Green hydrogen has faced a torrent of setbacks in recent years, but Electric Hydrogen CEO Raffi Garabedian, for one, is holding on to some hope.
In a recent interview with Catalyst with Shayle Kann, Garabedian made the case that large, modular electrolyzers deployed strategically across the globe may offer the key to bringing costs close to fossil parity in a decade or so — even despite the industry’s hurdles.
“ The situation we’re in right now, it’s a cycle,” he told Kann during the interview. “But on a 10 year horizon, we are as a society going to implement innovations to fix the problem.”
The problem is multifaceted. Over the past few years, the price of producing green hydrogen has continued to rise; in some cases, Garabedian has seen it double. Despite faring relatively well during OBBB negotiations, green and blue hydrogen make up the largest share of industrial decarbonization projects that were cancelled between 2018 and the third quarter of this year: $7 billion in total. The green hydrogen developer Topsoe, for instance, recently decided to hit pause on its $400 million electrolyzer factory in Richmond, Virginia, due to poor demand and a lack of necessary policy support.”
Garabedian believes the industry has suffered in part from excessive optimism.
“Green hydrogen unfortunately has been and continues to be an expensive solution [for hard to abate sectors],” he said, in reference to heavy industrial applications like steel, concrete and chemical production. “All solutions to those problems are expensive. But at the peak of the hype, there was a naive hope that society was willing to pay the difference.”
Listen to Raffi Garabedian’s whole interview on Catalyst:
As such, Electric Hydrogen aims to cut capital expenditures for new green hydrogen projects, specifically by reducing engineering, procurement, and construction (or EPC) costs. Those costs encompass not just the buildout of a plant, but everything from grading a plot of land to designing the control system and building a substation. According to Garabedian’s estimates, these services add up to “roughly half” of the total cost of a new green hydrogen facility.
To mitigate those costs, Electric Hydrogen operates larger, modular electrolyzers that resemble combined-cycle gas generation plants. These 100 megawatt electrolyzers can be built off-site to simplify and expedite their eventual installation. By comparison, other electrolyzers are much smaller — around two MW — and are often strung together at a plant. Garabedian argues that these smaller electrolyzers tend to take up more collective space than a single large electrolyzer, and together require higher EPC costs to install.
This comes as EPC costs rise for the wider energy sector. For example, demand for electrical engineers to build out data centers has put a significant dent in the labor pool for renewable energy projects; over 70% of employers in the energy sector have reported challenges finding enough skilled workers. These bottlenecks are also contributing to higher prices and delays for gas turbines.
In Europe, at least, Electric Hydrogen’s embrace of large-scale electrolyzers is already paying off. While the company’s’s work there is buoyed by subsidies in the EU’s current Renewable Energy Directive, Garabedian estimates that the total installed cost of a new green hydrogen plant is “just north of a thousand dollars” a kilowatt. “That’s somewhere between a half and a third of the competitive benchmark,” Garabedian said.
In addition to cutting EPC costs, Garabedian argues the most effective route to fossil parity may come from strategic deployments in the countries with the ripest economic incentives. He highlighted Brazil as a contender for several reasons. For one thing, roughly 90% of the country’s grid currently operates on clean energy, and especially hydropower. Brazil also has a huge agriculture sector, yet is dependent on foreign supply for the nitrogen that it uses to produce fertilizer.
“[Brazil’s] biggest import partner for fertilizer is actually Russia. So alarm bells can start to go off in your mind about the geopolitics of all this, right?” Garabedian said. “But also think about it in terms of the money that Brazil is spending effectively abroad to support its agriculture industry.”
In contrast, Garabedian argues, green hydrogen could accommodate the needs of Brazil’s agricultural sector for nearly — or less than — the same price. “ We’re not talking about a solution that’s better because it’s green. We’re talking about a solution where green is the icing on the cake,” he explained.
These moves, however, aren’t imminent; Electric Hydrogen likely won’t be opening a plant in Brazil until the beginning of the next decade. But the slow roll hasn’t done much to dent Garabedian’s own cautious optimism.
“ It’s all about getting to subsidy-free economics,” Garabedian said. “When you get to that, the market is insatiable for a product like ours. So that gets me very excited.”
