The role of Sunfire’s green hydrogen in our energy transition
Welcome back to Impact in your Inbox. Our monthly newsletter on all things impact, private equity and climate tech — by Liza Rubinstein, Co-founder and Head of Impact at Carbon Equity. Let’s get to it!
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💡In the spotlight:
To get to net zero, we need to electrify what we can: our cars, homes and industries. Fortunately, we have many mature climate technologies making good progress in our electrification process, like electric motors, heat pumps and batteries. However, there are still parts of our economy still using fossil fuels that are hard to electrify.
Today, we focus on one of the solutions that can help get those areas to net zero: hydrogen.
Hydrogen, when produced with renewable electricity, is a promising pathway for decarbonizing high-emitting and hard-to-get-off-carbon industries like high-temperature industrial processes and long-distance heavy transport.
Currently though, 95% of hydrogen is made from fossil fuel — primarily natural gas. If we can efficiently produce hydrogen with renewables as well as ship it and store it at scale, green hydrogen has the potential to play a significant role in curbing the climate crisis.
With this context, let’s dive into the production of green hydrogen using electrolysis technology, which can contribute substantially to reducing carbon dioxide (CO2) emissions in energy-intensive industries.
Sunfire, one of the companies within our Decarbonization Fund I, is one of the world’s leading companies developing electrolysis technologies to produce green hydrogen (and synthetic gas) efficiently and at scale.
Green hydrogen is made using only renewable energy, typically through the process of electrolysis. Electrolysis of water uses electricity to separate water into gaseous hydrogen (H2) and oxygen (O2). Sunfire’s electrolysis solutions produce renewable hydrogen and syngas, a mixture of hydrogen and carbon monoxide, from renewable electricity, water steam and captured CO2.
Sunfire has three products used for different hard-to-decarbonize use cases:
- Sunfire-HyLink Alkaline (for hydrogen) is its most established and proven electrolysis solution. This pressurized Alkaline electrolyzer is optimal for applications without or with limited steam availability. It has a proven system lifetime of at least 90,000 operating hours, making it a cost-effective, reliable and ready-to-use solution. Applications: steel, refineries, chemicals, mobility and energy
- Sunfire-HyLink SOEC (for hydrogen) is its innovative electrolysis solution based on solid oxide cells. The Sunfire-HyLink SOEC is the highest efficiency way to produce green hydrogen today! This electrolyzer uses steam as feed instead of liquid water to produce hydrogen. The integration of waste heat from industrial processes lowers operational costs and means less green power is needed to produce the same amount of hydrogen compared to alternative low-temperature electrolysis technology. Applications: steel, refineries and chemicals
- Sunfire-SynLink SOEC (for syngas) is an electrolysis solution based on solid oxide cells optimal for syngas production. Running at 850°C, the electrolyzer simultaneously processes water steam and CO2 to syngas gas in one single step. By integrating waste heat, this electrolysis solution provides more syngas output for the same renewable electricity input compared to other syngas production pathways. Applications: e-fuels and chemicals
Supplying hydrogen to industrial users is now a major business around the world. The demand for hydrogen in industrial use has more than tripled since 1975, and as I mentioned above, it is currently almost completely supplied by fossil fuels.*
Because of that, production from gas and coal made hydrogen accounts for 830 million tonnes of CO2 a year, equivalent to the CO2 emissions of the United Kingdom and Indonesia combined.*
With its leading electrolysis solutions, Sunfire’s green hydrogen has already begun to play a big role in reducing the CO2 emissions in hard-to-get-off-carbon industrial uses like ammonia, iron, steel and cement production.
However, the potential impact of its green hydrogen does not end there.
