UK electrolyser manufacturer Clean Power Hydrogen (CPH2) is in talks to license production of its patented membrane-free technology as it readies its business for an expected surge in demand from green hydrogen project developers, CEO Jon Duffy tells Hydrogen Economist.

CPH2, which is based in Doncaster in northern England, has a 2030 production target of 2-4GW/yr, with 1GW made at its own facility and the rest manufactured under licence by other companies.

“Our business model going forward is to produce a certain number of units ourselves and then to license out most of the production,” Duffy says. “That means we do not need massive amounts of capital work in order to scale up.”

The company raised about £30mn ($36mn) in February via an IPO on the AIM arm of the London Stock Exchange, joining a growing list of hydrogen sector players tapping the public markets for funds.

“The reason why we had our IPO before we are Ebitda-positive was because we knew we wanted to scale [the business], as there is a tsunami wave of demand about to hit us,” Duffy says. “We want to make sure we are on the front of that wave and capitalised to take advantage of it.”

“There is a tsunami wave of demand about to hit us” Duffy, CPH2

CPH2’s membrane-free electrolyser (MFE) technology uses cryogenic separation to deliver pure hydrogen and pure oxygen as separate gases. Its design means it does not use platinum group metals, and CPH2 says it is the most cost-effective alternative to proton-exchange-membrane (PEM) electrolysers. All the components of the MFE units can be recycled.

MFE technology can also match the performance of PEM electrolysers in terms of accommodating the fluctuations in power supply that come with the use of intermittent renewables, according to Duffy.

“Our electrolysers’ response to fluctuating power is very, very rapid. Some people will use it as a grid-balancing mechanism,” he says.

CPH2’s near-term targets include the development of a larger 2MW design of its existing MFE units. It hopes to commercialise the larger model this year.

The MFE manufacturing process, which includes assembly of parts bought in from local engineering firms and fabricators, enables CPH2 to make a “very positive” gross margin on each unit, according to Duffy—despite increases in the cost of steel and other raw materials.

“The supply chain is very, very difficult at the minute, and that brings costs with it,” he says. As a result, the market price of electrolysers has risen by 15-20pc over the last 18 months.

CPH2 has an ambition to be the first pure-play electrolyser manufacturer to become profitable. “I am not aware of any that are making money, but I could be wrong,” says Duffy.

The company aims to operate as a standalone commercial business without significant direct support from grants and subsidies, although it will support grant applications made by project developers to which it is supply electrolysers.

Home advantage

The UK is leading the way on innovation in the electrolyser sector through the work of businesses and academia, but there is a danger a lot of that expertise and technology will be exported rather than being deployed in the UK. Many of the proposed UK projects tend to be in the smaller 4-5MW range. These are still awaiting funding and are 4-5 years away from materialising.

4GW/yr – 2030 production target

“If in the meantime, we get the equivalent firm commercial order from Germany, Paraguay, Australia and New Zealand, we will fulfil those orders,” says Duffy.

Last month, CPH2 agreed the sale of a 1MW MFE unit to AFCryo, a New Zealand-based manufacturer of composite cryostats and cryogenic cooling systems, with delivery scheduled for early 2023. This was the second order from AFCryo, which is scheduled to take delivery of its first unit in September.

In March, CPH2 won an order from Yorkshire-based Atome Energy for a 1MW MFE unit for use at a green hydrogen project being developed by Atome in Paraguay. The two companies also signed a non-binding letter of intent covering potential future orders for Atome’s international hydrogen and ammonia projects, and the possible formation of a joint venture for the production of MFE units in Latin America.

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Author: Stuart Penson