Hydrogen Van Agency ‘First Hydrogen’ Fated To Fail However What Questions Does It Elevate?


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Within the annals of zero emission car startups there are innumerable failures. The Canadian/UK agency First Hydrogen is inevitably going to be considered one of them. I write this text to not hasten their demise, however to ask a set of questions on how this kind of factor will get funded, will get press, will get the looks of traction and the like. Consider it as an help to buyers in different inevitable failures.

The agency got here to my consideration in the summertime of 2023, when a giant announcement was made that they’d secured land in Shawinigan, Quebec, birthplace of former Canadian Prime Minister Jean Chretien and placement of a exceptional string of fires that consumed inns and inns, eight of the fifteen established within the city over its historical past. Remarkably, just one individual, an affiliate of Chretien’s whose inn had obtained a C$615,000 mortgage from the federal government whereas Chretien was PM, was ever charged with arson and he was acquitted because the proof was totally circumstantial.

Shawinigan is a reasonably picturesque city of 49,600 situated midway between Montreal and Quebec Metropolis on the Saint-Maurice River. Previously a reasonably very important industrial hub because of the hydroelectric dam, with pulp and paper, chemical, textile and aluminum industries making the most of the vitality, it’s been in decline because the Nineteen Fifties. Its development trade is retirement houses, with a full third of its inhabitants over 65 and its common age eight to 9 years larger than Canadian cities like Vancouver, Toronto and Montreal, and its inhabitants is slowly shrinking.

However it nonetheless has that 200 MW hydro dam that’s been in operation since 1910, which means its carbon debt is lengthy paid off. After I heard {that a} agency was going to be constructing an electrolysis facility there with their very own cash, I had my doubts however noticed no proof of any explicit governmental largesse, so shrugged and moved on. As a spot to construct a inexperienced hydrogen facility, there are worse decisions. Quebec wants fertilizer too, though fertilizer large doesn’t make any fertilizer within the province proper now, as a substitute importing it by way of a terminal on the St. Lawrence. Quebec is blessed with a number of inexperienced electrical energy however no fossil gasoline reserves to talk of, so the situation preferences for ammonia-based fertilizer have flipped in its favor so maybe one thing will occur there.

A bit about First Hydrogen

What I hadn’t realized was that First Hydrogen was really a hydrogen car wannabe. They lastly constructed a prototype with numerous skilled assist from car engineering and check agency AVL with, in fact, a Ballard gasoline cell within the combine. Engineering agency Arup was additionally engaged. As I famous in a latest article, Ballard has been going from failure to failure for 44 years and has misplaced $1.3 billion of different folks’s cash since 2000. AVL, per its historical past, has been fairly completely satisfied to take gasoline cell car wannabe’s cash for years now, and I’m positive Arup doesn’t thoughts the income both.

A little bit of historical past on First Hydrogen. It was apparently based in Vancouver in 2007, so it’s a 16 12 months previous group, though there’s treasured little indication it did a lot till not too long ago. A Vancouver actual property and building mogul, Balraj Mann, who seems to have began or owns about 20 companies which do constructing associated issues, based First Hydrogen and is the Chair and CEO.

That Vancouver location means that he’s within the bizarre BC bubble that continues to suppose hydrogen for vitality is a tremendous factor, however as Ballard’s litany of deserted trials and partnerships with OEMS like Audi and Ford reveals, that’s as a result of the entire begins are publicized as closely as attainable, however the failures are swept underneath a really lumpy rug in Ballard’s headquarters.

BC has just a little ecosystem of hydrogen occurring, with AVL having a gasoline cell division right here, Greenlight Improvements constructing and promoting gasoline cell check benches to companies that foolishly get into the enterprise together with Hyundai which was their largest buyer final time I talked to the Managing Director and some others.

Clearly the US Inflation Discount Act leaning into hydrogen and Canada unlocking purse strings in an identical motion unlocked extra silly cash as in April of 2022, First Hydrogen managed to get a trivial sum of money lastly, C$6 million. This 12 months they managed to scrape one other $2.9 million out of unnamed buyers. Within the highway car startup house, $9 million is chump change, orders of magnitude off of the required capital. And for establishing a hydrogen manufacturing concern?

