Plug Power Inc. (NASDAQ:PLUG) Unveiling the Potential of Liquid Hydrogen: Innovative Solutions and Market Insights Conference Call September 27, 2023 12:00 PM ET
Company Participants
Chris Rial – Director Business Development
Ian Richardson – Product Development, R&D Manager, Plug Power’s Hydrogen Liquefaction Program
Operator
So good morning, afternoon, evening everyone. Welcome to this month’s episode of Green Hydrogen with Plug, where we’re diving deep into the potential of liquid hydrogen.
My name is Meryl and I’ll be your moderator for today’s session. I’m very excited to introduce you to today’s speakers who both have deep expertise in our webinar topic. Chris Rial is Director Business Development at Plug. Chris comes from an extensive background in liquefaction, previously serving as the Vice President of Business Development at Joule Processing since 2015, where he specialized in developing customized solutions for gas processing and liquid handling needs to benefit customers across the globe.
He has worked in the energy and environmental industry for over 20 years across various roles in management, compliance and safety. Chris received his bachelor of applied science in Bio and Bioenvironmental Science from Texas A&M University and his MBA degree in global energy from the University of Houston, C.T. Bauer College of Business.
Ian Richardson is our second speaker today, and he is the Product Development and R&D Manager for Plug Power’s Hydrogen Liquefaction Program. Ian is an expert in cryogenic systems and green hydrogen technologies. Prior to joining Plug, Ian Co-Founded a startup commercializing lightweight liquid hydrogen fuel cell tanks and the associated fueling systems to support the energy transition in the aerospace sector. He received his Ph.D. from Washington State University, focusing on cryogenic fluid mixtures for NASA.
So really quick before I hand it over to our speakers, just a few things that are showing on the platform here. You’ll see our speakers in your top left corner and then under that is where the Q&A questions will be answered. So please, throughout today’s webinar, drop any questions you have in there. We’ve reserved time at the end of the webinar to answer some of those.
And then just on the right side, we have our speakers at the top of post-event survey. And then of course, we have our Plug Symposium coming up on October 11th, which we encourage you to register for.
So with that, I’ll hand it over to Chris to kick off today’s webinar.
Chris Rial
Thanks, Meryl. Thank you, everyone, for joining. I know you’re spread out across the world. Happy to discuss some of the potential of liquid hydrogen. We see it as an emerging market. And today, Ian and I are going to present some of the market insights and the products that are going to be delivered into these markets to help catalyze the market.
Before we get in there, I thought it was appropriate to talk about how Plug, Catalyze, and application. Specifically, this was around fuel cells. We identified an area that had a tremendous need for a conversion to a different fuel that would increase utilization. And this ultimately became the catalyst for Plug’s growth and the development of future development of reliable network of supply.
Today, you can take a look at the various verticals in the distribution and material handling sectors at some of our customer base. We have over 1 billion hours of operation. We’re dispensing over 40 tons a day of hydrogen to over 200 private fueling stations.
With the adoption of Plug fuel cells in the distribution sector, a readily supply of hydrogen was needed. This led to a vertical integration approach and effort to build out our own infrastructure, ultimately trying to drive down the delivered price of hydrogen.
Today, Plug provides equipment within the major components of the value chain as depicted here. You can see, we have products that serve the production, liquefaction, transportation, storage and handling, dispensing, and as discussed earlier, ultimately the use case in fuel cells.
As seen here, the image in front of you, you can see the various points of manufacturing, production of hydrogen, and delivery points that support a force-majeure network, a Force-Majeure Resistant Network. We’ve set a target of 1,000 tons per day to be produced by 2028, and it’s to serve the market that we’re going to talk about here in a few minutes.
Today, we’re going to take a look at the projected hydrogen demand growth, the various use cases and applications, as well as the products that support the market today. Ultimately, Plug is offering a complete integrated solution to drive down delivery and cost.
And with that, I’m going to hand it over to Ian to talk about some of the markets and applications that we’re going to be serving.
Ian Richardson
All right, thank you, Chris. So before we dive into the liquid hydrogen markets, let’s first look at why we even need to liquefy hydrogen in the first place. The answer really comes down to the increased density of liquid hydrogen versus gaseous hydrogen. This leads to a lower cost of transportation and a lower cost of infrastructure at the end user’s site on $1 per kilogram basis of stored hydrogen. As a rough example, it takes approximately eight gas tube trailers to deliver the same amount of hydrogen as one liquid hydrogen tanker.
This slide provides some general guidelines for when you would use different transportation modes for hydrogen, whether that’s gas tube trailers, liquid hydrogen tankers or a gas pipeline. Now, we also have ammonia and liquid hydrogen ships on here, and we typically only talk about these energy carriers when we talk about intercontinental transportation of hydrogen for energy markets.
The economics typically come down to how much hydrogen you’re consuming on a daily basis and how far you need to transport it. Now, this is by no means set in stone. There is a lot of overlap in some of these methods, and there are also other factors to consider, like the end use application, what purity of hydrogen you need, and the footprint requirements or limitations at the end use site.
