Electric Hydrogen nabs $100 million in credit financing

Four banks gave the electrolyzer manufacturing startup a vote of confidence, despite its having barely started production.

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Hydrogen bubbles produced during electrolyzer stack testing at Electric Hydrogen.

Hydrogen bubbles produced during electrolyzer stack testing at Electric Hydrogen. Photo credit: Electric Hydrogen

Hydrogen bubbles produced during electrolyzer stack testing at Electric Hydrogen.

Hydrogen bubbles produced during electrolyzer stack testing at Electric Hydrogen. Photo credit: Electric Hydrogen

Four major banks are signaling their faith in the promise of green hydrogen, by providing a substantial corporate loan to an electrolyzer manufacturer that is still in the early stages of production.

  • The top line: Electric Hydrogen announced today that it received $100 million in corporate credit financing, an unusually large facility for a startup company still at the pre-revenue stage. The company opened its first large-scale factory in Devens, Massachusetts late last month, and is set to ship its first electrolyzer stacks to a project in Texas later this year.
  • The nuts and bolts: The loan facility was led by HSBC, which contributed $50 million through its innovation banking business, with the participation of J.P. Morgan, Stifel Bank, and Hercules Capital. The financing is meant to support the manufacturing and deployment of Electric Hydrogen’s electrolyzer plants, but allows for flexibility in how the company uses the funding; it does not require any equity dilution. 
  • The current take: Banks have so far been hesitant to take on green hydrogen projects, because of the technology risk they carry and the lack of short-term demand for the fuel or the electrolyzers to make it, among other things. But the unusual size of the corporate credit facility suggests that banks believe that things are beginning to shift. Derek Warnick, Electric Hydrogen's chief financial officer, described the credit facility as marking “a step-change in Electric Hydrogen’s access to capital.” 

In March, Warnick told Latitude Media that Electric Hydrogen’s approach is to largely rely on non-dilutive capital, like the corporate credit facility it just obtained, so that it can use equity financing for research and development. To keep costs down and make itself attractive to more risk-averse investors, the company has been relying on equipment with mature supply chains, among other things.

The news comes less than two months after Electric Hydrogen announced $50 million in equipment financing provided by Trinity Capital and $46 million in a Department of Energy grant under the infrastructure law’s clean electrolysis program. Since its founding in 2020, Electric Hydrogen has secured over $750 million in financing from investors such as Amazon’s Climate Pledge Fund, BP, and Breakthrough Energy Ventures.  

According to the announcement, Electric Hydrogen plans to use the new financing to advance the deployment of its 100-megawatt electrolyzer plants, which rely on proton exchange membrane electrolysis technology. The company plans to reach full production volume — 1.2 gigawatts per year — by 2025. 

Electric Hydrogen is not alone in raking in financing. Its domestic electrolyzer startup peers have also grown flush with funding in recent years, and the release of the Department of Treasury’s proposed 45V hydrogen production tax credit guidelines have given the industry new clarity. 

Rahul Bammi, president of alkaline electrolyzer startup Verdagy, told Latitude Media that interest in the company’s equipment has increased since the release of the guidelines. Verdagy opened its California manufacturing facility late last year and it is also planning to speed up production in 2024.

Despite these recent gains, however, the market is still relatively young. According to the International Energy Agency, in 2022 global electrolyzer manufacturing capacity stood at 14 GW. Manufacturers are aiming to reach 155 GW of manufacturing capacity per year globally by 2030, IEA found, but only 8% of the capacity has reached a final investment decision. 

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