Manufacturing inexperienced hydrogen in Shawinigan?

Let’s have a look at the fiscals of the purported hydrogen manufacturing facility first. They obtained the land from town of Shawinigan. As the short have a look at it above confirmed, it’s a shrinking, rural city determined for funding. The chances that they obtained the land at no cost or near it are excessive. Adequate. There may be precisely no expert workforce to talk of within the city, so that they’ll must import, properly, all people, nevertheless it’s a pleasant sufficient city and solely a few hours’ drive from an amazing metropolis.

They’re asserting a 35 MW electrolysis facility. Let’s assume that they go along with the cheaper alkaline electrolyzer, which per the IEA is working round US$400 per kW of capability excluding steadiness of plant, that’s US$14 million or C$18.6 only for the electrolyzers, greater than double their whole capitalization. The steadiness of plant of roughly one other 27 parts is essential too, and contains an precise constructing, so name it double that simply.

What about electrical energy prices? Effectively, there’s a motive to construct inexperienced hydrogen services in Quebec and that’s as a result of industrial charges are advantageous and the electrical energy is inexperienced. However low cost doesn’t imply free. They’d be getting electrical energy underneath Hydro Quebec’s Price L industrial class at C$0.03503 per kWh and $13.779 per peak kW. That latter means the 35 MW electrolyzer plus possible one other 5 MW of steadiness of plant draw for 40 MW would value them a dedicated C$550,000 per thirty days, which might burn via their C$9.9 capitalization in 18 months, if they’d any of it left over after constructing the plant, which they gained’t.

Hydro Quebec likes 95% utilization energy attracts, in any other case they begin charging critical peaking surcharges, so let’s assume that First Hydrogen’s 40 MW whole draw is at that utilization fee. That turns into 1,000,000 a month in vitality prices. Water in Quebec is grime low cost even with the brand new charges of $35 per million liters, so it’s a rounding error of prices.

In an hour at full utilization they might manufacture about 727 kilograms of hydrogen. Simply the electrical energy prices flip into C$2.96 per kilogram. The capital value, amortized over the roughly 10 years of the electrolyzers, provides one other $0.58 per kilogram, making it C$3.55 or US$2.70. That is, by the best way, the best possible value case that’s possible, and issues like closely inflated govt compensation — see under — will make the fee per kilogram go up too.

That’s really a extremely good value for manufacturing inexperienced hydrogen, the very best economics I’ve seen anyplace (making me suspicious I missed one thing). At solely about 3 times US per kilogram prices from steam reformation of fossil methane, it’s significantly better than prices just about anyplace else shall be. This a part of First Hydrogen’s enterprise case is definitely affordable, even when they’re brief tens of tens of millions of {dollars} to construct it and $550,000 per thirty days for simply the electrical energy to run it.

Add 10% financing and 10% earnings as notional numbers and that’s about C$4.30 or US$3.24 per kilogram, undelivered.

If solely there have been something in Shawinigan to eat the hydrogen, as a result of storing and shifting hydrogen round could be very costly. There isn’t. Bear in mind, there are not any fertilizer vegetation in Quebec, by no means thoughts in Shawinigan. There are two refineries — keep in mind that the only largest shopper of hydrogen on the plant is the oil trade to hydrotreat, hydrocrack and desulfurize crude oil — however they’re within the suburbs of Quebec Metropolis and Montreal, 90 to 120 minutes driving down the freeway approach.

Delivering hydrogen by tanker truck is pricey. Even with black or grey hydrogen at $1 to $2 per kg manufacturing prices, when delivered by truck hydrogen prices within the vary of US$11 or $15 CAD. Assuming the identical pre-profit gross up, that places delivered hydrogen by truck at round C$17 to $18 on the refineries. I think that they gained’t be shopping for it at these costs, as they’ll want to have the federal and Quebec governments pay them to make blue hydrogen and retailer the carbon, turning an issue into a chance to suck extra oil and fuel subsidies.

