the electrochem¬ical reaction of hydrogen and oxygen into electrical energy. The systems, which compete with diesel backup batteries and lead-acid batteries, offer more reliability and lower operational costs, according to Hydrogenics.
The company also supplies hydrogen-fuelling stations, having recently landed a large contract with Royal Dutch Shell plc’s hydrogen division. It supplies equipment for over 45 hydrogen-fuelling stations globally.
RENEWABLE POWER REPOSITORY
However, Hydrogenics believes much of its future growth will revolve around its power-to-gas technology, which it describes as a “three-step process of integrating renewable sources of generation, converting surplus electricity to hydrogen or renewable gas and leveraging the existing natural gas infrastructure for seasonal or longer-term storage.”
The technology holds out the hope of overcoming one of the chief barriers in the use of more renewable power, such as wind or solar, which is the intermittent nature of those sources. Using existing natural gas storage infrastructure, which contains a vast amount of storage cap¬acity, renewable power can be stored. It’s a market potentially worth billions of dollars, and the company says it is working with “leading utilities worldwide” on demonstration projects, setting the stage for commercial projects.
Wido Westbroek, vice-president of sales and marketing, says the power-to-gas approach allows it to “convert multi-megawatts of renewable electricity to hydrogen and then use it in multiple applications.”
Those applications include commingling the hydrogen with existing natural gas, with it flowing to end-users to generate electricity or heat; using the hydrogen as a transportation fuel; using it for large-scale industrial processes such as petroleum refining; or using biogas methanation, where hydrogen is combined with CO2 to create synthetic natural gas.
“In a nutshell, Hydrogenics’ power-to-gas solution converts very large amounts of renewable generation, when it is not needed, into renewable power, fuel or heat where and when it is needed,” says Westbroek. “Shifting power across seasons and vast geographic distances through existing pipelines at multi-megawatt levels is something no other energy storage solution can do.”
The company, like many hydrogen-focused firms, has not been without its problems. It faced being delisted from the NASDAQ in 2012 (the company has since complied with the requirements) and dealt with the departure of some senior executives. However, its power-to-gas technology is gaining traction, particularly in Europe.
In 2012, Hydrogenics announced it had signed an agreement with a European consortium of utilities and technology firms to develop the INGRID project, a 39-megawatt, grid-connected, renewable energy storage project in the Puglia region of Italy, where there is now 3,500 megawatts of solar, wind and biomass energy in place. It has announced a number of other deals and has since started operating a series of projects that will convert renewable power into hydrogen.
In August, Hydrogenics and partner E.ON SE, a large European utility, as well as a consortium of 100 local utilities, inaugurated commercial operations at what Hydrogenics calls the largest power-to-gas facility in the world in Falkenhagen, Germany. The plant uses surplus wind power and Hydrogenics’ equipment to transform water into hydrogen, which is injected into a gas pipeline. The facility has a capacity of two megawatts and produces up to 360 cubic metres of hydrogen per hour.
In April, Hydrogenics announced a one-megawatt hydrogen energy storage system located near Hamburg, Germany, also with E.ON as project partner, using excess power generated from renewable energy, primarily wind. The system allows the produced hydrogen to be stored in large quantities over long periods of time within the country’s natural gas infrastructure. It incorporates PEM technology, featuring the world’s largest PEM electrolyzer stack. The company says the PEM technology “will serve as the building block for future multi-megawatt applications.”
Rob Harvey, director of energy storage for Hydrogenics and a veteran of the renewable energy sector, says the scale of power-to-gas technology offered by Hydrogenics and others is what will lead to its adoption. “All the stars are in place for the adoption of power-to-gas,” he says.
It is most likely to be adopted first in countries like Germany, where over 20 per cent of the power being generated comes from renewable sources. Other countries in Europe, such as Spain and Denmark, have similar levels. Because there is so much renewable power in those countries, “you need large storage systems,” such as natural gas networks, Harvey says.
In Europe, Hydrogenics has eight projects that are either in operation, being built or are planned. Overall, he says there are 30 power-to-gas projects being proposed for Europe, many of them in the North Sea area, where offshore wind farms are huge power producers, and the offshore natural gas infrastructure is in place. Hydrogenics is part of a consortium of nine companies proposing projects in the North Sea.
In Ontario, which is rapidly ramping up its renewable power production, as well as in U.S. states like California, the approach also makes great sense, he says. That’s why Enbridge, already an owner of renewable-power facilities in Ontario, is interested in power-to-gas. He says Hydrogenics is also in talks with partners to develop systems in California.
The company’s PEM technology, ideal for large-scale projects, is easily scalable, which allows for the future development of multi-megawatt systems, Harvey says. It is estimated that a 100-megawatt power-to-gas project could provide the same amount of renewable electricity as a new 55-¬megawatt wind farm, with a comparable capital investment of about $125 million. However, given hydrogen’s flexibility and the system’s ability to store renewable power, the company argues that power-to-gas is a much better investment since its technology would allow renewable power to be used when it is needed and in a variety of forms.
Speaking recently to a business audience in Sarnia, Ont., where a handful of refineries are located, Harvey noted that the integration of its power-to-gas technology can help make fossil fuels more environmentally acceptable and sustainable. “What if we used surplus renewables in southwestern Ontario to produce green hydrogen for oilsands refining in Sarnia?” he asked.