Leading Australian ESG investment firm Providence Asset Group (PAG) joined CEO-led coalition the Hydrogen Council last year.

The firm has a pedigree of investing in the clean technology sector and, following the publication of Australia’s National Hydrogen Strategy in 2019, wanted to expand into the hydrogen sector.

The Australian strategy aims to advance pilot schemes, build demonstration scale hydrogen hubs and develop supply chains.

Hydrogen Economist talks to Alan Yu, chief investment officer at PAG, about how the firm hopes to help finance developments.

“The focus is basically on building a pipeline of hydrogen technology initiatives and applications” Yu, PAG

Tell us broadly what PAG is doing in the hydrogen space?

Yu: PAG has a ten-year agreement with the University of New South Wales, one of the leading research organisations in Australia. In 2020, we founded the Hydrogen Energy Research Centre together with them to support the development of hydrogen. It is a ten-year agreement with an initial $5mn of investment from PAG.

The focus is basically on building a pipeline of hydrogen technology initiatives and applications across the value chain from storage to energy portability, fuel-cell technology, hydrogen testing and certification, and transport.

We believe we can make a large impact in the development of hydrogen products both in the consumer and small business market and also up to utility scale.

Are there any products to come out of that yet?

Yu: Yes, we have developed a product called LAVO. We see it as the world’s first household energy storage system. It uses metal hydride technology to store hydrogen for the equivalent of up to 60kWh of electricity. We are providing early-stage venture capital for the technology and using our expertise to identify how it can be brought to market. It is scaleable, and we are developing a utility-scale version called LAVO-HEOS that will help cater for the future of green hydrogen transport domestically, and the export of green hydrogen from Australia to countries such as Japan, South Korea and Germany. At the end of this year, we will roll out the first commercial prototype, and we think the technology will be fully commercially viable from 2022.

So you are trying to bridge that gap between innovative technology and the marketplace?

Yu: Our expertise lies in identifying industry needs, bringing that to the university and then finding a combined solution. It is a problem solving, reverse-engineering approach between the academic and commercial worlds. That enables us to fast-track the process to bring campus-leading research and innovation towards commercial reality.

Will you look for other small firms to take equity investments in if they have the right technologies?

Yu: It will be a mix of both options. Predominantly, we have a unique partnership with the University of New South Wales, and we have first refusal on a lot of unique technologies being developed there. But also, we are open to other startups with unique technologies—for instance, we invested in a smart energy software company called Evergen with an initial $4mn investment to support the development of AI-intelligence software to integrate with small-scale hydrogen batteries.

We hear a lot about comparisons between hydrogen and the renewables sector. Do you see costs coming down in the same way?

Yu: We think the demand side is not an issue. On a global level lots of countries are rolling out hydrogen strategies, and places like Germany have committed €9bn ($10.9bn) to build out the infrastructure and get projects off the ground. The economics of scale is going to drive costs down aggressively just as we have seen with solar in the past 15 years. Research from Bloomberg recently suggested the costs will fall by 90pc over the next ten years. I have an even more bullish view that costs could reduce to that level over the next five years.

---

Author: Tom Young