Is that this uncommon? No. Black or grey hydrogen disbursed in California and Europe prices between US$17 and $35 per kilogram on the pump. In Canada, HTEC runs the hydrogen refueling stations. It’s one other useless finish BC firm within the little bubble right here. At its BC stations, the regionally electrolyzed hydrogen utilizing BC’s low cost and low carbon electrical energy prices C$14.70 per kilogram or US$11, making it the most affordable pumped hydrogen I’m conscious of, and nonetheless vastly dearer per kilometer than simply utilizing electrical energy extra straight by way of batteries.

Principally, there’s nothing anyplace close to Shawinigan that wants inexperienced hydrogen and delivering it anyplace makes it very costly. That’s why 85% of hydrogen is manufactured on the level the place it’s consumed, and the overwhelming majority of the remainder is piped comparatively brief distances to excessive quantity customers from steam reformation vegetation, as is the case in Edmonton and in Germany.

Constructing hydrogen gasoline cell supply vehicles in Shawinigan?

And so we get to the second half of First Hydrogen’s failure in movement, creating demand. With the cash that they gained’t have after constructing a inexperienced hydrogen manufacturing facility, they will construct a gasoline cell supply van meeting manufacturing unit in Shawinigan, one able to delivering 25,000 automobiles a 12 months. Simply establishing a lightweight electrical truck facility — one thing doubtlessly smart to do — can value US$11 million or C$15 million, in response to one web supply, as soon as once more better than their whole present capitalization.

Their prototype van is a 3.5 metric ton van, a regular measurement for bundle and light-weight deliveries. This class of auto averages about 60 kilometers a day of driving per US statistics, assuming six days of operation. That’s a bell curve in fact, so some undoubtedly drive a lot additional, however excessive vary is prone to be 400 km, which is what Ikea in Austria requires for some routes apparently.

They aren’t 24/7 automobiles, so depot charging of electrical variations is trivial. They aren’t semi vehicles, so electrical variations can recharge at any quick charger, and there are a whole bunch of quick chargers dotted across the place already. There are already 400 km vary electrical automobiles obtainable on this class, for instance, BrightDrop with its US$85,000 price ticket. That agency is a subsidiary of GM, which really is aware of the way to manufacture vehicles and has sturdy relationships with automotive element producers like Magna.

I introduced up Ikea earlier for a motive. They acquired 5 hydrogen gasoline cell vehicles from Quantron, as a result of that agency was incompetent to make a 400 km battery electrical van it appears. The federal government of Austria needed to fund the acquisition as a result of your complete bundle together with the refueling station value €4.8 million, or C$7 million. That’s C$1.4 million per truck.

That’s absurdly excessive, isn’t it? However 1,000,000 US of governmental cash per truck or bus is about common for hydrogen trials, per my evaluation of the continuing stagings of the Odyssey of the Hydrogen Fleet tragicomedy.

Odyssey of the Hydrogen Fleet infographic by Michael Barnard, Chief Strategist, TFIE Strategy Inc, icons by ChatGPT & DALL-E
Odyssey of the Hydrogen Fleet infographic by Michael Barnard, Chief Strategist, TFIE Technique Inc, icons by ChatGPT & DALL-E

A lot of that’s for a hydrogen refueling station. The one one which at the moment exists in Quebec, on the outskirts of Quebec Metropolis, value C$5.2 million, is ready to refuel a single automobile at a time and was put in to gasoline 50 Toyota Mirais the Quebec authorities leased 4 years in the past as a lightweight car experiment. That experiment ended late this 12 months with the vehicles returned to Toyota and no info forthcoming. The refueling station continues to be there, hooked up to an Esso station, however there are solely 20 registered hydrogen automobiles left in the entire province, so it’s barely used.

