Hy2gen, a Germany-headquartered producer of green hydrogen-based fuels, raised €200m ($227m) today from investors including energy engineering firm Technip Energies, highlighting the increasing popularity of hydrogen in the new energy mix.
Hy24, a hydrogen investment vehicle formed by private investment firm Ardian and investment manager FiveT Hydrogen, led the round, which also featured Caisse de dépôt et placement du Québec and Mirova.
Founded in 2017, Hy2gen produces hydrogen for environmentally friendly fuels to be used across air, maritime and ground transport as well as for industrial applications. It claims the round is the largest to date for a green hydrogen company.
The hydrogen market has been growing at an accelerating clip as it is widely seen as a crucial piece of the decarbonisation puzzle, applicable to areas such as energy generation, transport and industrial manufacturing, as an alternative to fossil fuels.
Whereas the process of creating hydrogen has typically used fossil fuels, ‘green’ hydrogen is produced through electrolysis that separates the element from water using renewable energy, without requiring hydrocarbons.
The global hydrogen generation market was sized at almost $130bn in 2020 according to Precedence Research, which predicted it will surpass $219bn by 2030. Green hydrogen generation is expected to experience much faster growth, from $1.83bn in 2020 to over $89bn a decade later.
Increasingly, energy intensive industries are making adaptations to accommodate hydrogen inputs.
Gas grids in countries such as the UK are actively carrying out trials to blend hydrogen in with domestic gas grids with a view to eventually replacing it entirely, though that would require the large-scale replacement of consumer boilers and wider piping infrastructure.
Industries such as smelting and ceramics, which utilise high-heat machinery that uses gas and which cannot be electrified in a cost effective way, are turning to hydrogen as a lower-carbon form of heating.
In the transport sector, hydrogen fuels and systems are slowly encroaching into the market, with investment coming in behind them.
Sustainable aircraft developer Universal Hydrogen raised $62m in an October 2021 round featuring internet group Tencent, charter plane operator Waltzing Matilda Aviation, industrial product conglomerate General Electric’s GE Aviation subsidiary and Mitsubishi HC Capital, a vehicle backed by corporates Mitsubishi UFJ Lease & Finance and Hitachi.
ZeroAvia, a developer of hydrogen-powered aircraft drivetrains, received $24.3m from investors including airline operator British Airways in March 2021, following a $21.4m series A round backed by e-commerce giant Amazon and oil and gas provider Shell’s corporate venturing arm, Shell Ventures, three months earlier.
Hy2gen currently has 880 MW of green hydrogen production capacity in planning or construction, with another 12 GW in an early stage of development.
Cyril Dufau-Sansot, Hy2gen’s chief executive, said: “As early as 2021, we were looking for the best possible combination of financial and strategic investors to build e-fuel production facilities. These have the potential to decarbonise entire industries and transport sectors. We are now very pleased that all parties have sealed the largest investment in this segment.”
Hydrogen generation companies are also beginning to mature enough to start going public, highlighted by Denmark-based hydrogen production technology developer Green Hydrogen Systems’ initial public offering, in June 2021, which marked exits for shipping group AP Moller and energy utility Norlys Holding.
Image courtesy of Hy2gen AG.