But this table is general guidelines to help you break down those transportation options. And when you look at the markets that Plug is pursuing, these are well suited for liquid hydrogen truck deliveries.
So if we dive deeper into the liquid hydrogen markets and the markets that rely on liquid hydrogen, we have our traditional material handling market, where we’re actually transporting, delivery, and storing liquid hydrogen on site, outside of these large distribution centers.
We see a similar model playing out with stationary power and commercial transportation, where we will be transporting and storing liquid hydrogen on site to fuel these fleets of delivery vans and semi-trucks. And as we look towards the future, we have heavy duty industries coming online. These are things like mining trucks, aircrafts, and ships that will require liquid hydrogen onboard the vehicle to get the required energy density for widespread commercial adoption. So we actually see the demand for liquid hydrogen increasing significantly over the next several years as industrial applications come online.
So with that, let’s take a quick pause for a poll question. So how much faster is it to refuel a hydrogen fuel cell-powered Class 8 truck compared to a battery electric Class 8 truck? (A) 25%? (B) 50%? (C) 75%? or (D) 98% faster? We’ll take five or ten seconds here for the audience to populate their answers.
Chris Rial
Okay, let’s take a look at how the audience has responded. Alright, it seems the prevailing thought is 98% faster. It seems we have a very acute audience.
So let’s take a look. When we compare the two available technologies for long-haul heavy payload transportation, we see the advantages of fuel cell versus battery. With a comparison of a Class 8 truck over 500 miles, you can see the limitations of battery in terms of available payload and refueling time.
Due to the weight of the batteries needed for long distance and the charge time of batteries, we can see an increased payload of 25% and reduced fuel time of 98%. This increases productivity and utilization and has driven a number of truck OEMs to develop and start manufacturing a series of Class 8 trucks.
Now let’s take a look at projected hydrogen market demand in the U.S. and the future of liquid hydrogen for mobility. This table highlights the amount of incremental supply that would be needed to serve different mobility sectors beginning in 2030.
First, we’ll take a look at the U.S. transit buses. We’re already starting to see a slow conversion of municipalities to fuel cell vehicles, and we estimate a 25% conversion to hydrogen fuel will result in an incremental demand of 300 tons per day.
A much higher consuming application in Class 8 vehicles, just a 1% conversion of market share would result in an incremental demand of 150 tons per day. In a very nascent aircraft and airline sector, which still has some hurdles to overcome, we estimate just 0.5% of conversion to hydrogen fuel will result in a need of an additional 833 tons a day of supply.
Now we don’t see a lot of these sectors really coming on at tremendous scale until around 2030, which is not too far off. Roll all this up and we see an incremental demand in 2030 of around 1,300 tons per day.
What this doesn’t take into account is any conversion of combustion engines to hydrogen combustion engine, internal combustion engines, which we estimate would increase demand or supply of 20% to 25%.
When we look at the global market for liquid hydrogen, data shows the earliest adoption and increased demand coming from medium duty and heavy duty trucking. Other sectors such as aviation and mining have some technology hurdles to overcome as I mentioned earlier, before we see additional demand.
The speed in which these applications adopt hydrogen though, at scale are highly dependent on a number of growth drivers. You’ve got government incentives such as national subsidies and incentives to promote both the supply side and the demand side. You’ve got regulatory policies such as emission reductions and fueling mandates. You’ve got cost reductions, which come about via increase in manufacturing capacities, increased efficiency and standardization of equipment.
You have the deployment of new applications, as we’ve discussed earlier, and ultimately the availability of supply is going to be needed to go hand-in-hand with the increase of new applications in scale. We estimate the demand for low carbon hydrogen for road transport only to be around 8,500 tons per day by 2033. As mentioned earlier, we see other sectors coming on, but at a later time in which we’ll need incremental supply and infrastructure to support.
So time for another poll question. For countries looking to import hydrogen for use in the mobility and transportation sectors, which imported carrier molecule results in the lowest cost at the pump?
As you begin to think about that and answer it, it should be noted there are other carriers of hydrogen molecules such as liquid organic hydrogen carrier and methanol. Really, we compare these two, because the readiness of commercial and industrial scale technologies for those technologies is a bit nascent, and ultimately we had to base our assumptions off data that we have.
So let’s take a look at the results. Oh, this is closer than I expected this to come out at. So it looks like the majority selected liquid hydrogen.
This actually coincides with what we have analyzed to-date. It should be noted that this graph and information is based off a tremendous amount of assumptions and really off technology that isn’t readily available necessarily today and efficiencies and recovery aren’t known today.
But when you look at liquid hydrogen versus ammonia as the carrier in ultimately delivering liquid hydrogen to the market, you have to stack the processes together. And we look at the cost for liquid hydrogen that includes the liquefaction, the shipping, the storage and losses.
That’s compared to the cost of shipping ammonia, which includes the energy needed for ammonia synthesis, shipping ammonia, storing, cracking the ammonia to the hydrogen molecule, purifying the hydrogen to a purity that’s needed for liquefaction and ultimately liquefaction.
So when you stack all these processes together, the energy consumed in this, we see the price for delivered hydrogen or ultimately the liquid hydrogen to the market via ammonia carrier as higher than liquid hydrogen.
