Norway's HydrogenPro focuses on FEED studies as FIDs stall

Norwegian electrolyzer manufacturer HydrogenPro has grown the number of front end engineering design studies for green hydrogen projects it is involved in, as final investment decisions for large-scale projects continue to lag, the company said Aug. 15.

The company is engaged in FEED studies totaling 1.3 GW of capacity, with a further 2 GW of FEED studies at contract negotiation stage, new CEO Jarle Dragvik said in an online presentation.

"Final investment decisions are still somewhat lagging, and an exponential development must be deployed the next few years to meet the expected demand for green hydrogen," HydrogenPro said in a statement.

Dragvik said contract negotiation takes time, but involvement in FEED studies positioned the company well for subsequent electrolyzer orders while producing revenue.

HydrogenPro said new market research pointed to "large industrial players" within the energy and utilities sectors dominating the growing large-scale green hydrogen landscape, given their access to capital and project execution capabilities.

The company said its strategy was aligned with this focus.

HydrogenPro's "sales pipeline growth remains robust with few project cancellations, contributing to a growing base of large, solid projects in core markets, despite a tendency of project FIDs being delayed," it said. "Historically, FEED studies are signs of mature projects being close to FID."

US focus

The company has "substantial growth ambitions, especially in the US," Dragvik said.

HydrogenPro expected several FIDs in the US in the next six months, where it sees the Inflation Reduction Act continuing to support large projects dedicated to sustainable aviation fuels, synthetic fuels and ammonia.

The company is looking to expand its manufacturing capacity in the US with a new 500-MW/year facility, which it could partner on rather than own outright, following what it said was a successful joint-venture model at its 500-MW/year electrolyzer factory in China.

HydrogenPro said it observed increasing momentum in the European hydrogen space compared to recent quarters and expected to be involved in several FEED projects in 2023.

HydrogenPro's production partner ANDRITZ has secured a FEED study for a 200-MW electrolysis plant in Kristinestad, Finland, with an FID on the full project from Koppo Energia expected in the first quarter of 2024, it said.

Dragvik said by partnering with other companies on manufacturing and assembly, HydrogenPro would be able to grow its footprint more quickly, producing larger volumes while tying up less money in capex costs.

The tradeoff through the asset-light approach was giving up some revenue per plant, he said.

Its 100-MW/year manufacturing line in Denmark is ready to start production, with scope to scale to 400 MW/year, the company said.

Platts, part of S&P Global Commodity Insights, assessed hydrogen production via alkaline electrolysis on the US Gulf Coast at $5.10/kg (including capex) Aug. 14, compared with Eur5.91/kg ($6.46/kg) in Europe (Netherlands).

Technological advantage

HydrogenPro founder and head of technology Richard Espeseth said testing on the company's third generation products indicated a 14% lower electricity consumption to 4.0 kWh per normal cubic meter of hydrogen production, and 75% reduction in water consumption for cooling requirements because of low heat output from the process.

He noted the larger units the company is producing have a better efficiency profile than small and medium-sized electrolyzers.

However, the complete electrolyzers do not fit in standard shipping containers, and so require more planning around the supply chain for distribution. But the core membrane and electrode technology can be shipped in standard units, Espeseth said.

Change of leadership

The company announced a strategic refocus and abrupt change of leadership Aug. 8, with Dragvik replacing previous CEO Tarjei Johansen who had only been in post since December.

The company has had five different CEOs since 2020, with Espeseth stepping in as interim CEO during 2022, before appointing Johansen.

Dragvik and Espeseth would not be drawn on the recent management changes, saying they were questions for the board.

Asked if he would be the new permanent CEO of HydrogenPro, Dragvik said: "First, what is permanent?" before adding the company was committed to growing its US team.

HydrogenPro said Aug. 8 it had revised its priorities to focus efforts on the North American market and was reviewing its fundraising strategy to finance growth in an "unfavorable" market.

"The plan for building capacity in the US stays firm, but with the current market sentiment raising funding in the market is an unattractive proposition from a shareholder value perspective and the company is actively working on alternative ways to finance the expansion," the company said.

HydrogenPro had previously planned to finance its expansion mainly through equity from issuance of new shares. The company instead now has an eye on a possible listing on the Nasdaq stock exchange "in order to secure access to a larger investor universe," it said.