Not less than there’s one in a fairly sized city space serving a inhabitants of 737,000 folks. So there’s that. The subsequent nearest multimillion greenback stations are, in fact, in British Columbia, which has 5 of them serving that province’s 5 million residents. Largely are sitting idle more often than not, as there are solely 195 gasoline cell automobiles registered within the province and lots of are second vehicles for individuals who work within the hydrogen trade. Ballard satisfied a bunch of its workers to lease Toyota Mirais a few years in the past and the final supervisor of Greenlight Improvements leased one as properly. Sure, after a long time of pushing the hydrogen transportation rope uphill with a number of provincial and federal cash, there are fewer than 200 gasoline cell automobiles within the province. In the meantime, there are about 110,000 battery electrical automobiles already, and rising rapidly.

What different contextual knowledge is price contemplating when assessing First Hydrogen’s hyperbolic declare of constructing 25,000 gasoline cell supply vans a 12 months?

Effectively, Ballard, after 44 years keep in mind, states that there are solely 3,700 gasoline cell vehicles and buses in operation with its expertise inside. Additionally globally, there are solely 40,000 gasoline cell fork lifts in operation, about 3% of the battery electrical forklifts bought globally in 2021 alone. Most of these had US Division of vitality funding for the very costly refueling infrastructure and preliminary purchases, and have simply continued in shopping for extra as they expanded. The demand for gasoline cell automobiles is staggeringly absent, even in hotbeds of hydrogen delusions like BC.

How a lot hydrogen will a 3.5 ton van require? In spite of everything, that’s First Hydrogen’s demand development technique, so they have to want quite a bit. Now let’s flip to the Rivus white paper that First Hydrogen fastidiously cherry picks quotes from to make it sound just like the check was a roaring success.

How did their prototype fare in testing?

Rivus is, or maybe was, an excellent firm to check a hydrogen van. It’s on the UK’s largest fleet administration companies with garages throughout the UK, managing fleets for lots of the largest operators within the nation. It has the hardest use circumstances amongst its portfolio, together with deep outliers over 600 kilometers of day by day driving. As a reminder, the common is 60 kilometers for this class of auto. The Ikea case examine can also be price taking a look at as they’ve 56 battery electrical supply automobiles and solely acquired 5 gasoline cell automobiles for these longer routes (and keep in mind, battery electrical vans utterly able to overlaying the identical distance can be found, so this wasn’t a rational selection, simply free cash from the federal government).

After I say was an excellent firm, shortly after Rivus accomplished the 4 week trial and returned the only working prototype to First Hydrogen, the agency closed half of its services within the nation.

Regardless, Rivus picked three routes that have been serviced by gasoline or diesel vehicles. Over the 4 weeks, the van operated for 47 hours, overlaying 1,200 kilometers. That’s a median of 25 kilometers per hour and 54 kilometers per working day, by the best way. It’s deeply unclear if any of those routes couldn’t be dealt with trivially simply by decrease vary battery electrical automobiles, they might simply have to cost up on the depot at night time as a substitute of going to a fuel station as soon as per week.

The gasoline cell operated solely 40% of the time, and that was solely as a result of First Hydrogen specced a smaller, weaker battery than would go in a traditional battery electrical car. Nearly all gasoline cell automobiles are literally battery electrical automobiles with advanced and failure inclined hydrogen tanks and gasoline cells as vary extenders, and the First Hydrogen design is not any completely different.

They consumed 3.3 kilograms of hydrogen for each 100 km of driving. How does that examine to the output of the proposed Shawinigan plant? Effectively, on the fee of 726 kg per hour, that’s 22,000 kilometers of driving, which is to say as greater than a single common supply van drives in a 12 months. They’d have to have over 9,000 supply vans working to eat the hydrogen of the Shawinigan plant.

The rest? Oh sure, refueling issues. The Rivus facility was proper subsequent to one of many grand whole of 15 hydrogen refueling stations in the entire UK. One of many issues that hydrogen transportation varieties declare is a bonus of hydrogen is quick refueling, identical to a fuel station, as if recharging in a depot in a single day wasn’t less expensive and simpler for automobiles which common 60 kilometers per day.