With that, I’m going to hand it back over to Ian to talk about some of the products that we’re building into the market.
Ian Richardson
All right. Thank you, Chris. So when we take a closer look at our hydrogen production facility, you’ll notice that there are several different critical packages that make up the facility, starting with hydrogen production. This can be either from electrolysis or chemical processing like chlor alkali plants, steam methane reforming or autothermal reforming.
From there, that hydrogen goes through a purifier to remove any water vapor, hydrocarbons or oxygen before it enters our liquefier where it gets cooled and liquefied at minus 420 degrees Fahrenheit. That liquid then goes to on-site liquid hydrogen storage tanks, where it’s then piped to loadout bays to fill our liquid hydrogen tankers, which are then sent out to refuel our gen fuel sites.
Plug offers solutions in nearly every aspect of the liquefaction facility, and we have several of these facilities currently in construction. We’ve applied our lessons learned from building and operating liquefiers into our product design to offer an integrated solution to drive down costs and schedule. So let’s do a deeper dive into the liquefiers to highlight some of those key differentiators.
Though Plug is standardized are 15 ton per day and 30 ton per day liquefiers. These have been designed to operate over a wide range of ambient conditions that exist here in the U.S. from summers in the southwest to winters in the northeast. And Plug being focused on green hydrogen production, we knew that these plants would experience dynamic operations as renewable energy prices vary throughout the day. So we designed with that functionality and flexibility in mind and decided to use gaseous refrigerants throughout our liquefaction process to allow for faster turn down and ramp up of the system.
Now this is quite unique. Plug is the only industrial liquefier provider that utilizes gaseous nitrogen as the pre-cooling refrigerant and gaseous hydrogen as the liquefaction refrigerant. Using these gaseous refrigerants allows us to reduce the amount of cryogenic equipment that is required in our liquefier and it allows us to ramp this plant much faster than traditional liquefiers without the risk of damaging our equipment, which can occur when you use liquid nitrogen or liquid hydrogen in your refrigeration loops. So ramping up and turning down quickly when you have liquid refrigerants can lead to large temperature gradients that put thermal stresses on your heat exchangers and can lead to failures.
So let’s dive into some of our key equipment. Plug’s liquefier consists of two primary stages. We have our gaseous nitrogen pre-cooling loop, which is shown in numbers one through four and we have our nitrogen – which contains our nitrogen compressor, our cryogenic polisher which removes any trace impurities like oxygen, nitrogen, and argon, and then we have our turbo expanders, which generate our cooling, and finally the Perlite Cold Box which houses our brazed aluminum heat exchangers that cool our hydrogen to an intermediate temperature. From there, that hydrogen flows through the gaseous hydrogen liquefaction stage where it’s further cooled and liquefied at minus 420 Fahrenheit.
Now we do have a video on YouTube that goes into greater detail on our liquefaction process that I would strongly encourage you to go watch if you’re interested in learning more. That link should be in your related content box on your screen.
And with that, I’ll pass it back over to Chris to walk through some of our current projects.
Chris Rial
Thanks, Ian. Here we see some pictures from various stages of construction at our Camden County, Georgia facility. This is the first large scale green hydrogen facility that liquefies and distributes to our customer base in the U.S. and in the world. Due to the standardization of many of these pieces of major equipment, we’ve been able to construct this facility in 12 months. Compare this to industry standard of 36 to 48 months. This improvement and speed to market approach allows you to more closely align your supply with your projected customer needs.
On the left, you’ll see the aforementioned project in Camden County, Georgia. The phase one is 15 tons a day of green hydrogen production and liquefaction. We also have a 5 megawatt Electrolyzer producing 2.5 tons of gaseous hydrogen. This is supported by – the full facility supported by 45 megawatts of Electrolyzers.
And next to that, we have the Port of Antwerp project, which is 35 tons a day of green hydrogen capacity, in which we’re going to liquefy 15 tons per day there. That’s supported by 100 megawatts of electrolyzes. This is currently one of the largest green hydrogen plants in Europe and in construction.
Finally, we have what will be the world’s largest green hydrogen facility in Genesee County, New York, totaling 75 tons a day of green hydrogen liquefaction, supported by 200 megawatts of PEM Electrolyzers.
I hand it back over to Ian to talk about some of these solutions that are within these facilities and how they work hand-in-hand.
Ian Richardson
All right. Thank you, Chris. So as I mentioned previously, Plug is vertically integrating around the hydrogen value chain to reduce the cost of hydrogen to the end user and develop a robust network of liquid hydrogen production facilities.
When we look at this entire hydrogen ecosystem, there are numerous major equipment packages, both at the production facility side, as well as the end use site. All of these have to work hand in hand to optimize your hydrogen utilization and minimize your losses.
So with that in mind, Plug has spent a great deal of resources optimizing these critical packages. And we’re specifically focusing our time on optimizing the interfaces between these major packages so that they work seamlessly together, which is something that no other company can offer.
