Catalyst with Shayle Kann - Driving down the cost of green hydrogen

Episode Date: November 13, 2025

A few years ago, industry and political leaders embraced hydrogen as a solution to a laundry list of hard-to-abate decarbonization challenges — steel production, ammonia production, and more. But hydrogen failed to come down in costs and policymakers pulled back support. Ultimately, the bubble burst.  So what does it take to drive down the costs of low-carbon hydrogen and rebuild momentum? In this episode, Shayle talks to Raffi Garabedian, co-founder and CEO of Electric Hydrogen. (Shayle is on the board of Electric Hydrogen and Energy Impact Partners, where Shayle is a partner, invests in the company). Shayle and Raffi cover topics like: Why the hype bubble burst: political pullback, high renewables costs driven by AI demand, and high CapEx  The real cost problem: Why engineering, procurement, and construction (EPC) costs have remained persistently high Competing approaches: Why Electric Hydrogen chose supersized electrolyzers over modular units The China question: Why hydrogen’s EPC costs will limit the impact of cheap Chinese electrolyzers Real numbers: Realistic cost targets for fossil parity and Electric Hydrogen’s current pricing Where hydrogen wins: Markets where Raffi says green hydrogen can achieve fossil parity by the early 2030s, including Brazilian fertilizer Resources: Latitude Media: is 45v guidance killing green hydrogen production? The Green Blueprint: Electric Hydrogen’s bet on supersized electrolyzers Latitude Media: Electric Hydrogen is building through the market downturn   Latitude Media: Hydrogen’s narrow pathway to positive climate impacts   Latitude Media: Why the Electric Hydrogen-Ambient merger is a sign of things to come Fill out our short podcast listener survey for a chance to win a $100 Amazon gift card. Credits: Hosted by Shayle Kann. Produced and edited by Daniel Woldorff. Original music and engineering by Sean Marquand. Stephen Lacey is our executive editor.  Catalyst is brought to you by EnergyHub. EnergyHub helps utilities build next-generation virtual power plants that unlock reliable flexibility at every level of the grid. See how EnergyHub helps unlock the power of flexibility at scale, and deliver more value through cross-DER dispatch with their leading Edge DERMS platform, by visiting energyhub.com. Catalyst is brought to you by Bloom Energy. AI data centers can’t wait years for grid power—and with Bloom Energy’s fuel cells, they don’t have to. Bloom Energy delivers affordable, always-on, ultra-reliable onsite power, built for chipmakers, hyperscalers, and data center leaders looking to power their operations at AI speed. Learn more by visiting BloomEnergy.com. Catalyst is supported by Third Way. Third Way’s new PACE study surveyed over 200 clean energy professionals to pinpoint the non-cost barriers delaying clean energy deployment today and offers practical solutions to help get projects over the finish line. Read Third Way's full report, and learn more about their PACE initiative, at www.thirdway.org/pace.

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that we've got to collapse costs towards what we call fossil parity for the molecules that we produce. Coming up, how to make green hydrogen great again. Or great. When utilities need flexible capacity they can count on, they turn to Energy Hub. Energy Hub works with more than 170 utilities, coordinating over 2.5 million devices to manage 3.4 gigawatts of flexibility, built for the moments when utilities can't afford uncertainty. Energy Hub builds and operates virtual power plants that utilities actually stake their grid planning on, coordinating EVs, batteries, thermostats, and more through a single platform built for utility scale.

Predictive, verifiable, and designed to perform when it counts. Learn more at energyhub.com. Trillions of dollars are flowing into clean and critical infrastructure, but those investments aren't driven by technology alone. They're shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux, and host of a brand new podcast, Critical Capital. Each episode, I talk with people deploying capital, shaping policy and building the clean economy. Tune in as we unpack how progress is actually made. Listen to Critical Capital on Spotify, Apple, or wherever you get your podcasts. Catalyst is supported by Fish Tank PR,

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visit fish tankpr.com. That's F-I-S-C-H-F-T-T-P-R.com. I'm Shail Khan. I lead the early stage venture strategy at energy impact partners. Welcome. So if you were to read the headlines over the past year or maybe 18 months, your impression of the state of the green hydrogen market might be kind of dim. After a classic hype cycle played out at hyperspeed, basically,

from around 2021 to I would say 2024, reality very much set in for that nascent market. I think that reality check basically came in three forms. First, and in my mind, by far the most importantly, the actual delivered cost of green hydrogen from the first wave of projects that were being developed was far too high. Second, some of the markets that had been targeted, say light duty transportation or building heat, just didn't make much sense in the first place.

