Amid $150M capital raise, East Hartford fuel cell maker HyAxiom bets on growing hydrogen-based energy economy
Despite the Northeast region being largely left out of the Biden administration’s regional hydrogen hub competition, which will provide $7 billion in funding to support the industry, officials at East Hartford-based HyAxiom Inc. say they’re still bullish about the future as they develop new clean energy technology and enter a key new market.
On the heels of a $150 million private investment from three Korean investment firms, fuel cell company HyAxiom is developing electrolyzer technology that generates hydrogen by breaking up water molecules, while it moves away from some of its older product offerings.
The company, which is an affiliate of South Korea-based Doosan Corp., has a manufacturing campus in South Windsor with corporate offices in East Hartford. It traces its roots to the former United Technologies Corp. (UTC), now part of defense giant RTX.
HyAxiom has produced 1,200 fuel cell power plants across the globe, according to Director of Engineering Brian Chakulski, including several big projects in Connecticut.
Namely, the company built a 460-kilowatt fuel cell for the University of Connecticut, which was installed last year at UConn’s Depot Campus in Storrs and generates electricity for research labs. It also has plants on the campuses of Western and Eastern Connecticut State universities.
Key to HyAxiom’s future growth prospects, company officials said, is the energy industry’s pivot away from fossil fuels to a hydrogen-based energy economy, with efforts underway in the U.S. and across the world to decarbonize the industrial sector.
The Inflation Reduction Act of 2022 is helping to accelerate decarbonization. In addition to the hydrogen hub funding, it offers the largest hydrogen subsidies in the world and exceptionally high credits for hydrogen production, according to the National Resources Defense Council.
Currently, 1,190 gigawatts of hydrogen electrolyzer projects are in development across the globe, up 24.3% from a year ago, according to Aurora Energy Research.
“As the global economy transitions more to hydrogen, I think we’re really well positioned for that because we’re both on the production side, making hydrogen with these electrolysis units, and also the off-take side of hydrogen with our hydrogen power plant,” Chakulski said.
From UTC to Korea
HyAxiom was founded in the 1960s by UTC. Early on, it provided fuel cells for NASA space missions, such as those in the Apollo program. Over time, UTC focused on stationary power plants and transportation fuel cells used on buses and other vehicles.
UTC sold off its fuel cell division in 2013 to Oregon-based ClearEdge Power, which ran into financial troubles a year later and filed for bankruptcy.
Doosan acquired the company out of bankruptcy in 2014.
The company in recent years has focused on stationary power plant production, like the one installed at UConn’s Depot Campus, said Chakuski, who previously worked at UTC.
The fuel cells can run off natural gas, hydrogen or propane, and produce cleaner electricity compared to conventional fossil-fueled generation technologies.
Fuel cells are used by an array of institutions seeking to reduce their carbon footprint, such as hospitals, hotels, data centers, universities, wastewater treatment facilities and municipalities, Chakulski said.
“Combined heat and power is our specialty,” he said. “The fuel cell reaction that occurs produces electricity and heat, and that heat is captured and delivered to the customer. A lot of our customers use this heat for things like space heating, or if there’s a specific process that they have that requires heat.”
About a year ago, HyAxiom announced it was entering China’s emerging power generation market, which Chakuski said offers growth opportunities.
South Korea remains HyAxiom’s biggest market, partly because that country offers significant clean energy incentives, something the company has lobbied for in Connecticut over the years.
In the U.S., HyAxiom has taken advantage of clean energy investment tax credits to grow its business, said David Giordano, head of government relations and business development.
The company also participates in some state programs, like Connecticut’s Statewide Shared Clean Energy Facility program.
HyAxiom officials declined to disclose revenue figures or other financial information.
Hurdles and hiccups
HyAxiom has faced its share of challenges. In February, the company announced it was laying off 57 employees, or 19% of its overall workforce. HyAxiom CEO Jeff Hyungrak Chung said the layoffs were driven by an “adverse global economic situation coupled with impacts to the industry.”