However if you choose on the ‘quick refueling’ declare, it falls aside, as Rivus found. Hydrogen refueling services solely ship a couple of kilograms earlier than huge pumps spool up and repressurize the hydrogen again to 700 atmospheres. That’s high-quality for Toyota’s 5 kg hydrogen tanks, however with the ten.3 kg tanks, refueling took 3 times as lengthy. That is even worse for heavy items automobiles by the best way, which could want 100 kg of hydrogen for his or her longest ranges. The US NREL has managed, in a fastidiously designed facility, to handle pumping of hydrogen at 700 atmospheres as rapidly as diesel, however at business pumps 100 kg would take 60 to 90 minutes. There’s no indication that NREL’s huge check rig will flip right into a commercially viable pumping station when the only hose pumping stations which are at the moment in use value tens of millions.

The rest? Yeah, it was too costly to function, virtually twice as a lot as a battery electrical car.

“Rivus evaluation discovered that – in the meanwhile – the First Hydrogen car struggles with value comparisons to BEVs and diesel vans. At present hydrogen costs of £9.23 per kilo, the car value 31p per mile to gasoline. At 40p per kWh, a fully-electric LCV would value 18ppm, whereas a diesel would value 22ppm if the pump worth was £1.46 per litre.”

That’s clearly grey hydrogen being pumped, by the best way, as on the £0.40 per kWh famous, a kilogram of hydrogen would value £22 only for the electrical energy. All the time ask the place the hydrogen is absolutely coming from as a result of it’s ceaselessly thoughts boggling. For instance, the Whistler, BC hydrogen bus trials of 2010 to 2014 trucked it from Quebec, a diesel-powered spherical journey of roughly 9,000 kilometers for a load enough to energy a bus for about 10,000 kilometers.

After all, the identical electrical energy would energy 27,000 battery electrical supply vans at a fraction of the fee per kilometer and a a lot decrease value per car. There’s a motive why there are solely 3,700 buses and vehicles globally working with Ballard gasoline cells in them, and fewer than 10,000 gasoline cell automobiles in China in comparison with round 1.2 or 1.3 million battery electrical buses or vehicles within the nation.

First Hydrogen, in fact, claims that the outcomes have been amazingly constructive and point out not one of the main downsides in any respect. One of many few males on the Board of Administrators with out the CEO title, Chief Industrial Workplace Allan Rushforth, claims hydrogen goes to get cheaper, which as this evaluation reveals is nonsense. He additionally claims that chilly climate testing will actually spotlight the strengths of their van, ignoring the truth that gasoline cell automobiles create water that freezes and disables them until fastidiously managed, one thing that occurred with the defunct Whistler, BC bus fleet ceaselessly.

Different crimson flags about First Hydrogen

Are there every other crimson flags about First Hydrogen that must be talked about? Effectively, how about that per their web site and LinkedIn, they’ve solely 16 folks related to the agency, and three of them, males in fact, have the title of Chief Govt Officer. To place this in context, there are precisely seven Fortune 500 corporations which have multiple individual with that title, they usually every have two co-CEOs. Another doubling up? Sure, along with the Chair, there’s an Govt Chair. This 16 individual agency has 4 folks with CxO titles, a vastly high heavy govt construction and associated compensation.

Public paperwork point out that the Chair, Balraj Mann, is getting about $480,000 a 12 months, and keep in mind that there are two males with the CEO title and presumably excessive salaries as properly. Then there are the non-executive Board members who’re being compensated handsomely for his or her time one assumes. Bear in mind additionally that Mann owns one other 20 or so companies and is listed as CEO of at the very least 4 of the them. A fractional CEO of an organization that has zero income and approaching zero chance of any income is price virtually half 1,000,000 per 12 months?

It’s pretty apparent why I began this piece with the word that First Hydrogen was inevitably going to fail, and it must be clear why now. They’ve nowhere close to the cash to do what they are saying they will do, what they are saying they will do is mindless, and their projections about scale of the electrolysis facility and the variety of automobiles that they’re going to manufacture is mindless. Their accomplice Ballard has misplaced a median of $55 million a 12 months since 2000 as a result of nearly nobody is shopping for gasoline cell automobiles until some authorities ponies up 1,000,000 or extra per truck or bus. As quickly as the federal government stops funding the hydrogen, each trial ends.

