Generating Hydrogen At Scale: An interview with Verdagy CEO Marty Neese

As we progress through the energy transition, it is becoming clear that green hydrogen will play a critical role in the decarbonisation of the industrial landscape as it is expected to become a primary source of clean energy for almost 20 percent of the global power supply. But how can it be made attainable to large industry and efficient at such a large scale? Verdagy is designing and engineering large-scale electrolysers that generate hydrogen at scale, driving economics that make it easier for industry to replace fossil fuel with hydrogen. REM talked to Verdagy CEO Marty Neese to find out more.
Generating Hydrogen At Scale: An interview with Verdagy CEO Marty Neese
Verdagy CEO Marty Neese. Courtesy of Verdagy.

Can you give me a basic background to Verdagy and what it does

Yes. The basic background is that Verdagy is a green hydrogen, electrolyzer equipment designer and manufacturer. The background of the company is that we were spun out in 2021 from another company and started in May 2021 doing membrane-based electrolyzer technology development for the production of green hydrogen.

What is the current state of the green hydrogen market at the moment and how do you see it progressing?

I see that there are hundreds and hundreds of gigawatts of enthusiastic project announcements and demand being announced all over the world. The enthusiasm is huge, the momentum and the tailwinds for the industry are as good as I've ever seen in any industry. So you've got all kinds of policy environments and stimulus really trying to make the energy transition come to life, and then there's the reality of the day, which is how quickly can products come to market that can address this pent-up demand. That’s where the demand-supply gap is today and what Verdagy is attempting to address as we enter the market.

One of the main problems, at the moment, is that green hydrogen production is expensive. How can the cost be brought down and over what kind of timeframe?

It really starts and stops with the input electricity that you're using. So as you see massive scale continuing in the wind and solar industries, that's going to drive the input energy costs on a deflationary cycle, notwithstanding some of the challenges of wartime environments and things like that. Otherwise, in the renewable landscape you're seeing a cost reduction of both wind and solar and storage across the board and that really is helping to drive down the cost of green power, which is a major input to produce green hydrogen using electrolysis. Then the other part is the actual equipment needed to conduct the electrolysis. That too needs to be cost-reduced and that's where we enter with a very low-capex solution that takes advantage of the input power that I just mentioned of intermittent, wind solar, and some complimentary storage, and then transforms it with a low-capex basis, high-capacity, piece of equipment that gets you the economics that you need to really make the transition come to life.

Can you tell me about the large-scale elecrolysers Verdagy is developing and how they will be able to make a difference to costs and scaling up

First and foremost, if you think about what we're doing, we started with the precept that scalability is going to be the thing that is needed most to first, drive down the cost of the equipment and second, to be able to couple with renewables, and then to be able to rapidly go to giga-scale with the product itself. So taken one by one, our approach is a very large electrochemical cell running at high current densities with a wide dynamic range that addresses the ability to couple with renewables and gives you a very scalable Lego block from which to build. That large electrochemical cell, we would need 1600 cells to make a 200 megawatt plant. That's a really compelling value proposition as you think about scale. So 200 megawatts is 80 tons a day, more or less, of hydrogen production. You can imagine numbering up from there, once you think of this very large electrochemical cell running at high current densities with this wide dynamic range, so you can couple with renewables. And now you can imagine what it takes to produce 1600 cells versus, let's say, tens or hundreds of thousands of membrane electrode assemblies if you are a competing technology, and those things start to scale really, really, rapidly and so does the factory footprints needed to address a giga-scale market.

Can you tell me about eDynamic and what is it that sets it apart from your competitors?

It's a very large electrochemical cell, a 3 square metre cell, very large, enabled with a membrane that gives us the capability to have a very responsive electrochemical cell, so let's say a 20:1 turn down ratio. This means that when energy prices are at their peak, you can change the operating condition, when the energy prices are at their most favourable, you change the operating condition again, and you have this ability to load-gain and load-shed. The load gaining part is novel, and that's enabled by the high current density upper limit, if you will. When energy prices are low, you turn the plant up and you produce and gain productivity, and when energy prices are high, you toggle back towards efficiency, and you make best use of the power that's coming in that way.  Then because of that very large electrochemical cell with a membrane, and that dynamic responsiveness, that gives you the ability to couple directly with either power purchase agreements or direct coupling with renewables for solar and wind, and with a little bit of storage you can basically take all of that intermittency, make green hydrogen and have a steady-state duty-cycle on the the output side. So you can normalise how to take an intermittent resource, electrolyse, and then have steady output on the other end if that's the use case you’re coupling with.

I’ve seen that Verdagy claims the electrolyser it’s building can achieve the “lowest CapEx in the industry and and the lowest H2 production costs when coupled with renewable energy”, can you give me some ballpark figures and comparisons?