And third, as has happened in a number of other sectors over the same period, the durability, scalability, and magnitude of the so-called green premium turned out to be less than advertised. So the result has been a clear removal of hype in that market. But just as a reminder, the market for hydrogen and the emissions associated with the production of that hydrogen is not going away anytime soon. We already have a $70 billion annual market

using hydrogen in industry, predominantly in petrochemicals and an ammonia production. And don't look now, but there is a new wave of technologies entering the market that has the promise to actually deliver on the cost reduction that the market was seeking all along. Rafi Garibadian, who's my guest today, is the CEO of Electric Hydrogen, one of those companies.

He's been on the show before years ago, but he's back now for an update and a fresh and sober look at where this market heads after its journey up and back down the hype cycle. As a reminder for disclosure, we at EIP are investors in electric hydrogen, and I'm on the board of the company. Here's Rafi.

Rafi, welcome back. Thank you, Shail. Great to be here with you. Let's talk green hydrogen. I want to start by having you give me your version of the history of the green hydrogen market, such as it is over, I don't know, let's say the last five years or so. You picked your time period where the... I was going to say, should I go back to Jimmy Carter or...

Yeah, no, we don't need to talk about electrolysis in the 70s. But I think I can start with like, I mean, maybe around when you were starting to think about it, which is what, five-ish years ago. And then tell me what's happened in the market since then. Yeah, great. I think as you know, Shail, I was in the solar industry up until the end of 2020, but it started to think about what can be done with renewable power beyond direct electrification, you know, getting more renewables onto the grid, and that interest immediately leads to green hydrogen as the thing,

as the precursor, the foundation of most power to X. kind of ideas. So in late 2020, early 2021, I and my partners here at Electric Hydrogen started to think about how to make green hydrogen cheap, really kind of approaching the problem from the context of renewable power where cost reduction, rapid scaling and reduction in cost, helped to create a robust market for commodity in that case electricity. And we thought the same thing should be true in green hydrogen and derivative molecules. So, you know, that was a point in time early 2021 when there was the inklings of hype around green hydrogen, but hype hadn't really hit us square in the face yet.

I think it was more really in 2022, late 21st. early 22, when things got really, really active. And, you know, in those days, green hydrogen was a solution to every problem everywhere in the world. It was going to change everything. I mean, even at cocktail parties, people who know nothing about energy would say, oh, you're in green hydrogen? That's great, which is a sure sign that it's overhyped. Yeah, the second anybody asks me about something I do.

do at a cocktail party, I know something's gone horribly wrong, generally, which maybe implies something about AI today, but anyway, go on. Yeah, let's not go there. But yeah, since then, you know, so green hydrogen went through this just incredible ballooning of the bubble. And I would say since then, the bubble has burst. And, you know, I can't say whether right now we're at the natar of green hydrogen hype or whether we're starting to come out of it. It feels like we are starting to come out of it now gradually. But those of you know, the Gardner hype cycle, know that the climb out of the trough of disillusionment is slow and gradual and long and arduous. I think that's where we're where we are in this market today. And to what would you ascribe the

bubble bursting? Like fundamentally, why did it, I mean, all bubbles burst if there are bubbles, definitionally, but what made this bubble burst? Yeah, so great question. So why would the bubble burst? Well, what's green hydrogen all about? It's all about avoiding emissions in very hard to decarbonize sectors of the economy. Green hydrogen, unfortunately, has been and continues to be an expensive solution to those problems. Now, there's no cheap solution to those problems.