So if we look at the front end of this process with hydrogen generation, Plug offers a standard Electrolyzer solution. For demonstration projects that need only 1 ton to 2 tons per day, we offer a five megawatt turnkey containerized solution, and for industrial applications, we offer 10 megawatt arrays, which produce 4000 kilograms per day each, which can be integrated together to meet the needs of your facility.
One thing that I will highlight is that plugs PEM Electrolyzer Technology produces gaseous hydrogen at 40 bar pressure, which reduces the compression load at the front end of your facility.
Continuing down the value chain, we have our liquefiers that I discussed earlier. Just to recap, we have two different standard sizes in a 15 ton per day and 30 ton per day design. These have been specifically designed targeting flexible operations to turn down and ramp up quickly. They’ve been optimized for reliability to increase our uptime. And much of the major equipment has been skid mounted to reduce the field installation requirements and decrease construction costs.
Moving further down the facility, we have storage and transportation, which plug develops in-house. Plug offers the largest liquid hydrogen trailer on the market with just over an 18,000 gallon capacity. These are state of the art vacuum jacketed vessels designed to maximize payloads and reduce delivery frequencies. We also build our own liquid hydrogen storage tanks in 10,000 gallon and 19,000 gallon standard sizes, in both horizontal and vertical configurations.
And finally, rounding out that value chain, Plug develops our own hydrogen refueling systems, where we currently have over 200 in operation. These hydrogen refueling stations are currently targeted at material handling applications, as well as medium duty vehicle markets like buses.
Most of these sites have an 18,000 gallon liquid hydrogen tank. That liquid is then pumped to 6,000 PSI and warmed in a vaporizer and stored in high pressure tubes before it gets dispensed into the vehicle. And as I mentioned, we have 200 of these stations operational in the U.S. and we’re starting to expand into Europe and Asia.
With this experience, we’ve gotten very efficient at working with local authorities to get the permitting, construction and site integration streamlined for our customers. These fueling stations really serve as a building block to larger scale systems as we evolve to heavy duty vehicle fueling and larger industrial applications.
And one of those applications which I’m excited to share with you today is our portable refueler. We’ve essentially taken our experience and knowledge from our traditional hydrogen refueling systems that I just showed, and we’ve condensed that footprint to a custom drop deck trailer with a smaller liquid hydrogen tank.
This fueling solution can still meet the same fueling rates and pressures as our traditional fueling systems without the infrastructure requirements. This product is targeted at demonstration products or projects where fleet owners want to test out fuel cells on a small portion of their fleet to get comfortable with hydrogen.
And it can also serve as a bridge solution for fleet owners looking to increase their speed to market for deployment of fuel cell electric vehicles, because that permitting process for a permanent station can take several months. This unit can also be used to support a variety of new applications by recharging ground storage tubes and tube trailers.
And with that, I’ll hand it back over to Chris to wrap things up.
Chris Rial
Thanks, Ian. So why have we developed this product line and why are we talking about it today and looking at it as an end-to-end solution? Well, we’ve highlighted it for more than just self-fulfilling reasons. It’s really about the intricacies of the process-to-process interfaces, as well as the process-to-balance of plant interface that can drive up contingency in a project, resulting in higher CapEx.
Additionally, supplying individual systems within a facility to an EPC contractor can result in a facility that hasn’t been optimized for efficiency. That ultimately drives up OpEx. But it’s through the tremendous efforts of standardizing and optimizing this equipment line that is resulting in lower costs and delivery of ultimately a lower price per kilogram of hydrogen. And our estimate, this integrated solution saves roughly 5% to 10% in total installed costs and levelized cost of hydrogen at the end of the day.
So through the continuous operations of these facilities, as we continue to operate and construct, we’ve gained a tremendous amount of knowledge and experience. And because we have consistency within the facilities and through the standardization across the platform, we can now transfer that knowledge base to the market. It’s something that we’re proud to offer, both serve our internal customer and offer the third-party market today.
I think this concludes most of our presentation today. So I thank you for your time. I think we’re going to enter into a Q&A session.
With that, I’ll hand it back over to Meryl.
Operator
Awesome! Thank you both very much. We will jump right into Q&A. And really quick, I see one question that just came in about getting in touch with Plug on potential projects. So there’s two links at the bottom of this slide here, which can be used through our Contact Us page if you guys want to get in touch. And then also, the recording of this and the PowerPoint deck will be sent around via email afterwards. I saw a few comments on that as well.
So, all righty. To kick off here, first question is, what are Plug’s boil-off losses throughout the value chain?
Ian Richardson
Yeah, that’s a good question there, and I’ll jump in and take that. And the answer is, it really depends on which part of the value chain we are talking about. So let me go back to our value chain slide here.
And when we look at our kind of the boil-off and transfer losses, when we’re still at the production facility, from hydrogen generation all the way through truck loading here at the front end, when you’re at our production facility, we actually take – we pipe all of those losses, boil off from our liquid hydrogen storage tank, blow down from our trailers, and unloading vapor from our trailer.
Those get recycled back to the front end of our liquefier and re-liquefy. So we’re not actually losing any boil-off at the facility itself. Really, when those boil-off lots start is as soon as you fill that truck and that tanker leaves your facility.
