Nanofilm-Temasek JV eyes more hydrogen fuel applications

Nanofilm Technologies International is leveraging nanotechnology to create business opportunities beyond the consumer electronics and communications sectors.

In July 2021, it launched a JV with substantial shareholder Temasek Holdings to tap new opportunities in the growing hydrogen energy sector.

The JV, named Sydrogen Energy, will create products to be used in the growing hydrogen economy. It will be 65% owned by Nanofilm, with Temasek holding the remainder.

The total initial investment in Sydrogen is around $140 million, of which Nanofilm will contribute $21 million and transfer its hydrogen energy business and the licence of intellectual property related to the business. The proceeds will be used for R&D and the construction of production capacity.

In FY2021 ended Dec 31, 2021, Sydrogen reported a loss of $1 million due to operating expenses incurred in building its business fundamentals, which Shi says is “normal” for a start-up.

Sydrogen’s first focus area will be the application of Nanofilm’s proprietary filtered cathodic vacuum arc technology (FCVA) in the development of protective carbon coatings for metallic bipolar plates (BPP) of fuel cells and electrolysers.

These metallic BPP are somewhat of a weak link in today’s hydrogen economy. Shi says hydrogen fuel cells and electrolysers are plagued by cost and durability issues linked with the bipolar plates.

However, when bipolar plates are incorporated with Sydrogen’s advanced coating technologies, Nanofilm claims this can produce a wide range of fuel cell and electrolyser systems with simpler designs, extended useful life, better heat control and greater power density.

If successfully scaled and commercialised, this will reduce the total ownership cost of hydrogen fuel cells and electrolysers. Promising areas of applications include passenger and commercial vehicles, light-powered mobility solutions and stationary power-generating systems.

At the time the JV was announced, Shi said setting up Sydrogen as a separate JV was a deliberate move to help Nanofilm expand into different markets, especially in China which strongly supports the development of the hydrogen economy, starting with fuel cells for electric vehicles (EVs).

CEO Gary Ho says the company has received “very positive” feedback from its first EV customers in China, who say Nanofilm’s coating is “by far the best [in test results]”.

He adds that all the production equipment has been installed at its Shanghai plant which has cleared all its audits. As such, Sydrogen is expected to contribute positively to revenue in 2H2022.

Shi’s vision is for Sydrogen to become more than being a seller of components. Instead, he wants the company to venture into the applications space. In China, the company will focus on servicing mobility applications such as cars, trucks and heavy lorries. But as the company is not yet ready to develop hydrogen applications, it will mostly support its partners by supplying coating for the BPPs.

Instead, Singapore will be the “launching pad” for hydrogen applications developed by Sydrogen, reveals Shi.

Some of these applications include distributed stationary power sources, where hydrogen fuel cells are used to power buildings like data centres, EV charging stations and households.

For example, as Singapore pushes for wider EV adoption, it will need more charging stations. The majority of charging stations planned in Singapore are AC charging stations, also commonly known as slow-charging stations. These take anywhere from five to eight hours to fully charge an EV, depending on the battery size and power transmitted.

On the other hand, DC charging stations or fast-charging stations deliver power much faster. For example, Shell claims its DC chargers at its stations can charge an EV to 80% in 30 minutes.

But shouldn’t fast-charging stations be ubiquitous so EV owners won’t have to wait half a day to charge their EVs to the max?

The problem is fast-charging stations draw an enormous amount of power and this may burden the national power grid, Shi says.

With Sydrogen, fast-charging stations can tap hydrogen fuel cells instead of the national grid for power.

“That means you’ll have an off-grid charging base, like five or 10 charging stations powered by one hydrogen fuel cell which will solve the problem. We can install this in every car park without any loading disruption to the grid,” says Shi.

Although Asia is a natural market for Sydrogen, Shi says hydrogen as a power source looks very promising in Europe, which is trying to wean itself from depending on Russia for energy.

“I think the hydrogen economy is going to be huge in the world. So, I hope Sydrogen can seize a good portion of this economy. Furthermore, Sydrogen is set up to grow much bigger than Nanofilm now.”

If Sydrogen is successful, will it be spun off and listed to attract more investors?

Shi does not rule out that possibility or even a spin-off into more application areas. “Yes, any­thing is possible ... The possibilities are open but one thing is certain: Sydrogen will grow.”

Temasek’s investment in Nanofilm is part of what can be described as “enterprise building” for the wider Singapore economy, says Russell Tham, Temasek International’s joint head, enterprise development group (Singapore) and head of strategic development.

The Sydrogen JV is a business that can potentially capture a “very long and big value chain” of the hydrogen economy whose expected transition over multiple decades is just starting, says Tham, who sits on the board of Nanofilm as a non-executive, non-independent director.

When asked if there are already plans for a potential spinoff listing of Sydrogen down the road, Tham says Temasek is “open to good options” to monetise its investment.

In response to a similar question, Shi says: “We’re still young, I think eventually the market will see our delivery and we still need to deliver. But given time, the market will see the difference and uniqueness of Nanofilm.”