This year, venture capital firm Energy Innovation Capital led an investment in Aurora Hydrogen, an Edmonton-based hydrogen technology company developing clean, low-cost hydrogen production solutions. Co-investors include Williams, Shell Ventures, and Chevron Technology Ventures.
Why is this exciting? Aurora Hydrogen possesses an elegant technology that has the potential to produce emission-free hydrogen under $1/kg LCOH (levelized cost of hydrogen, a metric that factors in the totality of capital and operating costs for producing hydrogen). Other clean-hydrogen production technologies are generally in the $2/kg+ LCOH range, which makes Aurora Hydrogen an attractive technology from an economic viability standpoint, rooted in its advantaged scientific foundations.
The hydrogen industry is a large industry today – over $130 billion per year – and is forecasted to grow to $2.5 trillion by 2050. This growth is fueled by hydrogen’s key role in global decarbonization, specifically for the hard-to-abate sectors. Hydrogen’s inherent properties as a light, storable, energy-dense molecule that produces no direct emissions when combusted lends its use as a good candidate to decarbonize heavy industry and heavy transport, which account for 40% of global carbon emissions. Innovative, transformative technologies will be required to meet decarbonization goals, including the burgeoning amount of government and corporate Net Zero initiatives.
The vast majority of hydrogen produced today is carbon-intensive. Most hydrogen today is produced through a process called steam methane reforming (SMR), which produces 9kg of carbon dioxide per kg hydrogen. There are methods to produce clean, emission-free hydrogen, though these methods do have drawbacks. One method to produce clean hydrogen is adding carbon capture after the SMR process (“blue” hydrogen); this process, however, does not capture all the carbon dioxide produced. Another method is through electrolysis, where energy is used to split water into hydrogen and oxygen (“green” hydrogen), though this process is highly energy intensive.
This is where Aurora Hydrogen’s innovation comes in. Aurora Hydrogen’s energy technology is an elegant solution, where natural gas undergoes pyrolysis to form clean hydrogen and solid carbon, the latter of which can then be sequestered or used. Aurora uses a highly efficient process with microwaves to provide the energy to power the reaction. This is not only a more energy-efficient hydrogen production technique than hydrogen production techniques through electrolysis (“green” hydrogen), but it also allows the easier sequestration of carbon, in its solid form (vs. carbon capture after SMR, “blue” hydrogen). What’s more, Aurora’s technology is advantaged versus other methane pyrolysis technologies (the category is called “turquoise” hydrogen), due to its novel reaction and heating mechanism, which does not require catalysis, molten salts, or plasma.
Energy Innovation Capital has evaluated many hydrogen companies as part of its Energy Transition and Sustainability investment themes. Among many evaluative factors, EIC looks for technologies with scalable, science-based advantages, that can also provide an outsized impact toward decarbonization. Aurora Hydrogen’s technology meets these criteria, and has the large-scale reduction potential of over 900 MT of CO2 per year at scale, which is equivalent to almost 2% of global carbon emissions.
Furthermore, an important consideration for successfully commercializing energy tech ventures is the ability to de-risk scale-up. Aurora’s modular technology platform makes it viable across many use cases, an additional advantage beyond energy efficiency and lowest-cost potential. Many industry experts have hypothesized a low-cost, distributed method of hydrogen production will unlock the hydrogen economy, as this will reduce the additional costs of transportation and distribution from a large-scale, centralized facility. Aurora’s solution is scalable across a variety of use cases, and feasible at the point of use, from hydrogen fueling stations, to inside steel plants, to grid injection to reduce carbon intensity of a natural gas network, to even supplementing existing processes in large-scale chemical and ammonia plants.
Energy Innovation Capital believes Aurora’s technologically-advantaged solution, strong market tailwinds, multiple paths to establish product-market fit fueled by decarbonization imperatives – all complemented with a strong founding team – are hallmarks of a successful energy technology venture. EIC believes companies like Aurora will shape the energy transition and sustainability in conventional energy and other critical industries, leading toa world of clean, abundant, and affordable energy.