Now for that application, let me go to our hydrogen refueling slide here. So this is our typical refueling system for a material handling site. So think a Walmart or Amazon distribution center here. These tanks work in fairly steady use cases. Most of those facilities are 24 hours a day. We do have boil off and transfer losses associated with that. But the end goal of these facilities is high pressure gaseous hydrogen to fuel a forklift with 5,000 PSI.
So these facilities actually have hydrogen compressors at them. If you see those two white boxes in the middle of the screen, that’s actually a diaphragm compressor, where we take our boiler off, compress it to 5,000 PSI or 6,000 PSI and put it into the storage tubes to get dispensed to the fueling station. So we actually don’t have to have boil-off losses at these facilities if you have the right level of compression to max those losses.
There are some things that are unavoidable. There are some transfer losses with purging near lines. We have to get all those impurities out. That’s not able to get captured. But we are actively looking at reliquifiers to be able to just condense and reliquify any boil-off vapor, largely for our stationary applications where you have liquid hydrogen just sitting in a storage tank for a large amount of time, so. Something Plug is very actively pursuing and optimizing for our own value chain and we plan to roll out to the broader market.
Operator
Great, thank you very much, Ian. Next question, for cars or fleet vehicles, do you have a good breakeven point of where it makes sense to use / switch from battery versus fuel cell?
Ian Richardson
Yeah, I can jump in and take that one as well. It depends a lot on the application on how you’re actually using that vehicle. Typically, we kind of see that 250 mile mark as you’re breakeven for a passenger car. Below that, battery electric is usually just simpler. It also depends on the charging infrastructure availability and your hydrogen fueling station situation in your area. But typically that 250 mile mark is what we would see.
Operator
Perfect, thank you. Next question, by fast turndown for the liquefier, do you have a typical ramp up rate available?
Ian Richardson
We are actively exploring this. It’s something we can go into greater detail. There are some other factors in there. So we’re happy to take that kind of question offline if you have specific examples. Chris, if there’s any other color you want to add on that, let me know.
Chris Rial
Oh, the only thing I would add, I mean we’re balancing the thermal stress as Ian mentioned earlier, across the system, and trying to maintain the cold temperatures. So turndown in capacity is really about controllability and protecting that aspect, and the control system that we’ve put in place around this liquefaction system is such. But as Ian mentioned, we need to take a look at a number of variables to accurately answer that question.
Operator
Great, thank you both. All right, next question. Is the HL4500DP still in concept or available today?
Ian Richardson
HLDP, so the portable refueler. That is, it’s still in development demonstration at the moment. I don’t believe we’ve opened it up to the market at this time, but maybe if Eric’s online, you could jump in and correct me there.
Unidentified Company Representative
Yeah, we are taking pre-orders on that product right now. It is in its first stages of production. So the first ones are coming off the line here in the next month or so, and definitely we are already taking pre-orders for that product.
Operator
All right, thank you. Next question. Why do you ICE application as an additional consumption to FC consumption rather than a competitor?
Chris Rial
I think the question is whether or not internal combustion engine is in competition with fuel cells or it’s additional to fuel cells. I think it depends on the application you’re talking about for long haul transportations. I know some manufacturers of trucks or owners of fleets of trucks don’t want to adopt a fuel cell for the fact that that means moving from mechanical repairs to electrical repairs. It requires different tooling and expertise in-house. So they might not want to diversify their existing truck fleet as such.
So in some places you may see it compete, but I think in general, as this technology develops, it’ll be accretive to the total volume end market itself. So hope that answered your question.
Operator
Great, thank you Chris. Next question, what is Plug’s view for the optimal size for a liquefier train to minimize capital costs and maximize operation flexibility? Is 30 tons per day train just right or is it a train much bigger than this desired?
Chris Rial
I have probably encountered this question multiple times a day. It’s a great question and I would say the jury’s still out. Obviously we saw significant savings going from 15 to 30 tons a day in liquefaction. To give you an idea, we’re building two 15 ton a day units and 13, 30 ton a day units.
So when we look at our business cases and the volume that we’re trying to serve, we see significant savings at scale. I think the market itself is looking beyond 30 tons per day. We certainly are ourselves. We expect to see an incremental savings in scaling up to 50, 60, 70 times, whatever it should be.
But then when you go into larger scale, pipe sizes, valve sizes, cold box sizes, all the equipment gets to a point to where you are now bumping up against the threshold for over the road transportation, modularization. You’re moving into what we term stick built facilities that could have increased costs associated with construction and installation and also delivery time.
So where the market will settle out, we don’t know, but we do think that there will be a larger scale liquefier. Again, this has to be married with the increase in demand and the market growth, right. But we do think there will be significant savings when you look at a million dollars per ton of installation costs. We’ll see that significantly drop as we get into the larger facilities beyond 30. Hope that answered your question.
Operator
Thank you, Chris. Next question, does the plug liquefaction process require any steam?
Chris Rial
Steam? It does not, no.
Operator
All righty. Next one. Does Plug self-perform the engineering of hydrogen plants or do you have partnerships with outside engineering construction firms?
