A green hydrogen startup has raised one of the Bay Area's biggest deals of the year.
Electric Hydrogen Co. raised a $380 million Series C round, it announced Tuesday. The San Carlos company, which has developed industrial-scale electrolyzers for separating hydrogen from water, plans to use its new funds to ramp up manufacturing of its systems, it said in a news release.
Hydrogen is used in a wide variety of products, including fertilizers and the chemicals that form the basis of numerous compounds. It can also be used to extract iron from iron ore in place of coal. The problem is that most of the world's hydrogen today is derived from fossil fuels — largely natural gas and oil — and the production of hydrogen from such sources can generate a significant amount of global warming-inducting carbon dioxide.
"To address the global climate challenge, we need new technologies that help critical industries reduce their emissions," Raffi Garabedian, EH2's CEO, said in the news release. "Electric Hydrogen’s ... electrolyzer systems do that."
The startup's electrolyzers are large scale, 100-megawatt systems that can produce as much as 50 tons of hydrogen a day, according to the company. EH2 is in the process of installing manufacturing equipment at its factory in Massachusetts, where it has a significant base of operations. It plans to begin producing its electrolyzers there early next year and delivering them to customers later in 2024.
Among its first customers will be New Fortress Energy Inc., which plans to use EH2's system to produce green hydrogen at a plant in Texas.
With its new round, the startup has now raised a total of $600 million since its founding in 2020, according to the company. EH2, which has a pilot production facility in San Jose and a design center in San Carlos, did not disclose its new, post-round valuation. Its backers last valued it at $420 million last year, according to PitchBook Data.
Fortescue, Fifth Wall and Energy Impact Partners co-led EH2's new funding round. Other investors included Oman Investment Authority, bp Ventures, Temasek, Microsoft's Climate Innovation Fund and the United Airlines Sustainable Flight Fund
"United's need for sustainable aviation will require scaling the supply of green hydrogen, and we believe Electric Hydrogen's technology could be game changing," Michael Leskinen, president of United Airlines Ventures, said in the news release.
EH2 is one of more than 75 Bay Area companies in the hydrogen space, according to PitchBook. Since 2014, such local companies have raised more than $1.6 billion in funding across more than 200 deals.
The startup's new funding round comes California Gov. Newsom has been promoting the development of a hydrogen economy to help support the state's plans for a renewable energy future.
