W7Energy rebrands to Versogen with eyes on future

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W7energy, a startup that developed more environmentally friendly fuel cell technology focusing on hydroxide exchange membranes, has changed its focus to building entire hydrogen electrolyzer units and rebranded itself as Versogen. | PHOTO COURTESY OF UD/EVAN KRAPE

WILMINGTON – As the world begins working toward reducing greenhouse gases that are leading to climate change, industries are going to face a number of challenges to eliminate the harmful pollution from their operations.

Carbon dioxide is one of the most problematic greenhouse gases, coming from the burning of fossil fuels like coal, oil and natural gas. It is also a significant byproduct of the world’s manufacturing processes, which largely still depend on those fuels.

If the technology of one of Delaware’s most-promising startups is able to be scaled efficiently, however, they may be among the industry leaders in decarbonizing much of the world’s production processes.

The hydrogen problem

One of the sectors that sees an immense amount of carbon dioxide byproduct is the production of hydrogen, another gas integral to the refining of petroleum and production of ammonia, glass, metals, and more. An estimated 95% of hydrogen is created from carbon-emitting technologies reliant on natural gas or coal.

Somewhat paradoxically, hydrogen is also a gas that will power many of the more environmentally friendly technologies of tomorrow. Hydrogen fuel cells can replace combustion engines in vehicles and would be especially beneficial to long-haul trucking and aircrafts where electric batteries wouldn’t currently be cost-efficient. Hydrogen could also one day become a cleaner alternative to heat homes, replacing natural gas or heating oil.

GRAPHIC COURTESY OF VERSOGEN

The production of “green hydrogen,” or hydrogen produced without a carbon dioxide byproduct using renewable energy sources like wind and solar, is still in its infancy. According to the International Energy Agency, less than 1% of hydrogen produced today qualifies.

The science behind green hydrogen production, done through a process called electrolysis that essentially uses electricity to split the two hydrogen atoms from the oxygen atom in water, is still developing. The primary challenge is the ion-exchange membrane, a semi-permeable material that allows the separation of hydrogen and oxygen to occur. Companies around the world have been working to perfect a cost-efficient membrane that can be mass produced.

For small Delaware startup W7Energy, the technology is the realization of decades of study.

A new player

Yushan Yan, the Henry B. du Pont chair in chemical and biomolecular engineering at the University of Delaware, founded W7Energy in 2018 after working for more than 20 years on the development of fuel cell technology.

“Without this membrane, nobody can do anything,” he explained. “You can dream all you want, but you can’t get a device that will perform well or last for a long time.”

The Versogen team, led by professor Yushan Yan, center, aims to create cheaper green hydrogen for the future. | PHOTO COURTESY OF VERSOGEN

Yan and a team of several former post-doctoral researchers from UD have been perfecting a polymer membrane that relies on cheaper components than many of their commercially available competitors. One of their biggest advantages is its lack of rare earth metals, or elements that are exceedingly scarce therefore making the technology and production of the hydrogen electrolyzers much more expensive. The mining of rare earth metals, often in Third World countries, is also often fraught with pollution concerns.

While competitors use platinum or iridium in their proton-exchange membranes, W7Enegy designed an anion-exchange membrane that uses nickel or silver. The result is a capital expense of less than half of their competitors, Yan explained.

The technology has attracted attention and support in recent years, as the W7Energy team landed a $3.4 million U.S. Department of Energy research grant, a $100,000 state EDGE grant, and $1 million in private investment, along with other smaller grants. They also have secured a half dozen patents related to the technology and worked on building their capacity to manufacture their novel membrane at their Delaware Innovation Space home.

A new focus

Yan said that the initial goal for W7Energy was to scale production and commercialize sale of its anion-exchange membrane, but the team accomplished their initial three-year goal much faster than planned. That led them to reassess their mission and think bigger, now producing the entire electrolyzer unit that produces green hydrogen.

The new focus also comes with a new name, as the company rebranded Versogen (pronounced Verso-gen, as a play on versatility and hydrogen) in January. For now, Versogen is supplying partners with its membrane for use in the research and production of fuel-cell engines, but it is fully turning its focus to hydrogen production.

“Although producing hydrogen is new to Versogen’s mission, as a researcher and as a faculty member I’ve been working on it for a long time,” said Yan, who was elected to the National Academy of Inventors in 2018 for his work in the field.

The team decided, in part, to refocus their work after examining the market potential. Even before green hydrogen use becomes the norm, Versogen sees the potential for a lucrative market where green hydrogen makes up less than 1% of the current market share of roughly 70 million tons of hydrogen.

That market is expected to explode in coming years as nations and industry try to scale back the use of fossil fuels. BofA Securities analysts recently predicted that by 2050, clean hydrogen could account for an estimated 24% of the world’s energy needs, up from just 4% of the energy that hydrogen supplies today. By 2050, the value of the hydrogen market could grow to as much as $2.5 trillion.

Those lofty estimates include not only converting manufacturing processes that need hydrogen, but also for use in transportation, heating and power production.

Yan explained that the potential for green hydrogen is especially exciting because it can utilize pipelines already built for natural gas. In Europe, utilities have supplemented natural gas supply with hydrogen created by off-peak power. Consumers don’t notice a difference that they’re burning hydrogen instead of methane for heat, but the mixture produces considerably less carbon dioxide in the process.

Meanwhile, researchers also concede that batteries for electricity produced by windmills and solar arrays can store the energy for several days, but longer-term energy needs will need to be identified for emergencies, like the winter storm that ravaged Texas in February. Green hydrogen is among the ideas many researchers believe can help fill that gap – Mitsubishi Power is even investing in an underground, 1,000-megawatt storage facility in Utah that depends upon the idea.

For Versogen to become a major market player, the goal remains to create green hydrogen at a price point cheaper than the dirty methods. They estimate that they will be able to produce truly green hydrogen for as low as $1.39 per kilowatt hour versus more than $3 for many of their competitors.

“Our hope is to compete on price without subsidy and without a carbon penalty for the other side – just have a real competition. I think that would be the best way to move the technology forward and get the market to accept it,” Yan said.

Versogen plans to raise upward of $10 million early next year after it has demonstrated its small-scale production, Yan said. With those additional funds, the company aims to manufacture a megawatt-level stack that would be tested at a partner’s site over the course of 2022.

If successful, their growth plan calls for another round of fundraising up to $50 million to begin manufacturing of its hydrogen production units in 2023.

Versogen currently employs 10 scientists – two have joined this year – and if their plan goes accordingly, Yan said that 10 to 15 additional engineers could be hired in 2022.

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