Chris Rial
We do not self-perform. We’re not a facility engineer or constructor, but as the question asked, we certainly have developed good relationships with the EPC providers that are building our existing facilities. And how we execute and how that EPC to OEM contract is executed, really can drive how the total installed costs plays out in a facility.
So these are new facilities. There’s not a lot of existing data and knowledge based in the industry for these facilities. So these EPC contractors as well are learning as we’re going through this, but it’s those learnings that are reapplied in the future examples and future projects that are going to start to lower costs.
These EPC and just projects are littered with risk buckets and contingency buckets and layers of markup that are really driving up costs. And so the more that you can engage with an EPC contractor and talk about the optimization of these interfaces I highlighted earlier, that’s really going to be what’s lowering the risk, lowering the contingency and ultimately the installed costs.
Operator
Great, thank you. Next question, why are liquid hydrogen tanks limited to 18,000 gallons at customer site?
Ian Richardson
I can jump in on that one. So that 18,000 gallon typically correlates to 10,000 pounds of hydrogen fuel and you start reaching the PSM threshold above that size class. So above that there’s another safety layer that you would have to go through for all of those refueling sites, which is why we keep it just under that threshold.
Operator
Perfect, thank you, Ian. Next question, what is the molecular efficiency of the hydrogen liquefiers?
Chris Rial
I’ve never heard a phrase like that.
Ian Richardson
I’m not sure, molecular efficiency, but in the liquefaction realm, we typically use the specific energy consumption, which is kilograms liquefied per kilowatt hour of electricity. Plug guarantees less than 11 kilowatt hours per kilograms.
Operator
Perfect, thank you both. All right, next question. What is the status of the Georgia plant?
Chris Rial
Seemed to get a lot of questions about that. It’s currently in commissioning phase. We had analyst day out there not too long ago when we partially commissioned part of the plant, but we’re in commissioning mode and we’ll have further updates at our symposium in October.
Operator
Great, thank you, Chris. And I apologize, the questions are coming in quick. So I’m trying to keep up with them here. How do the production rates and purity of hydrogen obtained through fermentation compared to those obtained through conventional methods like steam methane reforming and electrolysis?
Ian Richardson
Was the question around the hydrogen purity of fermented hydrogen or off gas from fermentation? You mind reading that one more time, Meryl?
Operator
Yeah, no, sorry. How do the production rates and purity of hydrogen obtained through fermentation compared to those obtained through conventional methods like steam methane reforming and electrolysis?
Ian Richardson
Let’s see, I’m not personally familiar with the fermentation process for producing hydrogen. I know there’s a lot of anaerobic gestures and things like that. Typically, there are different impurities you need to be aware of when you’re dealing with different production sources, whether that’s biogas or some kind of chemical processing. And the challenge is really when you get to the liquefier. So your liquefier has a pre-cooling stage. So roughly kind of the minus 280 to minus 310 range, around liquid nitrogen temperatures.
So any molecule that’s going to freeze out in that range needs to be removed, which is almost everything except for nitrogen, argon, oxygen and CO. So any water vapor, any hydrocarbons, all need to be removed to less than one part per million levels on the front end of the plant. So whether that’s a PSA or a temperature swing absorber, that purification process will vary depending on the feed stock of hydrogen for that.
Operator
Great, thank you, Ian. Can you please clarify the benefit of the H2 cycle versus HE cycle?
Ian Richardson
Sure, so typically smaller liquefiers, so kind of your sub 10 tons per day, some of your 15 tons per day, will use helium refrigerant for the liquefaction stage. So they are actually using helium and expanding that through turbo expanders.
Now, helium is not as efficient and it’s not as efficient of a refrigerant. So your specific energy consumption increases. Essentially your OPEX increases. However, the equipment is slightly cheaper for helium, because it doesn’t have to deal with the explosion requirements that hydrogen equipment does. So your CapEx is lower. So typically we see that that breakeven in OpEx versus CapEx at around 15 tons per day, where it now makes sense to transition over to hydrogen as your refrigerant in that liquefaction stage.
Operator
Great, thank you. And what is the pressure of the liquid hydrogen that you produce?
Chris Rial
Oh, sorry, I was reading questions there. Can you say that one more time?
Operator
No problem. What is the pressure of the liquid hydrogen that you produce?
Ian Richardson
That pressure can actually vary slightly depending on the facility storage tank philosophy. Typically we output our liquid at 10 PSI gauge and can vary up to even a 30 PSI gauge, depending on the storage tanks at that facility.
Operator
Perfect, thank you. And what is the reason for the two different dispensing pressures of the portable refueling stations?
Ian Richardson
That dispensing pressure is usually dictated by the end-use application. So a lot of like, you know, forklift material handling applications use 350 bar standard pressure, so it’s about 5,000 PSI. And then a lot of your passenger vehicles for, your Toyota’s Mirai’s, and Hyundai’s and Honda’s, those have a 700 bar refueling system, so about 10,000 PSI in your passenger vehicle. So that’s not necessarily dictated by us. That’s just what’s out there in the market. Those are your two common fueling pressures.
