One of Bill Gates’ latest forays into the world of clean power could turn out to be anything but. Seattle-based Modern Electron’s heat-to-power system, while taking strong steps towards decentralization, must avoid reliance on natural gas’ diminishing role as a bridge fuel, if it is to secure a part of the future hydrogen economy.

As part of its oversubscribed Series B funding round, Modern Electron has raised a total of $30 million. Funding will be dedicated towards deploying pilot projects for decentralized hydrogen production that “demonstrate affordable decarbonization of gas heating without any new infrastructure,” while also integrating its technologies into existing heating appliances.

The company’s primary offering has been its small thermionic converter that captures waste heat from gas boilers to produce electricity. This new push towards hydrogen, however, will see it develop a technology to split natural gas into hydrogen and solid carbon. This ‘turquoise’ hydrogen could then be burned within next-generation boiler systems to produce both heat and power, while the solid carbon could then be safely discarded or sold as graphite.

The company has not yet given technical details of its system, apart from the fact that it will be a small modular appliance. However, producing solely hydrogen and solid carbon from methane requires both high temperatures and an absence of oxygen, something that many companies have struggled to commercialize so far.

“Modern Electron’s next-generation distributed hydrogen production technology addresses rapidly increasing market demand for heating without CO2 emissions inside residential and commercial buildings, as well as the industrial sector,” the company claims. It also states that the amount of natural gas needed to heat your home would remain the same, although you would be left with between 1 kilogram and 2 kilograms of carbon residue per day.

On the face of it, there are some warning flags. Turquoise claims to be carbon neutral in operation; essentially mirroring industrial scale production of ‘blue hydrogen’ using the steam methane reforming of natural gas with 100% carbon capture. But this neglects the fugitive upstream emissions of methane when using natural gas as a feedstock, which can equate to nearly 11 tons of CO2 released for every ton of hydrogen produced.

However, the co-existence of decentralized power and heat generation could provide an opening for hydrogen in a sector where electrification is looking like the primary route to decarbonization. According to Modern Electron, the energy savings from the thermionic converter will offset the additional costs and efficiency losses of the combined system against electrified options.

The key issue for hydrogen in heating is its efficiency and cost. Hydrogen has 3.4 times less calorific heating value per cubic meter than methane, meaning that 3.4 times as much volume of H2 is needed to produce the same amount of heat as natural gas. The fact that hydrogen is a smaller molecule also means that 22% more energy is needed to pump hydrogen around the network, and roundtrip efficiencies are estimated at just 46%.

Electrified options, with a coefficient of performance of around 3, are around five-times more efficient than these early hydrogen boilers. For hydrogen to become competitive, its cost would have to fall to around $0.35 per kg; a level that we wouldn’t expect to see for 20 years at least.

However, in many regions, environmental factors can limit this advantage significantly. In damp and cold regions – like Scotland during winter, for example – the realized figure can be much closer to 0.8, meaning that heat-pumps all but lose their advantage over hydrogen-based systems. In specific cases like this, hydrogen also offers a more seamless transition to decarbonized heating, especially when retrofitting systems to existing buildings where gas infrastructure already exists.

Recent studies, such as Hy4Heat in the UK, have shown that it is fairly easy to switch gas-fired boilers to those that are ‘hydrogen-ready’ – it’s largely a case of just adding two additional valves and some additional ventilation. They are also relatively easy to install and maintain compared to electric options. Solving NOx emissions is likely to be a similar case of adding more sophisticated catalytic converters.

The market will inevitably end up dominated by heat pumps. Rethink Energy predicts that, given their inherent advantages in new build properties, electrified heating will grow from its 15.6% share of the global market today, to reach 40.6% in 2050.

However, the share of gas heated buildings globally will fall from just 41% to 34% in this timeframe, with hydrogen being blended in to occupy 82% of the gas grid. Large sectors that will likely stick with gas-based heating include cold climates, existing buildings, and industrial process heating.

Many existing boilers, however, are already capable of running on up to 20% hydrogen, which has given governments time to ponder the best route to decarbonizing heat supply. The UK, for example, is not expected to make a decision on hydrogen heating until 2026, making it hard for companies to reduce risk in their business plans.

This is likely to be the reason that Modern Electron has focused on the cogeneration of electricity from gas boilers, while dipping a toe into hydrogen technologies. If the company can accumulate a reasonable market share with its ‘fuel-agnostic’ add-on offerings, while demonstrating that its success can translate to hydrogen appliances, then it can build out its manufacturing capacity with confidence before hydrogen heating becomes a reality.

“Notably, Modern Electron’s distributed hydrogen production can decarbonize applications where existing renewable electrification technologies struggle and proposed infrastructure solutions such as a ‘hydrogen grid’ are years away and expensive,” the company has claimed in a statement.

Rather than focusing on turquoise hydrogen, we would urge Modern Electron to partner with modular electrolyzer producers like Enapter and companies developing hydrogen-ready boilers like Worcester Bosch. This would allow the company to integrate itself into behind the meter systems, while readying itself for a green hydrogen-grid, rather than confusing itself with emission intensive methods of production from the start.

The $30m Series B funding round was led by At One Ventures, with further capital coming from existing investors MetaPlanet, and new investors Extantia, Starlight Ventures, Valo Ventures, Irongrey and Wieland Group.

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