Amazon’s hydrogen deal shows the technology is ‘becoming accepted’: FiveT CEO

FiveT Hydrogen CEO Pierre-Etienne Franc joins Yahoo Finance Live to discuss the importance of hydrogen fuel for decarbonization and the outlook for the industry in the wake of Amazon's partnership with Plug Power.

Video transcript

AKIKO FUJITA: Welcome back to Yahoo Finance Live. We are talking about renewable energy today, and for that, we're going to go back in time a little. 148 years ago, author Jules Verne wrote of the inexhaustible fuel made from water in his novel "The Mysterious Island." Now, today, hydrogen is touted by some as the answer to the world's energy problems.

But making it clean is another story. FiveT Hydrogen and Private Investment Group Ardion have launched the world's biggest clean hydrogen fund to make a reality. Let's bring in Pierre-Etienne Franc, FiveT Hydrogen Chairman and CEO of HY24. Good to have you on today.

Want to get to your fund, but let's first start by talking about hydrogen. We hear a lot about renewables in solar as well as wind. Why is hydrogen a better option?

PIERRE-ETIENNE FRANC: In fact, it's not a better option. That's the option that makes it compulsory in the end. If you move through the energy transition, you need a growing share of renewable. And the only way to make it accessible to end users, which need a lot of heat or which need a lot of power, is to convert that into hydrogen and to use hydrogen as a fuel. This is exactly what Plug is doing with the forklifts.

If tomorrow you want to fully decarbonize the energy system, you need to do very large amounts of solar and wind energy systems in places which do not need it. So you need to find a way to transport it in a transportable way. And the only way to do that is you get large power plants, you do electrolysis, you convert this energy into hydrogen, and then you can ship hydrogen into a hydrogen rich vector to the countries which need it-- Europe, Korea, Japan, Singapore, many countries like that.

In the US, Australia, Qatar, South America are very rich solar and wind potential places. And it's a way for them to export this energy to you. And that's why as the graph that you see, hydrogen that used to be just a molecule to decentralize fuels in the refining industry or to do fertilizers can become the secondary vector of a complete energy system. That's why the amount of hydrogen that we're going to need in the future is going to be multiplied by around 10 over the next two decades.

AKIKO FUJITA: Let me pick up on one of the points you just made, because one of the criticisms with hydrogen has been just the stringent requirements that are needed right now, whether it is cooling to a specific temperature or having specific pressurize requirements. How does your fund change the cost calculation here? Because it is very expensive right now.

PIERRE-ETIENNE FRANC: So the big topic is to move scale. And so in order to move scale, you need to find schemes where the policy-makers on the one side and the industry players or the transport users are ready to bring massive amounts of quantities of hydrogen. The fund enables that to happen because, basically, what we bring, we bring several investors with us, and we are capable to invest hundreds of millions per project so that we can help bring those dreams into a real asset base.

So typically, what we're going to do is we're going to-- if we move in, we're going to put maybe 50 to 100 million into a project along all the partners, which enables us to basically fund 400 to 500 million euros or dollars of projects. Then those projects [INAUDIBLE] policy-making can leverage another half of that size, moving to $1 billion. And with that, you're moving into CapEx which are becoming very competitive.

So the price of hydrogen that used to be around $5 or $6 per kilo in a small scale electrolysers can reach $2 to $3 per kilo just by the scale of it. The fund is going to help that.

AKIKO FUJITA: Yeah. And we are getting this announcement today from Plug Power which is, of course, one of your anchor investors there, tying up with Amazon. They've already had a partnership in place. Now, they're going to become a supplier of liquid green hydrogen. How significant is that, when you think about the momentum that's needed to really take this on a broader level and scale it up?

PIERRE-ETIENNE FRANC: I think plug has always been one of the pioneering players in developing massive series of forklifts and massive distribution of liquid hydrogen to the [INAUDIBLE] They have, I think, 165 stations up and running. And they operate 50,000 silos around the clock.

They are the only player that have that level of basically reliable supply every hour of the day in the US and in a couple of sites in Europe. This deal, which has been achieved with one of the leading players in the world, which is Amazon, shows that this technology is becoming reliable and is becoming accepted as a significant substitution to fossil energies for intensive mobility.

Plug has basically with that demonstrated that intensive mobility for logistic use is a significant part of what hydrogen can solve. And so it's also to be looked at in the context, of course, of the new Biden Inflation Reduction Act, which is giving a big boost to that. If you take a little bit of this-- and so far, the only big geography having a very large policy move was Europe.

They built a very large ambition has been fostered further by the Ukrainian law, because it tries to substitute natural gas by large amounts of produced hydrogen. But the execution of the plan is taking time. And now the US is coming, and they're legitimating exactly what Europe has announced to do over the last few years.

And maybe the US will be ahead of Europe. And the Biden plan basically says, we're going to help people producing green hydrogen by getting credits of $2 to $3 per kilo. And so that's going to deliver massive investments. We, of course, massive potential for technical companies like many other ones.

AKIKO FUJITA: And that chart we just showed early on really points to how far the US lags, but companies like Plug Power are certainly hoping that IRA could accelerate that.