Why Elon Musk Is Wrong About Hydrogen

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By Jon LeSage

Elon Musk was right about one thing: electric passenger cars will be beating hydrogen fuel cell cars.

But what about trucking and power plants? Things are looking good for Nikola Motor Co.’s hydrogen-powered heavy-duty trucks. While Tesla CEO Musk brags about his company getting into the non-diesel-powered trucking business, Nikola Motor is already there and is generating a lot more interest.

On the power plant side, wind and solar are the leading renewable energy sources — but hydrogen is getting more backing.

ValueAct Capital Management is betting on Nikola, a closely held hydrogen fuel cell trucking company, which is seeking to raise $1.5 billion to expand in the U.S.  The San Francisco-based capital firm had invested up to $40 million prior to the fundraising campaign and will be taking a stake in the company.

ValueAct CEO Jeff Ubben has put together a $350 million investment pool, the ValueAct Spring Fund, where the Nikola investment is coming from. Nikola meets the objectives of the Spring Fund and makes good business sense, the chief said.

“This idea of a really, truly sustainable business that delivers savings today and has a tremendous social and environmental benefit is the next Facebook,” Ubben said. “These are the next mega-plays.”

On the savings side, Nikola is generating interest from trucking companies with the fuel being 20 to 30 percent cheaper than diesel. That opens to the door to trucking, rail, and the air cargo business, Ubben said.

Nikola has already scheduled delivery of about $14 billion in fuel cell trucks to customers. One of them, Anheuser-Busch InBev NV, ordered 800 tractor trailers from Nikola last May. The fuel-cell truck maker will also generate revenue from the fuel it will sell to the client from its network of hydrogen fueling stations.

Phoenix, Ariz.-based Nikola on Tuesday talked at great length to a crowd of nearly 2,000 suppliers, customers, and potential investors about its future. That will include a vast network of hydrogen fueling stations, an electric personal watercraft, a drone-launching military vehicle, and a list of fuel cell and battery-electric vehicles.

Korean automaker Hyundai sees great potential in hydrogen energy — and in fuel cell vehicles sold through its Hyundai and Kia brands.

On the electric power plant side, Hyundai Motor just signed a memorandum of understanding with Korea East-West Power and Deokyang to build a 1MW hydrogen fuel cell power facility. It will generate 8,000 MWh of electricity annually with zero emissions and can power 2,200 households at 300 kWh per month.

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The hydrogen power facility is scheduled to break ground later this year in Ulsan, South Korea. It will utilize two container-type 500 kW generator modules, each loaded with multiple power modules from Hyundai’s Nexo crossover SUV fuel cell vehicle.

The Korean-power deal was inked right before Hyundai signed a deal to deliver 1,600 fuel cellheavy-duty trucks through a joint venture with H2 Energy AG.

The new agreement will start with hydrogen refueling at H2 Mobility Switzerland Association’s network of stations. The JV will also expand its market presence to other European countries beyond Switzerland.

Hyundai has been looking for opportunities to lead the way in fuel cell vehicles — competing with Toyota and Honda on the passenger vehicle side and with Toyota and Nikola on the commercial truck side.

British oil giant BP is traveling a similar route, adding support for hydrogen power along with its alternative energy investments in biofuels, biopower, and wind and solar energy.

BP is funding a joint study looking to create Europe’s largest renewable-energy-based hydrogen production facility at a refinery in Rotterdam, the Netherlands. The oil company is working with Nouryon (formerly known as AkzoNobel Specialty Chemicals) and the Port of Rotterdam to study the energy potential.

The joint study is looking into the feasibility of a 250-megawatt water electrolysis facility that could produce up to 45,000 tons of hydrogen per year. The power would likely come from excess wind and solar power that might not be utilized.

An electric utility in the state of Washington also sees the potential of branching out into hydrogen production — this time from a water dam along one of America’s largest rivers.

The Wells Dam on the Columbia River in Washington generates quite a lot of surplus electricity, especially during spring runoff. Utility managers had been sharing the idea of using surplus electricity to split water molecules to make hydrogen.

Douglas County Public Utility District general manager Gary Ivory said one of the advantages here is that the electrolyzer, which is needed to produce the hydrogen, has dramatically fallen in pricing lately. The utility district runs the Wells Dam and sees real cost savings benefits in going the hydrogen route.

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