The need for a viable business plan makes commercialization one of the most important aspects of developing hydrogen fueling technology. The following list provides the ways in which the technology can be commercialized and scaled:
- Formation of a business entity
- Creating a value proposition
- Identifying customer segments
- Managing customer relations
- Large scale manufacturing
2. Cost reduction
- Decrease in compressor cost
- Specialization of installation roles
- Increased bargaining power
3. Needed advances to go from an entry system to a commercially viable product
- Increase in container size
- Vortex tube catalyst development
- Regulation changes
- Material advances
- Development of upgrades, warranties, and insurance policies
- Integration of greenfield locations
- Changes in public perception
4. Private investment potential
Detailed information about the process to commercialize the product is explained in the following sections. Much of the following information can be found in United States Department of Energy research paper: Energy Efficiency & Renewable energy, Technical Report NREL/TP-5400-64107 SAND2015-2660.
The commercialization of our liquid hydrogen system relies on producing hydrogen in a convenient and cost effective manner. The following list shows some of the ways in which the commercialization process has already begun:
- Formation of Protium Innovations LLC
- Licensing of vortex tube patent from WSU
- Working on vortex tube proof of concept
- Development of minimal viable product
Talking to potential customers has allowed for the fine tuning of a value proposition.
Value Proposition: We will provide value to our customers by supplying liquid hydrogen to an already existing liquid hydrogen market in a convenient and cost effective manner.
Customer Segments and Partners
Finding customers is the first step in increasing manufacturing at larger scales. The following list shows potential customers and/or partners who have expressed interest in either liquid or gaseous hydrogen.
- AgEnergy Solutions
- Acts as both a partner and customer. Interested in using excess farm biomass to provide us with gaseous hydrogen for liquefaction purposes.
- Potential customer. Uses H2 primarily for HCL production.
- Potential customer. Uses H2 for HCL production.
- Clean tech open
- Accelerator aimed at the development of environmentally friendly startups.
- Turns municipal waste into various gaseous for energy purpose. Produces hydrogen to be shipped and sold to the already existing hydrogen market.
- Potential customer. Produces large amounts of waste hydrocarbon and syngas. Needs to separate hydrocarbons and syngas to resell for additional revenue stream.
- Washington State University
- Assisting in the technical development of the system.
Customer Relationship Management
Managing customer relations is an important part of keeping and growing customer base. The primary customer relations we will be using are as follows:
- Excellent customer service
- Word of mouth
- Find new customers through conferences, trade shows, networking, and current equipment suppliers
- Referral programs
Large Scale Manufacturing
Our dispensing until will still need to provide the same value to the customers when produced at a large scale. The ability to provide liquid hydrogen in a cost effective and efficient manner will be the mass productions limiting factor. Changes to the system which hurt our ability to provide value to the customer will be unacceptable, even if it cuts down on the systems costs.
The modularity of our system is very important for large scale manufacturing as various subcomponents can be improved and then mass produced without affecting the entire system. Deals can be made with specific suppliers for only one component. This allows us to find the best large scale manufacturing suppliers for each specific subcomponent as opposed to the entire system, which will cut down on large scale manufacturing costs while still optimizing the system to fit our value proposition goals.
Stations which produce liquid hydrogen are currently much costlier than gaseous hydrogen stations. This is mainly a consequence of the costly components required to liquefy hydrogen. The Department of Energy (DOE) estimates that a liquid hydrogen station would cost $910,447 before installation. Our costs will be closer to $400,000 as we avoid many of the capital intensive components by using a high efficiency vortex tube (see expected costs). Our system is already noticeably more affordable than current estimates, but over time we except further decreases in costs. The following shows some of the ways we will decrease costs as production grows.
Based off of the DOE’s Hydrogen Refueling Station Analysis Model (HRSAM), compressors are the only major component in hydrogen liquefaction for which costs will decrease significantly with increased manufacturing production.
