Doors for long-term cooperation in South Korea opened to Estonian company H2Electro, which manufactures components required for hydrogen production. The company’s founder and CEO Henrik Hal hopes today’s major cooperation project will create a good basis for future cooperation with even bigger companies such as Hyundai or Toyota.

H2Electro manufactures the components needed to produce green energy, hydrogen. Specifically, the company’s pilot plant in Tartu produces the individual elements of a high-temperature electrolyser, which are known as ceramic cells and stacks.

“Our innovation lies in novel materials,” Hal stressed. “Another important aspect is how we produce these cells.” The company has 250 m2 of space in the Tartu Science Park, where the aforementioned cells, which have been noticed in the world today for their quality, efficiency and stability, are manufactured in stages using high-temperature ovens.

The innovative solution and technology have already brought the company its first major partner in South Korea. Unfortunately, Hal cannot reveal the name of the company, but he can say that they are a stack manufacturer who use the ceramic cells manufactured by them in their own production and R&D. H2Electro also has resellers in Japan. Partners in the two Asian countries also distribute the product of H2Electro to local industrial companies, conglomerates such as Toyota Group and Hyundai.

The company is looking at South Korea and Japan because they are far ahead of Estonia in hydrogen use, Hal says. “We don’t have any hydrogen filling stations in Estonia today,” he gave as a simple example, adding that fortunately Alexela is currently building the first one in Tallinn and it will open this year. In Japan and South Korea, however, they are already the norm. Electricity for everyday activities is also produced from hydrogen for households in Japan’s densely populated areas, he added.

Expanding hydrogen market

According to the company’s CEO, the product of H2Electro is attracting a lot of interest in both the European Union and Asia. Thus, in addition to the major South Korean company with which the Enterprise Estonia helped them broker a deal, cooperation negotiations are currently under way in France, and Germany is also seen as a potential market. They also have a partner in Denmark, where they cooperate with DynElectro, and in Estonia they’re working with Enefit Solutions, a subsidiary of Eesti Energia.

H2Electro signed a contract with Enefit Solutions in spring, which is the basis for cooperation in the development of an electrolyser for hydrogen production. The partners began active work in August. “The option to develop and build the final product locally in Estonia with a strong partner helps us work more efficiently and save time. Having a big partner on the home market also gives confidence on foreign markets.”

“The goal is to bring the company’s turnover numbers to hundreds of millions. We have the potential today to be one of the next success stories in Estonia.”
Henrik Hal, CEO of H2Electro

Confidence and production capacity are necessary, as according to Hal, the hydrogen market will grow approximately 1,000-fold in the next 10 years. “I personally don’t know of any industrial sector today that is going to grow a thousand-fold in the near future. Approximately 1 GW of electrolysers were produced in 2022, but their production capacity by 2030 must be 590 GW per year to meet the climate targets that Europe and other developed countries have set in order to switch from fossil fuels to renewable energy,” said Hal to illustrate the outlook for the near future.

According to the head of H2Electro, the war launched by Russia in Ukraine increased these goals even further because, in addition to climate concerns, the accessibility of gas became an issue. “Europe wants to be independent. Being energy-independent means that you have to have your own production units. There must be sufficient security of supply of wind and solar energy, which in turn can be used to valorise hydrogen, which is used to make ammonia and methanol,” Hal said, also referring to the ammonia plant that will be opened in Paldiski.

Aiming to grow into a unicorn

If H2Electro managed to capture 1–2% of the global hydrogen market, it would be colossal, according to the company’s CEO. “I don’t even dare to say all those zeros out loud,” he emphasised. At the moment, however, hydrogen is still an alien topic to people.

“Investors today don’t have a high degree of confidence in the sector. They don’t understand yet why they should invest. I’m like a missionary,” Hal said, although both politicians and the media have been talking about hydrogen technology and the first big investments are coming to Estonia. In addition to the aforementioned Paldiski ammonia plant, a methanol plant will also be built in Pärnu, which is a billion-euro investment. According to Hal, the introduction of hydrogen technology is inevitable.

Demand for the components provided by H2Electro is already high in various manufacturing industries – ammonia and methanol production, nuclear power plants, the steel industry. However, Hal adds that to be able to say that the company is doing very well, it could do with some more big contracts and partnerships, similar to the one the company has with Enefit Solutions.

“The goal is to bring the company’s turnover numbers to hundreds of millions. We have the potential today to be one of the next success stories in Estonia,” he says, referring to their ambition to become a unicorn, or a billion dollar company. The partners the company dreams of cooperating with are also big, with Toyota, Hyundai and SK Group being some of the ones Hal says could help the company conquer the Asian market.

The company is raising an investment of €4.5 million

It has taken 3.5 years to conclude the present contracts and find partners. That’s the exact age of H2Electro, which was established in 2021. “Years ago, I met with Enn Lust, a chemist and professor at the University of Tartu, because I could already see that hydrogen and storage was a business,” said Hal. “This is the future, and investing in this sector makes sense.”

“Investors today don’t have a high degree of confidence in the sector. They don’t understand yet why they should invest. I’m like a missionary.”
Henrik Hal, CEO of H2Electro

So the first framework contract was signed with the University of Tartu three years ago, which also included the development of novel materials, as this competence is very strong in the Faculty of Materials Science at the Institute of Chemistry. The cooperation has gone so well that today, six of the company’s 10 employees are scientists with a background in the Institute of Chemistry at the University of Tartu.

As a result of the joint work, the company now has a finished product and production, a completed team that works well, and also the first partners and signed customer contracts, with more to come. The company has raised €4.4 million in total, including support. At present, H2Electro is raising an additional investment of €4.5 million

GOOD TO KNOW

H2Electro
Develops solid oxide electrolysis cells for use in industrial environments.
Employees: 10. 60% of employees have a background in the Institute of Chemistry of the University of Tartu.
Investments raised: €4.4 million.
Production capacity and objective: to produce 5,000 elements in 2025, 10,000 elements in 2026 and 50,000 in 2027. From there, the plan is to move to mass production.
Competition: there are other companies operating in the sector: Bloom Energy in the US, Sunfire in Germany, Haldor Topsoe in Denmark, and Elcogen and Stargate Hydrogen in Estonia. Henrik Hal says that as the market is big, there is no feeling of direct competition.
h2electro.com

This content is funded by the European Union – NextGenerationEU

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