The crimson flags are enormous and flapping in a gale drive wind with this agency.

But First Hydrogen raised virtually C$9 million and have a bunch of governmental luminaries exhibiting up at their announcement in Shawinigan and apparently believing that they’re going to do that. Is that as a result of it’s arduous to seek out out something I’ve listed above? No, it’s all public info.

Is that as a result of the governmental luminaries and Mayor of Shawinigan know one thing I don’t? No, that’s unlikely both. What’s more likely is that they haven’t any clue about any of this, by no means did the slightest bit of labor with Google and spreadsheet, didn’t ask any rational transportation analyst to evaluation it, didn’t have any flunkies run Google or a spreadsheet, and principally simply purchased what First Hydrogen was promoting. In spite of everything, the agency has a former Ballard govt and a former Ford govt on the Board, in addition to a Quebec public affairs director who’s clearly good at creating press and getting connections in that province.

Google stock chart for First Hydrogen
Google inventory chart for First Hydrogen

Remarkably, this agency managed to go public in 2020. And sure, regardless of having nothing however seed funding and earlier than they’d a single prototype car, they managed to attain a inventory worth of virtually C$5.15 per share in September of 2022 and a peak market capitalization of 1 / 4 of a billion {dollars}, albeit Canadian ones.

Clearly the prototype car they’d in testing within the early summer time of 2023, the October thirtieth, 2023 monitor day for fleet homeowners and press didn’t impress retail buyers, as their inventory worth has dropped by two-thirds, again to its nonetheless far overvalued present degree. Their second increase being half of their first increase possible didn’t assist.

Caveat emptor and don’t spend tax {dollars} on it

It’s totally attainable that everybody concerned is totally honest, regardless of their claims and marketing strategy being full and simply dismissed nonsense. In spite of everything, there’s the continuing bubble of hydrogen for vitality delusion that’s persevering with and Mann is a Vancouver participant, the place the hydrogen for vitality bubble continues to be periodically reinflated, with a number of companies distorting the the native economic system. As my native contacts inform me, Ballard is paying massive bucks for electrochemists and chemical engineers, contributing to the previous years’ huge losses.

Mann is clearly a deeply shrewd enterprise individual and has carried out very properly for himself. Clearly he’s doing very properly for himself with First Hydrogen, no matter whether or not it succeeds of fails, properly on his strategy to harvesting 1,000,000 {dollars} out of the corporate. He began the agency in 2007, after which received enough folks on board with enough expertise to make it look credible and draw $9 million in funding up to now primarily based on tissue paper and thumb tacks. That he has no background in vitality, transportation or hydrogen aside from this, in addition to no STEM credentials I used to be capable of finding, would possibly imply that he really thinks it is a affordable firm.

The previous Ballard govt is, in fact, properly linked within the hydrogen bubble and undoubtedly is being supported in his cognitive biases strongly because of this. The UK technical director, one of many couple of STEM certified folks within the agency it appears, is an engines man for his whole profession, so strongly aligned with molecules for vitality.

And I can’t let you know the quantity of people that have tried to make the argument that as a result of governments are creating hydrogen for vitality methods and main companies are toying with it, that I’m clearly flawed in my empirical, factual and logical analyses and assessments.

Clearly the individuals who put in $9 million and the retail buyers who personal FYHD did zero due diligence upon the claims and marketing strategy, regardless that it’s trivially straightforward to do. The fundamentals of this text took half-hour to seek out, trying solely at publicly obtainable knowledge, though I do have a robust background in transportation repowering and the precise prices of producing hydrogen.

However for governmental varieties in BC, Quebec and Ottawa, please don’t throw any extra taxpayer cash at First Hydrogen or hydrogen for vitality normally. And for buyers eying First Hydrogen or companies prefer it, caveat emptor. Your cash is yours to waste nevertheless you see match, nevertheless it could possibly be significantly better used elsewhere should you really wish to have it develop and do one thing worthwhile.

 

 

 

 

 

 

 

 

 

 


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