HW Richardson chief executive Anthony Jones. Photo / George Heard
Chris Keall is the technology editor and a senior business writer for the NZ Herald
Hydrogen is being talked up in Southland. And not by a Green Party think tank or a power company PR person, but by our largest private transport company, HW Richardson Group. This is industrial New Zealand, rolling up its sleeves and getting on with the energy transition.
HWR has been trialling a hybrid hydrogen-diesel truck, and will now add 10 more to its fleet by the end of this year.
It is also installing two refuellers, with systems for creating and storing hydrogen from fast-growing Christchurch company Fabrum.
Notably, HWR's hybrid truck and refuelling pilot - budgeted at $15 million - has so far been entirely self-funded.
"We see that diesel fuels are only going to be around for another 10 to 15 years, and potentially shorter than that," says HWR chief executive Anthony Jones.
Change is inevitable, Jones says. HWR wants to keep ahead of the play by initiating its own transition "rather than waiting for it to be mandated".
The Government wants to reduce emissions from freight transport by 35 per cent by 2035. Jones says each truck converted to hybrid hydrogen-diesel will reduce its emissions by 50 per cent.
And we're talking a lot of trucks.
HWR operates some 1300 heavy vehicles across the 25 trucking firms it owns. Overall, there are 48 companies in the group, including Allied Concrete, Allied Petroleum with its 125 fuel stops, quarry and property interests, plus Australian operations including fuel distributor Pacific Petroleum. Revenue will be around $2.5 billion this year, or more than Mainfreight's domestic revenue. The company remains privately-held by the family of founder Bill Richardson.
The business has actually tested three hybrid trucks over the past 18 months as it sought the right hydrogen-diesel solution. The first trial was in April last year, the second in August, and the third from April this year.
The hybrid truck involved in the latest trial (pictured above) is not available for any media opportunities because it's being used as a workhorse. It's an Allied Bulk cement tanker that carts all over Southland. It operates Monday to Friday and its two drivers are shift partners, meaning that as one finishes his shift, the next driver jumps in and starts his, which can keep the truck on the road for up to 16 hours a day. It's clocking about 25,000km per month.
Why go with hybrids over pure hydrogen fuel cell trucks - where hydrogen is used to generate power to drive an electric motor?
Jones says there are three reasons. One, bluntly, is cost.
This month Hyundai unveiled the first New Zealand customer for its hydrogen fuel cell truck, the Xcient - a 40 tonne proposition with a full load.
Jones says HWR had a hands-on look at the Xcient and found it an impressive vehicle - but also one that did not make financial sense for his company right now.
"The current sticker price for a 100 per cent fuel cell truck is around $1.2 million," the CEO says.
"We know that's going to get cheaper over time, but at the moment, because it's a genesis industry, it's quite cost-prohibitive."
By contrast, "it costs $130,000 to convert an existing diesel engine to be able to run on dual fuel and travel those same distances with the same mass contained in the truck." An equivalent diesel truck would cost around $300,000, he adds.
A second reason is the speed of transition. HWR can convert trucks to hybrid at a rapid clip using its in-house engineering team. To achieve that, HWR uses a solution supplied by UK company CMB Tech, which has a decade's experience with hydrogen dual-fuel systems under its belt.
"The dual-fuel technology injects hydrogen into the inlet manifold of the existing diesel combustion engine. It works in concert with the diesel to combust and fire the internal combustion engine, and therefore offsets the amount of diesel being injected into the cylinders," Jones explains. The system has been proven by HWR's initial trial and by CMB Tech's years of experience in Europe. Potentially, up to 100 HWR trucks could be converted per year.
By contrast, it could be another five years before mainstream truck makers start turning out pure fuel cell models in volume. And HWR needs to get a wriggle on because it replaces each of its trucks after just five years. That fast turnover means the second-hand market will be quickly seeded with hydrogen hybrids if HWR does end up expanding its pilot.