Operator
Great, thanks Ian. And I believe this is another one for you. If hydrogen is explosive to the environment, what precautions are taken to avoid the explosive nature of hydrogen?
Ian Richardson
So, hydrogen is a fuel just like any other fuel, whether it’s, diesel, propane, natural gas, they all have different safety characteristics with them. Some of the benefits of hydrogen is that it’s the lightest molecule we have, so it goes up and dissipates much faster than anything else around it.
It dissipates at 20 meters a second, so it won’t pool on the ground like other fuels do. So the main thing with hydrogen is just isolation, so isolating your storage source if you do have a leak, being able to turn that source of hydrogen off. And then ventilation, don’t allow your hydrogen to accumulate to flammable mixtures in any location. So vent it to the outside, just let it dissipate into the atmosphere.
So our plants are all designed with these philosophies in mind. There’s fire detection, there’s hydrogen leak detection all throughout the facilities. Vent stacks are very common with hydrogen. You basically just vent it up above everybody’s head safely so it can just dissipate out into the atmosphere.
Operator
Perfect, thank you. Next question, can you talk about supply chain? Are most of the parts manufactured in the U.S.?
Chris Rial
It depends on how you look at it. You can look at it many different ways. You can do it by equipment count or part count. You can do it by percent of CapEx, there’s different ways you can look at that. But in general, our supply chain is spread out across, and I would say most products that are serving the liquefaction market are spread out across Europe and North America.
This scope of supply is relatively new to the market, so the supply chain is pretty small. But I can tell you, with things that we’re doing with our supply chain, where we’re building in volume, we’re asking our supply chain to diversify, whether to serve different markets, whether that’s to meet specifications, delivery or subject matter expertise.
Various reasons we’re asking our supply chain to look at continental delivery or manufacturing to serve, to broaden our reach into different markets, so.
Operator
Great, thanks, Chris. Next question, what type of heat transfer or vaporizer equipment is required during the dispensing operation to change hydrogen phase from liquid to high-pressure gas?
Ian Richardson
So in those fueling stations, let me pull a picture up here. Typically, so we actually have liquid pumps at these sites. So we’re actually pumping that liquid in a piston pump. So most of that phase change actually happens in the pump itself. So it comes in as slightly sub-cooled liquid, and it gets pressurized to roughly 6,000 PSI. So that hydrogen is actually supercritical at that point.
So it has changed phase into a supercritical state. It’s no longer separable liquid vapor phase. So it comes out of that pump as supercritical hydrogen, and it is warmed up through our piping and in these vaporizers right here. So these are just standard aluminum vaporizers to warm that to ambient pressures before we put it in our storage tubes.
Operator
Great, thank you. Next question, what indicators in the market should we follow to give us a sense that hydrogen demand is growing?
Chris Rial
That’s a good question and I wish we all knew the answer to this, but it’s a matter of – let me see if I can pull this up. It’s a matter to a lot of these growth drivers here. So if you look at policy, that could be a big indicator. When you sector out geographically, Europe, North America, Asia Pacific, Middle East, Africa, they all have different drivers.
Europe and what happened during Ukraine and their heavy push for decarburization, they are solving for a little bit different equation than maybe the U.S. or Asia Pacific. And they may look at a different mix of hydrogen and ammonia in those sectors.
So, I would say when you look at indicators, you want to follow public policy, which obviously I think would encompass both government incentives and regulatory policy, as well as monitoring the OEMs in these sectors and their commitment to developing technology in the fuel cell market or shipping market as well.
So it’s – again, it’s an early market right now, but that’s kind of how we monitor various sectors to understand when they’ll be coming online or what scale they will be demanding. Its estimated Europe will have a demand of roughly 20 million tons per year by 2030. Their ability to produce a green molecule within Europe is limited due to access to renewable resources. And within Europe, you’re going to see areas of export versus areas of import based on their access to renewable.
And again, that’s just on the green side of things. I think if you look at what Europe is doing, specifically Germany, in mandating retail fuel usage, that would be a good indicator that the need for liquid is going to be coming in the near future.
So hard to answer in a nutshell, but basically these growth drivers as highlighted on the slide, those will lead you to areas that will highlight future demand.
Operator
Great. Thank you. Next question. You’ve indicated liquid hydrogen is a good application for mining trucks. Any experience with this application? How would you engineer supply for 100 trucks with consumption of 50 tons per day?
Chris Rial
You want to tag team this one, Ian? I have my thoughts here. So, look, it’s a developing market right now. And if you can develop the fuel cell technology itself or combustion, whatever it ends up utilizing, our estimate, because of the remoteness of these areas, the tough terrain that these areas, you know it’s not like they have smooth roads that these transportation and low vehicles are going across.
You’re going to need close proximity production and distribution just to save on losses and other types of dynamics that are affecting mining. It is an area that is a high emitting sector. That is, the folks that we’ve been engaged with have a desire and are putting dollars into investments to understand what that looks like, adopting hydrogen as a fuel. So we have a ways to go before we fully see that sector really scale up. Ian, we’ve lost your audio I think.