If green hydrogen production becomes more cost-efficient, and we are able to ship and store it effectively, it can also help reduce emissions:
- in transport, through hydrogen fuel cell trucks and cars, and in shipping and aviation with hydrogen-based fuels
- in enabling renewable energy 24/7, by being able to store, transport and provide renewable energy when other forms (like solar and wind) aren’t available
Recent company news
It has been a busy year for Sunfire! I've compiled four highlights:
1) Sunfire is installing the world’s first multi-megawatt (~2.6 MW) solid oxide cells electrolyzer (Sunfire-HyLink SOEC) to produce green hydrogen at Neste’s Renewables Refinery in The Port of Rotterdam. The company will install twelve electrolysis modules on site, adding up to the world’s largest high-temperature electrolyzer installed in an industrial environment. After its commissioning, which is expected in early 2023, the electrolyzer will produce more than 60 kg of green hydrogen per hour.*
2) Uniper decided to implement a 30 MW pressurized alkaline electrolyzer from Sunfire (Sunfire-HyLink Alkaline) — to begin industrial-scale green hydrogen production, transportation, storage, and economic use. The Sunfire electrolyzer will create green hydrogen using renewable electricity from a nearby wind farm. In the second phase of the project, the generated hydrogen can momentarily be stored in a salt cavern, which nearby chemical companies can then use.*
3) Under the "Important Projects of Common European Interest (IPCEI)", Sunfire will receive more grant funding for industrializing its hydrogen technologies. It is one of the first companies to be granted an early start. At the beginning of the year, the German Federal Ministry of Education and Research had already committed funding of €60 million through the flagship project H2Giga.*
4) Amazon’s $2 billion Climate Pledge Fund is accelerating its efforts to decarbonize global operations through green hydrogen. The Climate Pledge Fund announced new investments in Electric Hydrogen (another Decarbonization Fund I company) and Sunfire, which they called two of the most promising U.S. and European-based developers of electrolyzers.*
📚 Interesting reads
Climate Tech Deal Flow Holds Up Amid Threat of Economic Downturn
In short: The third quarter of 2023 saw 539 climate tech deals and $10.7B invested compared with 547 deals and $12.3B invested in the second quarter. According to Bloomberg, this implies that enthusiasm for environmental innovation is persisting through growing signs of economic uncertainty.
Investment in Renewable Energy Needs to Quadruple by 2030
In short: We still have a ways to go. Currently, about 90 cents goes to low-carbon energy sources for every $1 put toward fossil fuels. That ratio needs to change dramatically by 2030, with an average $4 invested in renewables for every $1 allocated to high-carbon energy supplies.
Sustainable economy: Parliament adopts new reporting rules for multinationals
In short: The EU is getting close to fully adopting rules on what sustainability information companies need to disclose. Once put into place, it will lead to more transparent and detailed reporting on a company’s impact on the environment, and offer investors more reliable information.
Star trek for potatoes: can a hi-tech farm save french fries from the climate crisis?
In short: Potato farmers are adjusting production methods due to climate change consequences. This article brings to life how a simple commodity like potatoes can spark both cutting-edge and bygone methods of sustainable agriculture — saving our access to french fries! 🦸🍟
The “world’s largest floating wind farm” produces its first power
In short: Offshore windmills are typically mounted with a fixed bottom to the seabed in shallow waters. This article introduces you to next-level floating windmills that can be placed in the deep sea! Paradoxically, the Norwegians use this technology today to power oil and gas fields.
💡 3 awesome innovations (plus funding)
Nitricity transforms how farms fertilize by producing nitrogen fertilizer from air, water and renewable electricity in on-site systems. It recently announced its Series A financing of $20M, joined by Energy Impact Partners.
SiTration is pioneering new separation processes for materials extraction, which recovers critical materials in the lithium-ion battery recycling process. Azolla Ventures led its $2.35M pre-seed funding round.
RIFT is developing a green alternative to fossil fuels with its tech that use iron powder as a circular fuel generating heat with no direct CO2 emissions. It recently raised €2M in its first round of investments and was selected for the Breakthrough Energy Fellows Program.
🔬 Show me the data
Source: Climate Tech VC
What you are seeing is a breakdown of the $94 billion of total capital raised by climate tech funds since Jan 2021. This capital was raised by 132 funds in total including venture capital (VC), Corporate VCs (CVC), Growth Equity, Infrastructure (Infra), and Private Equity (PE).
The amount of climate capital raised doubled in 2022 versus 2021 — mostly due to a series of large infrastructure (infra) and growth equity funds announced. There were five funds that raised more than $1 billion. 😵 This means two things.
First, there is around $37 billion of dry powder (money already raised and available to be invested) for many climate tech companies to be funded over the next few years despite the current market. ~$13 billion of the dry powder is for VC and ~$24 billion for Growth, which means funding is available for early-stage startups and later-stage scaleups.
Note: This dry powder is only from funds raised since January 2021 so in total, there’s more capital available for climate tech.
Second, the increase in capital in infra and growth equity funds means more capital available to scale climate companies with proven technologies.
According to McKinsey, existing mature technologies, if deployed widely, could deliver about 60% of the GHG emissions abatement that’s needed to stabilize the climate by 2050.* Infra and growth equity funds are critical to funding these technologies and bringing them to new markets. In doing so, they are the last private funding stops for our next climate unicorns.