Singapore’s hydrogen startups, eyeing overseas markets, long for a larger launchpad

SunGreenH2, the local startup behind the two-kilowatt device, says its design omits expensive metals such as platinum, titanium and iridium, while being equally durable and 20 per cent more energy efficient than existing setups. It is looking to soon display a larger 20kW unit.

Few in Singapore would have laid eyes on the device – partly because of the many security hoops one must jump through to get on to Jurong Island. SunGreenH2, for its part, envisions its use primarily overseas. A similar device is already being trialled on a microgrid in Spain.

Singapore has in recent years signalled an interest in adopting low-emissions hydrogen to decarbonise its economy, currently 95 per cent powered by natural gas. New gas plants in the city-state now must be able to handle at least 30 per cent hydrogen, while a bunkering and electricity generation trial for derivative fuel ammonia is being studied by two large industrial consortia.

In the wake of policy manoeuvres, a new crop of startups has emerged, supported by multi-million dollar research grants the country has been providing since 2021. These ventures create smaller waves locally not just due to their nascency, but also because they often offshore early to seek growth opportunities that Singapore currently cannot provide.

Overseas expansion comes with the blessing of the Singapore government, which is eager to see homegrown brands succeed and provides assistance in finding foreign business partners. But with global competition heating up, there are also growing calls for regulators to expand local testbedding opportunities – if not to develop a home market, then at least a nursery for entrants to build experience before competing abroad.

Greener pastures

SunGreenH2’s electrolyser, which splits water into two gases, oxygen and hydrogen. When plugged into renewable power, this process represents the cleanest way to produce hydrogen fuel. Image: SunGreenH2.

Tim Rockell, SunGreenH2’s senior vice president of business development, sees growth opportunities in every direction from Singapore. The firm, which was founded in 2020 and opened an Australian branch last year, is targeting a US$15-20 million funding round this year to expand further – possibly to India, Malaysia, Europe, United Kingdom and North America, Rockell said.

The aim is for SunGreenH2 to leverage growing global demand for “green” hydrogen, made in electrolysers powered by renewable energy, generally the cleanest but most expensive way to produce the fuel. Green hydrogen currently costs between US$4-12 per kilogramme to produce, versus under US$2 for the more traditional, carbon-intensive method using methane, according to analyst BloombergNEF. SunGreenH2 is aiming to get green hydrogen production down to US$3/kg by 2025, and under US$2 by 2027.

More Singapore companies in downstream applications are also making early overseas forays. Sydrogen, a 2021 outfit, announced a deal with China’s Shanghai Hydrogen Propulsion Technology this month to develop a ship-borne 250kW hydrogen fuel cell, which is expected to be ready by 2025. The firm, set up by precision engineering firm Nanofilm Technologies and Singapore state investor Temasek, already has an office and manufacturing line in China for bipolar plates, a component in the fuel cells.

“Back in 2021, we saw good signs that the market is already starting to think about hydrogen, especially in China,” said Sydrogen chief executive Gian Yi-Hsen. Continued momentum in the sector in 2022 even as Russia’s invasion of Ukraine rattled markets indicated resilience, while falling renewable electricity prices signalled greater availability of clean hydrogen fuel for end-users, added Gian, who is also eyeing opportunities in Europe, Japan and Southeast Asia.

Some are pivoting into the industry following shifting customer demand. Lee Swee Ser, a 30-year veteran in the diesel generators business, set up Powerzone H2 in 2021 to make catalyst-coated membranes, another key part of hydrogen fuel cells, after clients increasingly asked him for clean energy options. Lee sees Japan as the most promising market for membranes, and Indonesia for complete fuel cell sets. The firm is also exploring opportunities in Germany, Lee told Eco-Business.

Lee Swee Ser is the managing director of Singapore hydrogen fuel cell startup Powerzone H2. Image: Liang Lei/ Eco-Business.

There are now over 40 companies under the Hydrogen and Fuel Cell Association of Singapore (HFCAS), president Noel Chin told Eco-Business, with most being small and medium enterprises. The figure is 50 per cent higher than five years ago, though growth is attributed to both new entrants and existing firms seeking membership.

Globally, the low-carbon hydrogen market is expected to rise almost 10-fold to US$12 billion by 2030, according to the International Energy Agency. If the whole world shifts to a net-zero emissions pathway, the pie increases to US$112 billion.

The chances of a big break in the hydrogen space are much higher outside Singapore. Countries such as Australia have more land and favourable weather for large solar panel installations to power hydrogen production. China, Japan and South Korea have large industrial sectors hungry for the clean fuel. Several regional countries also offer cheaper manufacturing.

“In China, a demonstration project is 500 or 1,000 vehicles. In Singapore, two vehicles would probably count as a good demonstration project,” said Gian, pointing to hydrogen automobile trials.