Operator
Well, might be his headphones.
A – Chris Rial
Okay. Well we can close that question now, for now.
Operator
Yeah. All right. We will move on to the next question here. What are the primary energy sources and methods used in the liquefaction of hydrogen? And how do these energy intensive processes impact the overall feasibility and sustainability of hydrogen as energy carriers?
Chris Rial
That’s a long – I’ll probably give a presentation just on that question. Which question is that, so I can reference it?
Operator
Question 53.
Chris Rial
Got you. Thank you. When you look at – so first questions, what are the primary energy sources and methods used for the liquefaction of hydrogen? I would say, we look at all forms of energy, nuclear, hydro, wind, solar, you know any clean fuel or energy source is something that Plug is looking to utilize. That’s really about the carbon intensity of the energy itself.
When you look at liquefaction, you’re in – because it is energy intensive, it’s not near as energy intensive as the electrolysis aspect of this. But if you just look at the specific energy consumption, you can get blinded into solving for one answer.
There are lower efficiency technologies that can be deployed. We could deploy one. The challenge with that is, you typically get there by adding rotating equipment, right. And that additional rotating equipment introduces new complexities, controllability and reliability.
The more rotating equipment, the more opportunities for points of failure. You’ve got challenges with, well, your increased capital might not outweigh the savings on the energy. So when we look at power bands within certain regions, if the internal rate of return on capital savings can beat out energy savings in those aspects, so over a certain period of time.
So you have to look at it dynamically. You can’t just look at it statically at one metric. Would you add anything to that, Ian? I don’t know if you can – have audio.
Ian Richardson
Am I back? Can you hear me again?
Chris Rial
Yeah.
Ian Richardson
Okay, perfect. No, I think you nailed it there on low energy. We certainly could go build lower energy liquefiers, as Chris mentioned, primarily by adding additional turbo expanders. They’re fairly expensive and they limit your operational flexibility. So those plants would want to operate at a single point, 24/7, with very known and constant cooling water supply temperatures.
They are not going to be able to vary or have the flexibility that our system does. And so we consciously went with the flexible route, because that suited our internal applications. And that’s where we see the market, at least in the near term, being headed.
Operator
Great. Thank you both. We have time for a few more. So next question. Can you discuss the cost drivers for liquid hydrogen?
Ian Richardson
Certainly. So when you look at your cost drivers, electricity is a big part of that, especially if its electrolysis based hydrogen. You do have that energy input at the front end. Obviously you have your capital costs of your plants and the larger your plant, typically the lower production costs on $1 per kilogram basis.
Then after kind of the spigot price of your liquefaction facility, you have your transportation costs. So that’s your liquid tankers, how far you need to transport that. And that piece right there is typically why we go to liquefaction and liquefy our hydrogen. That transportation costs on $12 per kilogram basis is much less for liquid deliveries than it is for gaseous tube trailers because of that energy density. It’s roughly eight times fewer loads for a liquid delivery versus gaseous tube trailers.
And then at the site, you have additional infrastructure costs there. There are some power costs associated with either compressing or pumping that hydrogen to get to your end use application, whether that’s 350 bar or 700 bar. So that’s typically your value chain. You have your CapEx and OpEx and electricity consumption at your different stages of your value chain, depending on what you’re dispensing into.
Operator
Great, thank you. Are there plans to use your liquefaction technology for other potential applications?
Ian Richardson
I’m not sure if the question is more centered around liquefying other products or providing liquid hydrogen for other applications.
If the answer is the first, the answer is no. This is very specific to hydrogen. If the rationale was more associated with new applications, really it’s about where the hydrogen molecule was consumed. We are constantly evaluating whether it’s industrial processes or distribution facilities or transportation. All these sectors have different constraints that they’re solving for.
We see the industrial sector, whether it’s steel, concrete, what have you or even refining. When you move into higher volume, you’re probably moving more into gaseous rather than liquid, and that’s just surely due to the amount of transportation and energy and costs associated with transportation good side here.
So typically in those high consumption applications, you’re going to have gas connection or pipeline connection in those areas. There’s probably a volume that we haven’t exactly calculated, in which it doesn’t make sense to transport liquid, but you can get a sense of that very quickly when you look at the volumes and the number of trucks that would be needed to supply consistently for those applications.
End of Q&A
Operator
Awesome. Well, I think that brings us right up to time. So a huge thank you to our presenters today and for all of you who joined.
Ian, Chris, I’ll turn it over to you guys if you have any final things you want to say. But as we said, stay tuned. Next month is our Plug Symposium and the registration is right on the right-hand side of your screen there. So thank you everyone very much.
Chris Rial
Yes. Thanks, Meryl, and thanks for everyone that took the time to join. It’s an exciting industry to be in. It’s an emerging market. So stay tuned, its exciting products that are starting to be developed for this market.
Ian Richardson
Yeah, thank you all for participating. And just as a last note here, if you do have any follow-up questions after the webinar, our Contact Us links are at the bottom of this slide here. So feel free to reach out. Thank you all.
Operator
Thanks everyone.
Question-and-Answer Session
End of Q&A
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