A third reason for going with hybrids is range. HWR is putting a hydrogen refueller into Gore. A pure hydrogen fuel cell, if it had Xcient-level range of 400km on one fill, would be restricted to travelling within 200km of the town. With the hybrid trucks, there's no range anxiety.
"The beauty of dual fuel is if you run out of hydrogen, you can continue to run on 100 per cent diesel. And so we see that as a big game-changer to start our transition without risking our capital base that's already deployed."
Hydrogen is also getting started elsewhere. There are hydrogen refuelling stations in Auckland and Taupō and Hiringa Energy, headed by ex-Todd Energy executive Andrew Clennett and backed by $19m in government loans, is building refuellers in South Auckland, Tauranga, Hamilton and Palmerston North, due to open this year, and says it will expand into the South Island in 2023, with a long-term plan for 24 stations. And HWR has its own refueller network plans, which could grow to include all of its 125 Allied fuel stops over the next few years. But hybrids allow it to get up and running with emission reductions immediately.
"There's front-end design work but any diesel engine can be refitted," says Jones. "The thing we need to trial - and why we're doing it on 10 trucks to begin with - is because we want to see how it works with New Zealand topology and New Zealand roads. Subject to how that plays out, we'll look to deploy it further.
"But you can't just deploy a truck. You've got to have a hydrogen production and refuelling network so we grabbed an electrolyser though Fabrum and we've got two of those on order now."
The first electrolyser is due to be up and running in September, and the second early next year.
If all goes well with the hydrogen production, storage and dispensing technology, "our plan will be then to roll it out throughout our Allied Petroleum network across the country, and then retrofit more of our 1300 trucks - while working with industry, which we've had a lot of interest from, to retrofit their vehicles as well," Jones says.
What about trucks powered by lithium-ion batteries? Tesla has a semi-trailer truck in development, while several of the large truck makers also have electric models in the works.
Jones says his company is interested in EVs for smaller vehicles in the pickup and delivery part of its business, but for larger vehicles he doesn't see it as practical yet.
One issue is the time it takes to recharge an electric truck.
"Some of the comparators that we're seeing in Europe are five to eight hours to charge a heavy mass EV and 15 minutes to refuel a hydrogen vehicle," Jones says.
"So we see that you can get similar outcomes as to what we're getting with diesel refuelling today with hydrogen."
Another issue is that while a hydrogen setup is bantamweight, lithium-ion batteries are heavyweights in an industry where every kilo counts.
"For a long-distance, heavy mass vehicle, the battery would be about seven and a half tonnes, and that is 30 per cent of the payload," Jones says.
"And so what that would mean is we'd need 30 per cent more trucks than are on the roads today to carry out the current freight task."
Hyundai's Xcient has a range of up to 400km and a fuel capacity of 31kg of hydrogen - meaning that at about $25 per kg of hydrogen for the fuel cell that powers its 350kW electric motor, it will cost around $775 for a fill. It would cost around $450 to get the same range from a diesel heavy truck, assuming around 40 litres per 100km - bearing in mind that the price of diesel has nearly tripled to close to $3 per litre in recent times.
Jones thinks the price of hydrogen could be as little $8 per kilo here once things get rolling, but he notes it's highly dependent on the cost of the electricity required to create the hydrogen.
Here, Energy Minister Megan Woods has raised the prospect of turning Manapouri into the world's largest green hydrogen plant, using the power freed up once Rio Tinto closes the Tiwai Point smelter. That will be in 2024 under the current timetable, though there have recently been suggestions that the smelter's owners are thinking about staying on.
In February, Contact and Meridian appointed two Australian companies, Woodside Energy and Fortescue Future Industries, to enter "final stage negotiations to become lead developer" of a green hydrogen plant they claim will create "thousands" of jobs and add $800m to this country's GDP.
Jones is not convinced Rio Tinto will depart, given the recent resurgence in the price of aluminum. But HWR's hydrogen plans don't depend on the smelter going. He says it could be good for New Zealand if Manapouri does produce hydrogen for export - and crucially, reserves some for the local market - but his company's vision is to produce hydrogen close to where it will be used, with a series of small hubs.
