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Can you give us some basic background on Verdagy and what it does?
yes. The basic background is that Verdagy is a designer and manufacturer of green hydrogen and electrolyzers. The background to this is that in 2021 we spun out from another company, and in May 2021 we started developing membrane electrolytic cell technology for green hydrogen production.
What is the current state of the green hydrogen market and how do you see it evolving?
We see hundreds and hundreds of gigawatts of enthusiastic project announcements and demand announced worldwide. The enthusiasm is huge and the momentum and tailwinds in the industry are better than any industry I’ve ever seen. , is the reality of the day. The question is how quickly a product that can meet this pent-up demand will hit the market. That’s the gap between supply and demand today, and it’s what Verdagy is trying to address as it enters the market.
One of the main issues at the moment is the cost of producing green hydrogen. How can costs be reduced and over what period of time?
It starts and stops at the actual input power you are using. Given the continued massive expansion of the wind and solar industries, deflationary cycles will drive up input energy costs, despite challenges such as the wartime environment. Otherwise, the cost of both wind and solar, as well as electricity storage, has been reduced across the board in a renewable environment, which has actually helped reduce the power of input raw materials for electrolysis. Next is the actual equipment needed to do the electrolysis. This also needs to reduce costs and we are on the verge of introducing a very low capital investment solution. It takes the input power mentioned intermittent, wind power and some complementary storage and transforms it at low cost. Equipment that provides the capital investment base, high capacity, and economics needed to make migration a reality.
Tell us about the large-scale electrolysers Verdagy is developing and how they can make a difference in cost and scale-up
First and foremost, we started with the lesson that given what we’re doing, scalability is going to be the most necessary thing, one is to lower the cost of equipment. Second, the product itself can be rapidly scaled to gigascale. So, taking it one by one, our approach addresses the ability to couple with renewable energy and operates at high current densities with a wide dynamic range, offering highly scalable Lego bricks to build. It is a very large electrochemical cell that That big electrochemical cell would require 1600 cells to make a 200 megawatt power plant. Given its size, this is a very compelling value proposition. So 200 megawatts is more or less equivalent to 80 tonnes of hydrogen production per day. Given this very large electrochemical cell operating at high current densities with this wide dynamic range, it can be combined with renewable energy. And now you can imagine what it would take to manufacture 1600 cells. For example, competing technologies would require the production of tens or hundreds of thousands of membrane electrode assemblies. These started to expand very quickly, as did the factory footprint. We need to address the giga-scale market.
Tell us about eDynamic. What makes us different from our competitors?
This is a very large electrochemical cell, a very large cell of 3 square meters, with a membrane that allows for a very responsive electrochemical cell. So let’s say a turndown ratio of 20:1. This means that operating conditions can be changed when energy prices peak and again when energy prices are most favorable. This allows you to increase or limit the load. The load augmentation part is novel and it is made possible by the high current density cap. When energy prices are low, we increase factory utilization to produce and increase productivity. When energy prices are high, switch to efficiency to get the most out of the power you get out of it. Second, the very large electrochemical cell with membrane and dynamic responsiveness allow direct coupling with power purchase agreements or solar and wind renewables. Take all the intermittence and make green hydrogen and have a steady state duty cycle on the output side. So you can normalize how you get intermittent resources and electrolyze them, and get a steady output on the other side if it’s a coupling use case.
I’ve seen Verdagy claim that the electrolyser they’re building can achieve “the lowest CapEx in the industry, and the lowest H2 production cost when combined with renewables”, but the rough numbers and Please give me a comparison.
We have a roadmap for improvement over the next decade, and more innovation will come to this area. Thanks to our approach, we need many innovations that can continue to reduce costs even further. It’s the capital expenditure aspect, but it’s the cost level. Of course, we want to be an ongoing concern, so that’s a different story, because we want prices, not costs. There are all indications that it could drop significantly below $2 per. And now you’re starting to enter the zone where you’re fighting gray hydrogen head-on.
Verdagy is apparently preparing to begin commercial operation later this year. Perhaps this will start in the US. Is the company targeting markets outside the US?
absolutely. So the European hydrogen backbone is very attractive to us, with the existing hydrogen backbone infrastructure, with the roadmap for expansion, with some additional cooperation agreements announced in regions like Iberia. Let’s just say there are. These are all very good target locations. Of course, there is a lot of back and forth with governments about local production, local incentives, and the nature of it, so we need to be as careful and thoughtful as any other country comes to the United States. For IRA incentives, we want to do the same for EU incentives, and we want to do that carefully with our partners.
In which areas is the hydrogen produced primarily expected to be used?
I think petrochemicals, industrial chemicals, and steel are very big upfront markets. These three industry sectors alone have enough potential demand to drive the green hydrogen business for decades. It literally took 50 years to significantly decarbonize these three industries with green hydrogen.
Where do you see Verdagy in 10 years?
We want to be a highly capable producer and innovator of green electrolysis equipment, services and production assets. So, if things evolve like they do in other industries, I think we’ll see a hybrid business model. If you are a really good equipment manufacturer or innovator, you can also participate in the service business. Equipment manufacturers have also become producers, and now they can produce hydrogen themselves as an asset, like solar power generation entering the energy business. As a startup, it’s a bit premature to say that one day we’ll be able to manufacture hydrogen and sell it as a service, but he’s totally within reach 10 years from now.
Anything else I haven’t mentioned or want to add?
Yeah, I think there are some very interesting things to see as the market evolves. Let’s say you join a cluster that has what they call promiscuous pipeline access. So they are starting to be able to attract electrolyser companies, service companies and producers. Then you can take a pipeline run by someone else, align supply, and do hub pricing as demand offtake. So it’s starting to become a very interesting replicable model. Wherever these clusters form, we are seeing more and more of this non-discriminatory access, and in my view, it is possible to make hydrogen much less dependent on transportation and things. It’s going to really change the game of being. so. You can have federated demand and supply clusters. I think this is very attractive for each region. And the capillary system of pipelines is getting wider and wider. The future will be like the natural gas infrastructure, produced everywhere and distributed everywhere. Given the role of green hydrogen in this kind of environment, it is an exciting future.
It’s also fun. Because if you have the sunshine and the wind, and the willingness to take advantage of them, and the right physical infrastructure, it changes the game. You don’t have to go five kilometers deep to the ocean floor to find a molecule. It’s readily available and you can do a lot more based on egalitarianism. You’ll see many different players emerge that may not be traditional or you might not expect to be future players.
Additional Information:
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