The Year Of Hydrogen

Australia | Dec 05 2022

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2022 has seen a sudden burst of listed hydrogen pure-plays, largely out of nowhere. Tim Boreham investigates.

-Hydrogen can be harnessed in many ways
-Sudden burst of listed stocks
-Energy intensity the key

By Tim Boreham

Whether in grey, blue, green and even turquoise form, hydrogen this year emerged as a compelling investment theme and 2023 looks to be no different for the first element on the periodic table.

Having been bereft of pure-play ASX-listed hydrogen exposures, investors are becoming spoilt for choice as more ventures seek to list.

To date, the emphasis has been on ‘green’ hydrogen, which refers to producing the gas by splitting water atoms with electrolysis, using renewable energy.

Some hydrogen developers have turned to solving the knock-on issues of renewables adoption including storage and transportation, battery materials recycling and improved battery performance.

One missing element (excuse the pun) of the hydrogen debate is the prospect of tapping naturally-produced hydrogen to obviate the need for any energy-intensive extraction and separation.

Your columnist professes to be worldly-wise, but had no idea that hydrogen occurred in natural form until he read about Gold Hydrogen’s upcoming IPO plans.

Chaired by former federal pollie Alexander Downer – and no hot air jokes please – Gold Hydrogen is mulling a $20 million raising and ASX listing to support its quest to explore for naturally-occurring hydrogen in South Australia.

Inspired by historical records showing incidence of the gas, Gold Hydrogen has 7820 square kilometres of granted ground on the York Peninsula and Kangaroo Island and has applied for another 67,512 sqkm.

The company has “independently and conservatively assessed” a potential 1.3 billion kilograms of the stuff. So, with an estimated production price of $1 a kilogram relative to a current global price of around $17/kg, Golden Hydrogen could be cooking with, er, gas.

The company plans to list in mid-January with an indicative market cap of $70 million.

The science of electrolysis might be proven, but commercialisation challenges include transporting and storing the volatile gas. There’s a dearth of hydrogen pipelines, while compressed hydrogen is hard to handle and has low energy density.

Rio Tinto’s ((RIO)) chief scientist Nigel Steward this week asserted that hydrogen remained “prohibitively expensive” and it didn’t make much sense to ship it (both cost and carbon emissions wise).

For IPO candidate Electriq Global, the solution lies with a powderised form of hydrogen which – like laundry powder – can be stored in a box until required with an indefinite ‘shelf life’.

According to the Israel-based Electriq, hydrogen powder is inert (there’s no risk of an explosion) and has an energy density more than two times that of liquid organic hydrogen and around five times that of compressed hydrogen.

“Hydrogen is well known in compressed or liquefied from, however when migrating hydrogen into fuel there are new challenges,” says Electriq executive chairman Baruch Halpert.

Electriq’s patented generation process involves bonding hydrogen with another material.

The hydrogen is produced in situ from a generator about the size of washing machine. On usage, half of the hydrogen drives from the powder and the other half from released water.

“That means when you deliver one kilogram of our powder, you actually get two kilograms,” Baruch says. “It’s literally a solution in a box.”

Electriq has released the world’s first generator run on powdered hydrogen, called Joshua. With an 80-kilowatt hour capacity, the unit is powering cranes on a Dutch construction site.

Baruch envisages the powder as a replacement for diesel generators at remote sites (such as mines) with marine applications as well (including submarines).

“Just as fossil fuels come in different forms, hydrogen will be the same,” he says.

The rush to develop upstream hydrogen facilities has also overshadowed the need to ship the material safely and economically.

Renamed from Global Energy Ventures, the ASX-listed Provaris Energy ((PV1)) initially pursued natural gas shipping but is now eyeing the development of two bespoke hydrogen gas vessels (called GH2 carriers).

With a capacity of 26,000 and 120,000 cubic metres, the ships have been approved by the American Bureau of Shipping, with construction slated for mid-2023.

Provaris’s patented method involves integrating two 130-metre-long tanks into the vessels, built with high-carbon steel to avoid the risk of the highly compressed gas leaking.

Provaris managing director Martin Carolan notes the common shipping method is by way of ammonia or liquefaction (similar to LNG). But the gas needs to be cooled to ultra-low temperatures and then reconverted to gas on arrival.

“There’s a lot of energy and capital being spent to convert the product into a much higher density liquid, purely to get the shipping costs down,” Carolan says.

The proposed fleet is part of a broader joint venture project based on the Tiwi Islands, which would integrate a 2.8-gigawatt solar farm and with a 30-kilometre transmission line to an existing port, where an electrolyser would be built.

A prefeasibility (design and concept) study has costed the venture at $US4.5-5.2bn based on 100,000 tonnes per annum of green hydrogen exports.

Carolan notes that only two per cent of the gas would be lost in the compression, storage and export stages, compared with up to 35 per cent if the hydrogen is transported in the form of ammonia under current methods.

“It’s a simply way of delivering a pure gaseous product and in the molecule the customers typically want,” he says.

Carolan says the ships initially could be used for other third-party hydrogen ventures, ahead of the Tiwi Islands project.

While a more efficient shipping method would help, producing ‘green’ hydrogen still requires intense energy input.

To ameliorate this age-old problem, the Adelaide based, ASX-listed Sparc Technologies ((SPN)) is furthering a novel technology to produce hydrogen from an electricity-free process called photocatalytic water splitting (PWS).

The work is by way of the Sparc Hydrogen joint venture, with Sparc Technologies in partnership with the University of Adelaide and Andrew Forrest’s Fortescue Future Industries.

Known about for five decades but eluding commercialisation, PWS uses the sun’s radiation and a highly-engineered photocatalyst material to split water into hydrogen and oxygen.

Because it obviates the need for electrolysers – an expensive component of conventional green hydrogen production – the output is expected to be very competitively priced.

The tech is based on a solar reactor developed by the University of Adelaide and Flinders University.

The bourse’s original hydrogen pure-play, Hazer ((HZR)) is beavering away on its plans to produce clean hydrogen and graphitic carbon from methane.

Normally, methane-derived hydrogen is expensive to produce, with high carbon emissions. That’s why it’s known as ‘grey’ methane.

Hazer’s ‘turquoise’ iteration, methane pyrolysis, adds iron ore as a catalyst to produce the high-value graphitic carbon, rather than carbon in its feared planet-warming gaseous form.

Hazer has two pilot projects on the go, in Sydney and Perth’s Kwinana and plans to start a 100 tonnes per annum, biogas powered commercial demo plant in Perth in 2023

Beyond that, Hazer has a memorandum of understanding (MOU) with Canadian energy giants Suncor Energy and Fortis Inc to build a 2500 tpa plant in Canada’s British Colombia province.

Hazer also inked a vague but promising MOU with Japan’s Mitsui & Co to explore potential markets for the company’s tech.

Hazer chief Glenn Corrie envisages a leveraged business model by which the company out-licenses its patented to know-how to other parties.

This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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