Danish Green Hydrogen Startup Raises $34 Million, Looks to IPO

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Danish electrolyzer startup Green Hydrogen Systems A/S raised 28 million euros ($34.3 million) to scale up production of the technology that’s at the heart of the European Union’s climate goals.

Competition is heating up among makers of the machines to capture a wave of orders that will make up the EU’s first generation of utility-scale green hydrogen production funded by government subsidies.

Electrolyzers are the machines that use electricity to separate hydrogen out of water. The clean-burning gas could then be used to replace fossil fuels in a wide variety of applications such as heavy industry, shipping and aviation.

The company will use the money to increase manufacturing capacity, carry out research and hire staff for its growing business.

New investment comes from a convertible loan of 20 million euros from AP Moller Holding A/S and 7 million euros from existing shareholder Nordic Alpha Partners. Another current shareholder, Norlys Holding, also invested 1 million euros.

Sebastian Koks Andreassen, the Green Hydrogen Systems chief executive officer, said the company aims to set itself apart from the competition by developing alkaline electrolyzers designed specifically to work with the intermittent power that comes from renewable sources like solar and wind.

It’s working on a pilot project with turbine maker Siemens Gamesa Renewable Energy SA.

The nascent market for electrolyzers is attracting increasing amounts of investor attention. The U.K.-based ITM Power Plc raised 165 million pounds ($224 million) earlier this year. While Norway’s Nel ASA raised 1.3 billion Norwegian krone ($150 million) in June. German industrial giants Thyssenkrupp AG and Siemens Energy AG also aim to be major early competitors.

Green Hydrogen Systems is considering an initial public offering at some point to raise more capital, Andreassen said. He said no decisions have been made about when that would happen if it goes ahead.

The company is currently building a new factory in southern Denmark that can produce at about 50 modular units by the end of next year with a capacity of 25 megawatts. The CEO expects to scale that up to over 150 megawatts as efficiency increases and work shifts are added. The company will look to increase capacity further sometime next year or in 2022.

©2020 Bloomberg L.P.

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