To begin with, HWR has purchased two 1.1 Megawatt (MW) electrolysers and storage systems from Fabrum to produce and store the "green hydrogen" to fuel its trucks. The first system is being installed in Gore.
While hydrogen will be produced on the spot, it will still need electricity to power the electrolysis process.
And if Rio Tinto does keep Manapouri occupied, that will require more hydro generation if New Zealand is to avoid the ignominy of Europe, where hydrogen is often created using electricity from coal-fired plants.
Jones, who recently toured Manapouri, calls the past decision to fund the underground hydroelectric power station, which opened in 1971, "a bold political decision to invest for the future" and "a nation-building project". To move to a hydrogen-powered economy, New Zealand will need similar big moves.
Fabrum (formerly AF Cryo) was founded in 2004 by Christopher Boyle and Hugh Reynolds. Its original focus was superconductivity, but it moved into cryo cooling - making systems to create and store liquid nitrogen and oxygen - the second of which was suddenly in great demand with the pandemic. Nasa has also been a customer for its Mars rovers. On a more down-to-earth level, Fabrum's systems have been used to freeze bull semen.
More recently, Fabrum has moved into hydrogen. "The hydrogen side of the business is absolutely blowing up," says chief executive Dr Ojas Mahapatra. "The main demand we see is coming out of heavy transport and aviation. There are good financial drivers to change and there's also a focus on [environmental and social] mandates," says Mahapatra, who gained a PhD in nanotechnology at Canterbury University before going into venture capital.
His choice of metaphor might worry anyone with safety concerns, but bear in mind that the technology is using electrolysis to separate hydrogen atoms from oxygen, not split them.
The privately held firm doesn't reveal financial results but Mahapatra says, "we've found ourselves in an amazing spot to influence the new and emerging hydrogen economy. We've almost doubled in size in the past year from 37 employees to close to 60. And we'll be close to 90 to 100 in the next 12 months."
Clients include Toyota (for its hydrogen-powered chase boat for the next America's Cup), HamiltonJet, Airbus and Rocket Lab.
Fabrum has partnered with UK startup Clean Power Hydrogen (or CPH2), founded in 2016, on electrolysing technology. It applied its own cryo-smarts for storing the hydrogen produced, which must be kept at minus 253C, or just above absolute zero. The Christchurch company manages this with no energy input or energy loss. Exactly how is its secret sauce.
Each of the two 1.1MW hydrogen systems supplied to HWR will produce around 400kg of hydrogen per day on-site at a refuelling station.
When the Herald visited, Fabrum was putting the finishing touches on a system in a shipping container that will create liquid oxygen for a European client. Mahapatra says the same modular, container-housed approach could be used for hydrogen systems to quickly deploy them around fuel stations.
One dual-fuel truck will consume 15kg of hydrogen per day, representing 40 to 50 per cent of its fuel use.
Trucks will need to be fuelled up every second day with hydrogen, meaning each station will be able to support the refuelling of 27 vehicles per day.
Dual-fuel trucks running an average of 384km per day could eliminate 102kg of carbon emissions per day per truck - more than 13,000 tonnes of CO2 if all of HWR's fleet was converted.
The heat-exchange process used to freeze the hydrogen creates a lot of heat, which can be captured and used for various applications.
The electrolysis process also creates medical-grade oxygen - in fact, five times as much oxygen as hydrogen - so HWR could well become a supplier to our healthcare system as an offshoot of its green energy project. CPH2's system is also cutting edge in that it's a membrane-free electrolyser. In practical terms, that means it skips the usual requirement for ultra-pure water. Any potable water will do - which should also help to easily plonk the systems around the country, assuming HWR does go ahead with a wider rollout.
"In time there will be refuelling stations just like a petrol station. Hydrogen will be available to buy sooner than you think across New Zealand," Mahapatra says.