Tesla, SpaceX alums stalk energy sector’s white whale with $2 million seed round

Hydrogen has been the decarbonized energy sector’s white whale.

Wildly abundant and highly versatile, it has long had the potential to decarbonize entire sectors of the economy. From cars and trucks to planes, trains and even household boilers, the universe’s lightest gas isn’t short on possible applications.

But it is short on successful applications. Cars and trucks? Until yesterday, the last time I saw a hydrogen car was when I tested a Mercedes fuel cell B-Class … nearly 15 years ago. Planes? Not anytime soon. And homes? Japan is testing the idea, but given the difficulty of retrofitting the natural gas infrastructure to accommodate the leaky molecules, it’s unlikely to happen in the near future.

One place where hydrogen does show promise is in heavy industry, where intense heat and dense power can be hard to replicate with electric sources. Cost remains a hurdle, though.

That’s where Hgen hopes its modular electrolyzers will make an impact. The startup aims to decarbonize hard-to-crack industries like steel and ammonia production by focusing on green hydrogen that’s made using renewable power. It was founded by Molly Yang, a Tesla alum who helped lead the Supercharger, residential energy and industrial energy teams, and Colin Ho, who led actuation and power systems for Starship at SpaceX.

The company exclusively told TechCrunch that it has raised a $2 million seed round led by Founders Fund, which was joined by Fontinalis Partners, Climate Capital, Yishan Wong and a handful of other angels.

Yang said Hgen is bringing to hydrogen production Tesla’s and SpaceX’s focus on optimizing the whole widget.

“The way that the market has evolved, each group is in their own silo,” Yang said, referring to the different components of an electrolyzer plant. “Because most systems that are installed are piecemeal, integrated together with a bunch of different vendors and a bunch of different parts, there’s a lot of redundancies in there. And there’s a lot of wasted opportunity to think through what the system could look like if it were actually built integrated.”

Initially, Hgen will be focusing on so-called distributed electrolyzers, which are sited on or close to the facility where the hydrogen will be used. As Hgen refines its design and scales up production, it’ll create more room to breathe; existing distributed hydrogen production costs more, but doesn’t depend on large-scale distribution and storage infrastructure, which doesn’t currently exist.

“The expectation would be that the electrolyzers would be more built near site and and be more co-located, essentially to supply it,” Yang said. “But then when you really think out longer term, the vision is for more centralized production.”

Hgen is developing alkaline electrolyzers, which aren’t the most efficient available today but also don’t depend on precious metal catalysts like platinum or iridium. Yang said Hgen is also focusing on eliminating parts and materials where possible and improving the design of the electrodes to boost overall efficiency. The goal is to drive down the total cost of the plant while also optimizing it for use with renewable energy.

Alkaline electrolyzers tend to rely on stable power sources, which makes them a poor fit for renewable power, Yang said. Ramping hydrogen production up and down can degrade the system’s catalysts, raising lifetime costs. Hgen is designing its system “with renewables integration in mind,” she said.

Today, green hydrogen tends to cost between $3 and $8 per kg, according to the International Energy Agency. It fares poorly when stacked up against gray hydrogen, a polluting form made from natural gas, which costs between 50 cents and $1.70 per kg, and blue hydrogen, which also uses natural gas but captures the carbon dioxide and costs $1 to $2 per kg.

Ideally, Yang said, green hydrogen will come down in cost to $1 to $1.50 per kg. “When you look at the range of different markets, a lot of it is unlocked in that sweet spot.”

When Yang first embarked on her journey, she was skeptical of green hydrogen because she came from “Elon world.”

“I think there’s this misconception, generally, that associates green hydrogen with passenger vehicles, right? That’s the primary use case,” she said. “For decarbonizing industrial processes, like steel production, ammonia production or some other categories, batteries are just not the right solution.”