At that time, the company said the South Windsor plant would no longer be used to make molded components, with HyAxiom instead opting to outsource some of that manufacturing.
“We did have some reduction, but we’ve actually been hiring up and expanding back in different areas,” said HyAxiom Director of Manufacturing James Skor.
HyAxiom is now back up to about 300 Connecticut employees, the company said, with room to hire several more engineers.
Chakulski said one of the company’s biggest challenges is competing with other energy sources — including natural gas and fossil fuels — on cost. Lowering costs to make the economics work better for customers is crucial, he said.
In addition to outsourcing some manufacturing, HyAxiom is working to reduce operating costs by simplifying and standardizing fuel cell site installations, and centralizing subassemblies to create economies of scale, the company said.
“There are other technologies out there that are lower cost, but we offer some advantages,” including lower emissions and less noise, Chakulski said.
A more recent hiccup was Connecticut’s omission from the Biden administration’s hydrogen hub program, which was part of the Bipartisan Infrastructure Law’s focus on hydrogen as an important clean energy source to fight climate change.
A seven-state consortium — led by New York and including Connecticut and the rest of New England except New Hampshire, plus New Jersey — was not among seven hubs selected to share $7 billion. The Biden administration estimates the hubs will spur another $40 billion in private investment and create tens of thousands of jobs.
Giordano said it was surprising to see the Northeastern region left out, given its leadership role in the industry. However, HyAxiom still may benefit from the program, he said, because it has fuel cell plants in both California and the mid-Atlantic, which were selected for hydrogen hub investment.
“We feel like we may be able to participate even in the other hubs that were selected, based on our technology,” Giordano said. “People are going to need fuel cells, they’re going to need electrolyzers, they’re going to need to make hydrogen, and we feel like we can be in that space.”
The Northeast’s snub from the hydrogen hub program surprised many in Connecticut who have connections to the industry.
“We were more surprised than disappointed in the Northeast not being selected,” said Joel M. Rinebold, director of energy at the Connecticut Center for Advanced Technology. “The Northeast hydrogen fuel cell industry is very strong. In fact, it’s recognized not only as a U.S. leader, but as a global leader in new technology.”
Another major industry player in the state is Danbury-based FuelCell Energy.
Rinebold said he agrees that Connecticut will still benefit from the hydrogen hub program indirectly.
“Connecticut can’t lose because all the other regions that did win funding for hub development will require some of the products made in Connecticut — Connecticut will not be shut out of this,” he said. “Connecticut will remain the production center for the technology that the other hubs will be using.”
HyAxiom is using the $150 million it raised earlier this year for research and development of new products — like its new PEM (proton exchange membrane) electrolyzer system — and to upgrade its South Windsor facility to handle a larger, more complex workload, officials said.
“We’re preparing the plant for higher technology items that are coming in,” said Skor, the manufacturing director. “So really, we’re at a crossroads right now of updating the plant to produce much more technical projects as we go to electrolyzers and some of the different technologies we’re going into.”
Chakulski said the PEM electrolyzer system is a “high efficiency” machine that uses 1 megawatt of electricity to generate 431 kilograms of hydrogen a day.
Hydrogen in something like a fuel cell is part of a clean electrochemical process that produces electricity and leaves only water and heat behind, no greenhouse gasses. To that end, hydrogen is viewed not far below solar and wind for how to lower greenhouse gas emissions.
It is seen as especially useful in hard to decarbonize sectors such as long-haul trucking, ocean shipping, aviation fuel, large industrial operations, fleet vehicles — especially those that operate indoors that would otherwise have emissions.
The big goal is “green” hydrogen. That’s hydrogen made from water, not methane, through an electrolyzer system powered by carbon-free energy like solar or wind.
HyAxiom is developing a solid oxide power plant that can be repurposed to run on a ship, Chakulski said, as the maritime industry takes larger steps toward decarbonizing.
Another fuel cell project in the works relates to powering heavy-duty vehicles.
HyAxiom was recently commissioned to build two fuel cell units for the University of Hartford, and has been picked for another project at York Correctional Institution in Niantic.