As Hydrogen Emerges As a Clean Energy Option, H2scan Raises $70 Million

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Hydrogen is having a moment in Southern California. The first element on the periodic table is rapidly emerging as a green alternative to natural gas. But for every hydrogen battery, electrolyzer or pipeline being proposed, a sensor is required: Hydrogen gas, as you may remember from high school chemistry class, is extremely flammable.

For H2scan, there’s big money in not blowing stuff up en route to a greener economy. On Tuesday, the Valencia-based hydrogen sensor company unveiled a $70 million capital raise that will be used to develop its technology, expand its manufacturing and bolster its sales and marketing operations. U.K.-based investment group LetterOne led the funding alongside South Korean energy company GS Energy. (H2scan also announced David Meyers, a former executive at engineering consulting firm Altran, as its new chief operating officer on Tuesday.)

H2scan’s sensors consist of a palladium-nickel crystal lattice that traps individual hydrogen molecules; when hydrogen binds to the palladium, it causes the electrical resistance of the lattice to change. With the help of algorithms, that change in resistance can be used to calculate exactly how much hydrogen is moving through the sensor—and whether it’s approaching dangerous levels.

“Because of our patented technology, where it's lower cost and more reliable and more accurate, we feel that puts us in a prime position to be the number one go-to—the golden standard for hydrogen sensing in the world,” H2scan founder, president and CEO Dennis Reid told dot.LA. “The bottom line is we want to be in every pipeline, we want to be in every electrolyzer and we want to be in every home. And we feel that we now definitely have the capital to get there.”

Founded in 2002, the company went to market with its hydrogen sensors in 2012 and has since deployed more than 20,000 units for applications including petrochemical refineries, nuclear facilities, semiconductor manufacturing, plastics production and food sciences. (H2scan’s customers include ExxonMobil, Shell, Chevron, Procter & Gamble, Siemens and ABB.) Reid is quick to note that they’ve never had a single sensor fail.

One growing area that will certainly need quality hydrogen sensors in the future is pipelines. Last week, Southern California’s primary gas utility, SoCalGas, revealed its plans for a hydrogen pipeline system as part of its goal to fully decarbonize its operations by 2045.

As energy companies increasingly turn to hydrogen, “There will be new safety requirements for avoiding an accident, because the hydrogen will very likely be mixed with some other gasses to avoid risky situations,” according to Jerzy Szpunar, a professor of mechanical engineering at the University of Saskatchewan who studies hydrogen generation and storage.

Reid says that H2scan’s sensors are particularly well-suited for pipeline applications due to their ability to pick out hydrogen molecules against a background of other compounds. In addition to expanding its production facility in Valencia, H2scan will also use the new funding to reduce the manufacturing cost of its sensors by consolidating many of the supporting electronics into a dedicated circuit—a move that could bring the price per sensor down from around $9,000 to just $2,000 for some applications.

Making hydrogen power more affordable is key to California’s transition to clean energy, and H2scan wants to be at the center of the conversation, according to Reid. “We want to take our core technology and then create a product for every single application within the hydrogen economy,” he said.