Hydrogen power will be on an accelerated growth trajectory in the next decade, says energy transition pioneer Kevin Chin. Government should support hydrogen similarly to how it created solar industry through well-targeted subsidies.
- Founder and Managing Partner, Arowana, 2009-present
- Co-founder, Chairman and CEO, VivoPower, 2014-present
- CFOO, RuleBurst Haley, 2004-8
- Vice President, JP Morgan, 1997-2003
- Various accountancy/consulting/investment banking positions 1992-7
- University of New South Wales, Commerce, Accounting & Finance 1993
Kevin Chin describes himself as ‘an impact-focussed pioneer’. His company, Arowana, began as a specialist fund manager, but has since evolved into a global enterprise that invests and operates at the energy frontier.
Chin tells Impact Investor he named his company after a “giant, leaping, tropical fish with a long history of adaptation.” Arowana focuses on “impact-orientated enterprises that can be scaled globally, that need our support to be transformed and manoeuvred into sustained growth.”
In the past year, Chin has seen “a significant shift” in investor interest in the sector. Arowana, he says, “tends to co-invest with family offices who have thought this through and love to invest in transformation technology.”
Chin, who enjoyed great success in the early days of solar power, is particularly bullish on hydrogen power. “In the next ten years it will be on an accelerated growth trajectory,” says Chin, adding “the required technological breakthroughs have already happened.”
The entrepreneur says his investment in solar power farms will “provide a platform for what is called a power-to-x application being the production of green hydrogen.”
“We’re seeing a lot of exciting green hydrogen projects all around the world. There will be a major tipping point in seven years as people see the success.”Kevin Chin
“Major tipping point in seven years”
Green hydrogen is produced using renewable energy and electrolysis to split water. Grey hydrogen is produced from methane and releases greenhouse gases into the atmosphere, while blue hydrogen captures those emissions and stores them underground to prevent them causing climate change.
Generating power from green hydrogen is therefore potentially significant. According to a report by the International Energy Agency (IEA), green hydrogen will extend to several parts of the energy sector and meet 10% of total final energy consumption by 2050.
A report by the World Energy Council suggests green hydrogen could be even greater, fulfilling up to 25% of global energy needs by that date. Huge investment in infrastructure is required to achieve transformation on this scale. The Hydrogen Council estimates that total investment in the hydrogen value chain will exceed a cumulative $300bn by 2030 and, according to the Energy Transitions Commission, reach approximately $15trn by 2050.
In the next 18 months, Chin is pleased that “we’re seeing a lot of exciting green hydrogen projects all around the world.” He sees these as running for a few years and then “there will be a major tipping point in seven years as people see the success.”
Hydrogen piping networks will be a large chunk of this, enabling enormous quantities of ‘green’ energy to be stored and piped to where it is needed in a way that is currently challenging for wind and solar power.
But the applications of hydrogen are much broader than this. There is also potential green hydrogen use in aviation, locomotive, and maritime fuels, where battery-based options are limited.
Call for government action
But how do we get there? Chin calls for “government action, in the same way that governments created the solar industry through well-targeted subsidies.”
He would like to see “generous tax credit offsets,” as well as capital expenditure and operating expenditure incentives “to boost cash flow.”
Deloitte, the global accountancy consultancy where Chin originally trained, agrees with this argument.
“Investors are used to dealing with some degree of uncertainty…(but) a more coordinated approach across government and businesses (is required) to provide greater certainty…investments will earn a return,” the firm wrote in a hydrogen report [pdf] published twelve months ago.
Battery technology is key
“We seek to cover both angles – hydrogen and battery technology – as we help our customers to achieve their net zero goals,” says Chin. He is doing this through VivoPower, the company he invests in and chairs, which is looking at Fuel Cell Electric Vehicle (FCEV).
FCEV technology offers passenger vehicles powered by hydrogen. According to the US Department of Energy, FCEVs powered with pure hydrogen are able to refuel in less than four minutes, with a driving range of more than 300 miles.
Toyota has already made a model available, the Mirai. While your next car will likely be electric, the one after that may be powered by hydrogen.
Focus on industrial vehicles
Chin expects the infrastructure for hydrogen fuel cells “to be fairly developed” by 2030. But in the meantime, it is not passenger vehicles, but industrial vehicle applications that are attracting him. “We particularly specialise in heavy industries such as mining where there is not a single solution.”
This is an interesting frontier in the energy transition. Some of the dirtiest industries will still exist in the future but will need to be decarbonised. In these industries, Chin believes, existing electric batteries may be the solution for light vehicles, while hydrogen technology will be more suited for heavier applications.
Vivo specialises in adapting vehicles for working in difficult terrain. The company is currently working on projects in Australia with the mining industry, while in the UK it is involved with various hydrogen projects at heavy northern industrial sites, he says.
Chin is excited about the potential returns. “When we started out in the solar industry, we found that developments were offering investors twice their capital every nine to ten months at an astonishing return on equity.” He adds: “based on the early projects we are seeing in hydrogen we’re expecting similar returns to what we saw in solar.”
Vivo’s shareholders have certainly seen great rewards since Chin took over. Arowana recently won three ‘Gold Stevie awards’ at the International Business Awards. The judges praised its “innovative approach to building companies and the highly successful turnaround of Nasdaq-listed VivoPower, which experienced up to a 2,400% increase in share price in seven months.”