A decrease in the cost of compressors will decrease the cost of the entire station as compressors are the most expensive unit within the system. The DOE estimates that current compressor costs are roughly two times the cost today than their long term projections. The cost of producing our system will reduce over time as the cost of compressors decrease.
Specialized Installation Roles
We will utilize a specialized assembly format to more effectively install and test our product once larger production begins. Installers will have specialized roles which will cut back on installation times as well as ensure a more effective testing procedure to cut back on later maintenance costs. Our production model will follow lean manufacturing standards which have been developed in the last century by major car producers to achieve maximum efficiency.
Increased Bargaining Power
Negotiating power on the part of the consumer will generally increase as buying increases. We expect that as our production increases we will have greater leverage which will allow for more affordable components.
Discussion of expected and/or needed advances to go from an entry system to a commercially viable product
To become a commercially viable product, we must first prove our ability to provide customers with a hydrogen fueling option based on our proprietary liquefaction technology. With this proof of concept, it is imperative the dispensing unit is successfully integrated into the current fueling infrastructure in compliance with the H2 fueling station guidance under development by the DOE / SAE J2601.
The following list represents changes necessary to become a commercially viable product:
The initial container that will be used is 603 ft; relatively small by shipping container standards. A larger container will be able to accommodate components with increased hydrogen production and dispensing capacity. The system will generate a higher lifetime profit.
Vortex Tube Catalyst
The vortex tube is our primary competitive advantage, and the catalyst it utilizes will be effective in producing liquid hydrogen at high efficiencies. Finding a more effective catalyst will yield a larger competitive advantage and help our commercialization efforts.
Current regulations in both Washington State and elsewhere in the country somewhat limit the effectiveness of hydrogen fueling stations. Washington regulation WAC 296-24-31505, for example, sets the minimum distance of a fuel station from a concentrated group of people to 75 feet. Many of these regulations will most likely change over time to be more in line with the regulations seen in the gas and oil industry.
Advances in material science will help in the commercialization of our product. An increase in the insulation ability of the storage, for example, will make the overall system more efficient.
Upgrades, Warranty, and Insurance
Providing upgrades to liquefaction stations will be necessary as more advanced sub components are invented. Warranties and insurance will also be required to make purchasing a liquefaction plant a more attractive investment.
Integration of ‘Greenfield’ Locations with Current Infrastructure
Greenfield locations (i.e. land without any structures) are increasingly difficult to find in urban locations. Systems which use Greenfield locations will face difficulties integrating into urban settings unless an increase in Greenfield locations occurs. The DOE does not see Greenfield hydrogen stations being viable in urban areas as land is not readily available. Some changes in current infrastructure would benefit hydrogen dispensing units as they could be more easily introduced into urban areas. An example would be the conversion of an urban parking lot to a location for our fueling station.
Our dispensing unit is much smaller and more movable than other units. This gives us the advantage of being able to utilize some Greenfield locations that would generally be too small for other designs. Changes to current infrastructure to allow for more Greenfield locations, however, would still help our system become integrated into urban settings.
Greenfield sites in urban areas are areas in which development could take place. They are very important for many hydrogen dispensing units.
New technologies can often times be the subject of public scrutiny, and hydrogen is not different. Liquid hydrogen in urban settings has seen some resistance from the public over general safety concerns. Japan, for example, had problems installing a liquid hydrogen station as the public had fears over the safety of hydrogen. Public perception of the safety of hydrogen must be addressed by means of education and outreach.
Potential for private investment and manufacturing partners for components as well as systems integration
The entire system will be modular and any needed upgrades or exchanges can be made on a subsystem level. Manufacturers will need to be aware of component sizes for the various subsystems and different manufacturing partners may need to be in contact with one another to assure proper systems integration.
Private investors will be a necessary part of our system going forward. Investors and partners with connections to capital and transit routes will help the commercialization of our system progress.