Sparc’s Fortescue JV could deliver historic step change in global green hydrogen
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Sparc is focused on developing its graphene solutions but it is the green hydrogen technology behind the Fortescue-Sparc Hydrogen JV that has the company’s blood pumping.
The joint venture with Fortescue Future Industries and the University of Adelaide seeks to produce commercially viable green hydrogen using a unique photocatalytic technology where a catalyst is exposed to direct sunlight to convert water into hydrogen and oxygen.
This has the advantage of not requiring wind farms or massive arrays of solar panels that are required for traditional electrolysis, making it potentially much more price competitive and is indeed the reason why the JV aims to be able to produce green hydrogen at or below the $2 per kg production cost within 4.5 years.
What’s important about this price target for Sparc Technologies (ASX:SPN) and its partners is that it is also the stretch goal set by the Australian government, which is also the point where it becomes competitive with fossil hydrogen.
“It’s not going to be easy to achieve but at this very early stage, we are quietly confident that the university’s technology will be able to bring that about,” chairman Stephen Hunt told Stockhead.
Achieving this objective is potentially very lucrative for the JV given that the hydrogen market is projected to grow six fold from US$150bn to $1 trillion by 2050.
But just how did Sparc come about this opportunity?
Hunt noted that the opportunity came about through the company’s existing relationship with UoA that had developed in relation to graphene.
“The university saw an opportunity to use graphene in the hydrogen project and started discussions about its use in the technology,” he explained.
“But the more we discussed it, the more we liked the project and there was an opportunity for us to become directly involved with investment into the project.
“Naturally we jumped at it because we could see that the technology was so exciting.”
Around the same time, the UoA was also in talks with FFI and Hunt believes it saw the opportunity to bring the three parties, each of which brought different strengths, together to form a JV.
The addition of FFI in particular means that proverbial 800lb gorilla is already in the JVs corner.
“FFI provides not just funding, they bring a huge amount of expertise and experience with developing projects, with engineering and construction and of course commercialisation,” Hunt explained.
FFI have stated they aim to produce 15Mt of green hydrogen by the end of 2030.
“It’s very ambitious, but there’s a customer right there as part of our joint venture, so the commercialisation side of what we are doing is certainly de-risked to a great extent by having such a capable partner as FFI.
“Having their strength and capability really provides us with a tremendous head start with the project.”
Looking ahead, the JV expects to have the preliminary Technical Economic Assessment ready by the middle of the year.
“That is really going to be quite important for us to be able to explain to the market in a little bit more detail about the economics of the technology,” Hunt said, adding that the TEA will be refined as the JV continues its research and development work.
“What we are also looking to do is optimise the photocatalyst, that work is ongoing, we have ordered some equipment that is going to help us improve the solar to hydrogen efficiencies, that’s very important work for us.
“We are also looking to – independently of the joint venture, develop graphene related materials to enhance the hydrogen technology, so I think we will certainly in the next few months advising the market of what that means and what those projects are.”
The JV also expects to make public the technology’s patent which is currently under application.
Looking further ahead, the JV intends to develop a prototype by the end of the first stage of the project in about two and a half years and a pilot plant at the end of the second phase in another two years.
“Ultimately, Sparc has the opportunity to be involved in potentially licensing the technology and while it is very early days to be able to talk about the commercialisation and construction, there could be certain parts of the technology that we could be involved in,” Hunt added.
Sparc is also making some good progress with its anti-corrosive graphene coatings with Hunt saying that the company had achieved excellent results and that there wasn’t much more to do beyond continuing to work with the largest paint companies in the world.
The company’s extended testing to ISO standards had delivered improvements of up to 40% in the anti-corrosive performance of atmospheric epoxy coatings.
“Naturally they need to undertake a lot of internal evaluation themselves. They cannot just rely on our results, which are done to international standards and the standards that they themselves use, they need to really convince themselves,” he added.
“It is a fairly lengthy process, we are talking about multi-billion dollar industries here and it is not something that any company will take on in a less than robust manner.”
The company has good reason to be patient given that the sector is expected to be worth some US$44bn by 2025.
This article was developed in collaboration with Sparc Technologies, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.