With a roadmap of improvements over the next 10 years, of more innovation coming to the space, and because of our approach, there is still a lot of innovation to be had that can continue to further reduce the cost there. That's on the capex side of things, but at the cost level. Of course, we want to be a ongoing concern so we're going to need to have a price, not a cost, so that's a different story. And then on the flipside of that, there's every indication that you could be well below two dollars a kilogram of production cost, depending on your renewable access. And now you're starting to get into the zone where you're fighting head-to-head with grey hydrogen and in an incumbent installed capacity that's been around for a very long time.

Verdagy apparently is preparing to launch commercial operations later this year, presumably this will be in the US, is the company targeting any markets outside the US?

Absolutely. So let's just say that the hydrogen Backbone in Europe is very, very compelling to us, and there's existing hydrogen backbone infrastructure, and there's a roadmap of expansion, and some additional cooperation agreements that have been announced in regions like Iberia. All of those would be really, really good target locations. Of course, we're seeing a lot of interactions with the government about local production, local incentives and things of that nature, so we just need to be careful and thoughtful, just like other countries when they come to the US, or trying to get to IRA incentives, we want to do the same thing with EU incentives and do that thoughtfully with partners.

The hydrogen produced, in which sectors do you expect it will mainly be used?

I would say petrochemicals is a really large first-mover market, as is industrial chemicals, and as are the steel industries. Those three have enough captive demand to drive the green hydrogen business for decades, just those three industry sectors. Literally that's a 50-year run to substantially decarbonise those three industries with green hydrogen.

Where do you expect Verdagy to be in say ten years time?

We want to be a very competent producer and innovator of green electrolysis equipment, services, and production assets. So if things evolved the way they do in other industries, I would suspect that hybrid business models will come to pass where, if you're a really good equipment manufacturer, an innovator, you can also participate in a service business, you can also produce hydrogen as an as an asset yourself in very much the way solar evolved over time, where you had equipment manufacturers also become producers and get into the energy business themselves now. As a start-up, it's a little bit early to say that we could someday produce hydrogen and sell it as service, but 10 years from now that's fully within scope.

Is there anything else I haven’t mentioned or that you would like to add?

Yeah, I would say that there's a couple things that are very interesting as I see markets evolve. Let's just say that we participated in a cluster where they have what they call non-discriminatory pipeline access. So they're starting to be able to attract electrolyser companies, service companies, producers if you will, then you can tap into a pipeline operated by someone, and then federate the supply and then have hub pricing as a demand off-take. So it starts becoming a very interesting replicable model. Wherever these clusters are forming, you'll start to see more and more of this non-discriminatory access, and it really is going to change the game, in my view, to being able to make hydrogen a lot less dependent on transport and things like that. You'll be able to have clusters of federated supply and demand, which I think will be highly attractive region by region by region. And the capillary system of the pipelines is only going to get broader. You'll see it turn into more like a natural gas infrastructure down the road, where it's produced all over the place, distributed all over the place, and that's an exciting future when you think about green hydrogen's role in that kind of an environment.

It's also kind of entertaining, because wherever there’s sunshine and wind and a willingness to harness those things, with the right physical infrastructure, it changes the game. You don't have to go to the three miles deep to the bottom of the ocean to find a molecule. It's readily available and a lot more on an egalitarian basis. You'll see a lot of different players emerge that may not be traditional and who may not be who you would think would be the players of the future.  

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I would have thought the very first, and most obvious question, to ask this charlatan is, where are you going to get all the water to electrolyse from given that most of the world is already desperately short of fresh water, let alone the 99.99% pure water required for hydrolysis?

When are people (especially journalists) going to wake up to the reality that hydrogen is not going to play any significant role in the transition away from fossil fuel use? Even if there is some niche market for H2, the vast majority of future energy supply will be derived from renewables in the form of electricity, stored in the form of electricity (with some pumped storage), and distributed, as electricity, using off-the-shelf technology, in a tried and tested way that requires comparatively little infrastructure improvement. All this compared to the absolutely gargantuan – with a matching price tag – infrastructure required to make hydrogen even a small player. It’s all a complete con!!
Baterías con premio en la gran feria europea del almacenamiento de energía
El jurado de la feria ees (la gran feria europea de las baterías y los sistemas acumuladores de energía) ya ha seleccionado los productos y soluciones innovadoras que aspiran, como finalistas, al gran premio ees 2021. Independientemente de cuál o cuáles sean las candidaturas ganadoras, la sola inclusión en este exquisito grupo VIP constituye todo un éxito para las empresas. A continuación, los diez finalistas 2021 de los ees Award (ees es una de las cuatro ferias que integran el gran evento anual europeo del sector de la energía, The smarter E).