Limited testing grounds

To entrepreneurs, Singapore has got many priorities right in supporting hydrogen sector development. In the past four years, several million dollars have been poured into research and development, the latest tranche unveiled just last week as part of a S$90 million (US$67.2 million) package for sustainable fuels. That same week, a new laboratory in the National University of Singapore was opened to help small businesses prototype hydrogen solutions. 

The government is also keen to help its hydrogen startups move overseas, with business development agency Enterprise Singapore helping with foreign matchmaking. Both SunGreenH2 and Sydrogen have been beneficiaries of the agency’s programmes.

While Singapore’s brand image and technological prowess help companies get a foot in the door overseas, industry insiders are also realising that experience counts.

“For a Singapore company going overseas in any sector, you really need some home credentials,” said Rockell, adding that SunGreenH2 benefits from being able to demonstrate its electrolyser in research agency A*Star’s laboratory.

HFCAS’s Chin agrees that startups need to first prove that their technology is feasible and financially viable before bringing their business cases overseas.

But this is often an area where startups struggle in. The issue is not just Singapore’s small market size; many ventures also bemoan tight regulations that further limit the possibilities for pilots.

“One of the challenges today is that the standard agency response is – go do a risk assessment – and then we need to spend three to six months, hundreds of thousands of dollars on it,” said Gian of getting regulatory approval for hydrogen trials in Singapore.

The cautious approach to hydrogen makes safety sense, in a densely populated city. Hydrogen is an easily ignitable fuel and often needs to be compressed for transport. The lightest molecule on Earth is also known to leak easily, and sometimes can cause metals to become brittle.

Safety concerns have plagued attempts at trials, including what could have been Singapore’s first multi-fuel vehicle station to supply hydrogen, proposed in 2021. Eco-Business understands regulatory roadblocks had stood in the way, and as of this year, the plan had switched to only installing electric chargers on top of the existing diesel and compressed natural gas offerings.

This setback comes as Singapore’s neighbour Malaysia is making big plans on hydrogen fuel stations in its Sarawak state, which has targeted 100 such facilities in 2030. HFCAS has led trade missions there to explore opportunities, including a delegation of over 20 firms to attend a hydrogen conference in June. The worry is that Sarawak’s opportunities will be snapped up by competitors fast if Singaporean companies are not fast enough.

In parallel, the association is trying to make sure that the next attempt at a Singapore multi-fuel station succeeds, by contributing to a technical reference that spells out the designs and safeguards needed to run such an establishment. It hopes to have the document ready in the coming weeks, Chin told Eco-Business.

What’s in it for Singapore?

Singapore’s hydrogen businessfolk say they are happy to be carrying the national brand overseas in their expansion plans. “Intel chips are made across the world. But it is still a US product,” said Powerzone H2’s Lee, as he discussed plans to offshore manufacturing of fuel cell membranes to possibly China, Thailand or Vietnam.

Sydrogen had signed an MOU for shipborne hydrogen fuel cell development with Shanghai Hydrogen Propulsion Technology at a government-led trade meeting in Shanghai, China, in July. Image: Sydrogen.

Many of them are also keen to keep management and research headquarters in the city state, which would help develop the capabilities and workforce needed for any future national scaleup plans.

Some startups’ overseas partnerships could also bring business back to Singapore. Sydrogen’s China partner, Shanghai Hydrogen Propulsion Technology, is keen on entering the city-state’s bustling maritime sector where hydrogen or its derivative fuels could one day be used, Gian said.

It remains to be seen how deep Singapore intends to dive into the hydrogen game. Its national hydrogen strategy, published end-2022, outlines the many research, planning and diplomacy steps the country has started to take, but also states that the pace of hydrogen deployment and infrastructure development will be in line with technological and global progress, given the uncertainties around the nascent sector.

Singapore as a large hydrogen hub appears unlikely to Gian, but he sees the city-state becoming a “niche market”, pointing to how some coast guard cameras already have fuel cell backup – though this business was snagged by SFC Energy, a German firm.

Other entrepreneurs also point to fuelling backup power and drones as possible local business sectors. The market would expand considerably if Singapore’s public housing blocks all switched from diesel to hydrogen-based standby generators, Lee said.

To make Singapore’s market opportunities clearer, Chin said HFCAS will soon start on developing an industry implementation roadmap that will highlight where hydrogen fuel can best be used in Singapore, along with the capabilities and policies needed to enable these applications. The association aims to have the plan ready by mid next-year.

It could go some way in addressing market risks for Singapore’s hydrogen startups, but they are still faced with many teething issues in the nascent sector. Cost remains a big concern – hydrogen power generation today remains some 20 times more expensive than using diesel, Lee estimates, adding that the investment landscape is also getting more challenging with a sluggish global economy hovering just above recession levels.

“Many investors are interested in hydrogen fuel cell technologies. But they also come with many questions,” Lee said. Still, he is holding out hope of an eventual hydrogen fuel renaissance, given the decarbonisation pressures businesses and investors are facing.

“If we do establish ourselves, reach the market and get customers’ demand, I think it is not that we need them; they will need us,” he said.