Copyright © 2020 Albuquerque Journal
New Mexico could soon become a global hub for the world’s rapidly emerging hydrogen economy, thanks to technology developed by Albuquerque startup BayoTech Inc.
The company, which was launched in 2015, has built the world’s first compact, mobile, hydrogen generators that can produce hydrogen anywhere, and at a fraction of the cost of today’s massive, centralized facilities.
The company just signed its first commercial contract with Nutrien, which bills itself as the world’s largest supplier of production inputs for agricultural operations. That company will start using BayoTech’s hydrogen generators this year to produce ammonia, and possibly nitrogen fertilizer, which require hydrogen as a base chemical.
BayoTech also forged a new partnership in April with Netherlands-based DLL, a $30 billion subsidiary of Rabobank Group that provides global vendor financing. DLL will market BayoTech’s hydrogen units on credit to end users who lease or rent the generators.
And BayoTech’s newly formed global sales team is lining up contracts worldwide, with $200 million in proposals in the pipeline, said president and CEO Mo Vargas.
“We’ve built a world-class sales team in North America, Europe and East Asia,” Vargas said.
As commercial promotion ramps up, BayoTech and its manufacturing partner, Farmington-based Process Equipment & Service Co., expect to rapidly expand their workforce. BayoTech almost doubled its workforce from 16 to 30 since last year, nearly all of them housed at the company’s 15,000-square-foot facility near Albuquerque Balloon Fiesta Park. It will hire up to 10 more people this year, and between 20 and 30 in 2021, Vargas said.
The real job growth, however, will happen in Farmington, where PESCO spent $3 million for a 60,000-square-foot facility next to its current 100,000-square-foot manufacturing plant to scale up production of BayoTech’s hydrogen generators, said PESCO business development manager John Byrom.
“We’ve been working with BayoTech for three years to help build prototypes and provide engineering-design support,” Byrom told the Journal. “Now we’re getting close to actually producing the commercial units. … We’ll add 30 to 50 people to start, but over the next two or three years, I can see adding 100 to 200 more employees, given the production volumes BayoTech is looking at.”
That’s a godsend for PESCO, which has traditionally focused on building components and machines for the oil and gas industry. It recently reduced its workforce through layoffs and furloughs from about 450 to 170 because of the pandemic’s economic impact and subsequent collapse of the oil and gas industry, Byrom said.
Cottonwood Technology Funds managing partner David Blivin said BayoTech has progressed from product development to commercialization. Cottonwood was one of the first investors in the company, which has raised about $16 million.
“It’s a long process to take a unique, disruptive idea and develop it, test it, demonstrate reliability and produce it cost-efficiently,” Blivin said. “BayoTech has successfully done that.”
The company licensed its base technology from Sandia National Laboratories, which invested $50 million to advance the original concept and platform.
BayoTech further developed it with the goal of building a modular, three-stage reactor that produces hydrogen in the first chamber, processes it into ammonia in the second, and then converts the ammonia into nitrogen fertilizer in the final chamber. That “nestedflow” reactor could be marketed to fertilizer makers for on-site production near agricultural operations, greatly reducing costs.
But after building the first-stage hydrogen-generating unit, BayoTech realized the hydrogen market alone is huge, so it pivoted to focus on that while continuing to develop the next stages of the reactor.
The hydrogen unit offers immense advantages over today’s centralized production plants, which produce hydrogen at $12 or more per kilogram, said BayoTech chief commercial officer Stewart Stewart. That compares with under $2 per kilogram with BayoTech’s mobile generators.
BayoTech employs traditional “steam methane reforming,” or SMR, which is a pressurized heating and cooling process that most chemical plants use to separate hydrogen from methane. But the compact unit, housed in a 40-foot cargo container, immensely improves production efficiency compared with traditional plants. And its mobile units can be located directly at end user sites, such as hydrogen filling stations, reducing or eliminating shipping costs.
The company’s first commercial reactor, the H2-200, can produce up to 200 kilograms of hydrogen per day. By year-end, BayoTech will unveil its H2-500 and H2-1,000 machines, followed by H2-10,000 and H2-30,000 units next year, Vargas said.
BayoTech is targeting many markets, including hydrogen-based passenger and commercial vehicles, backup power for things such as cell towers that currently rely on batteries, and heavy industry such as steel makers seeking to reduce costs and carbon emissions.
For the vehicle market, hydrogen suppliers can either install BayoTech units at their own plants or at fueling stations.
Most fuel-cell cars use 4 kilograms of hydrogen to fill up and get about 60 miles per kilogram, meaning the current H-200 unit could provide fuel daily for about 50 cars, Stewart said.
“In California, drivers now pay between $12 and $18 a kilo for hydrogen – and that’s when it’s available – but we can offer it at just $2 per kilo,” Stewart said. “… It’s super-competitive technology that can help turn the hydrogen economy from science fiction to reality. We can make it cost-competitive today with liquid fuels like diesel and gasoline.”