It's worth pointing out, right? All solutions to those problems are. are expensive. But at the peak of the hype, there was a naive hope that society was willing to pay the difference for deep decarbonization because it had turned into a decarbonization had a global priority. We had kind of Europe, the U.S., Asia, everybody had a, every country had a hydrogen strategy. The world's changed dramatically since then. And I think that political climate is resulting in a retraction from commitment to retooling critical industries at some expense for the purpose of decarbonization. Green hydrogen, it is also true, is expensive, and it's been

too expensive over the last few years. And it's been too expensive for a couple of reasons. If you look at the cost of making a kilogram of green hydrogen today, let's say in southern Europe, it might be unsubsidized. It might be maybe $6 a kilo, I think rough numbers. It might be about right. That can be broken down roughly 50-50 into CAP-X and OPEX. OPEX being the cost of the power, going into the process to make the hydrogen, and CAP-X being the cost of carrying the capital, the cost of building the plant.

Now, remember, the power that goes into making green hydrogen is carried out, chemically as hydrogen. So it's not lost power. It's power that's being transformed with some inefficiency. It's about 75% efficient process. So really it's a combination of those two things. And if we look at again what's happened in the last few years, on both of those fronts, we've had bad news. So green power, renewable power prices have gone up in many places in the world, driven by an imbalance in supply and demand. So green power is much more expensive. And let's now switch to the U.S. and I can give you real numbers.

If you look in West Texas and you were to sign a solar and wind kind of affirmed green power purchase agreement in Texas in Erkot territory, three years ago, you might have paid $35. a megawatt hour for that product. Today you're paying 65 maybe more dollars a megawatt hour. And that's driven by broadly speaking increase in electric demand, driven most notably by AI data center demand coming online or planned to be coming online. And we don't just see this in the U.S. We see this many, many places in the world. We see where there is cheap power.

Power prices have gone up dramatically, green power prices. have gone up dramatically because of new demand from data centers. So that's certainly a headwind for green hydrogen. But then on top of that, you have the CAPEX component of the levelized cost of hydrogen. And that's the other half of its cost, which has been extremely high and actually been going up rather than going down. So you'd like to think that as an industry gets its feet under it and starts to scale, starts to get past demo projects and building real scaled projects, costs come down.

But actually, people were maybe unrealistic about the cost that could be achieved, the capital costs that could be achieved, particularly by large Western suppliers of technology like Siemens and Teeson Group. I'll just mention those two big names. I won't mention all the rest when built by an EPC into a fully constructed project. So we've seen those capital costs go from, you know, an early promise of something like $1,500 a kilowatt, buck 50 a watt, to now even over $3 a watt of capital cost. So that's also had an escalating effect on the cost of green hydrogen. So bottom line, green hydrogen has gotten more expensive today than it was supposed to be two years ago.

Okay, so I think people understand, although maybe generally don't appreciate the degree to which this electricity supply demand and balance has led to higher wholesale power prices in general and prices for renewables. We've talked about that, though, before on this show. And I think generally people understand it. The thing I think people don't really understand is, like, why is the capex for electrolyzer, for electrolyzer systems? Why has it been so high? Can you break it down? What is the cost stack of a traditional electrolyzer project? And then you can briefly talk about like what electric hydrogen is doing differently there. But first, I want to start with like $3 a watt.

Like, what happened here? Yeah, what happened at $3 a watt? So if you look at the cost stack of a conventional electrolyzer, you're a project developer, let's say, in Spain, and you're trying to build a 150 megawatt electrolyzer someplace, right? How are you going to go about doing it? You're going to contract with an EPC, it's an engineer, procure, construct company.

You're going to select your technology. Maybe you're going to, I mentioned two names before, so I'll pick one. You're going to maybe select Siemens. That's your technology provider. And you're going to go through what's called a feed study, which is front-end engineering design. That's where the EPC takes all of the requirements from the equipment supplier, the technology supplier,

and figures out how to build that thing on your site. right the total installed cost is what drives levelized cost of hydrogen it doesn't matter what the electrolyzer costs per se it matters what the constructed cost of the plant is and in a typical project like we're discussing roughly half of the total installed cost goes to the EPC what are they doing they're grading the plot they're managing stormwater they're building the building that the electrolyzer is going to go into. They're building the substation. They're sourcing and selecting all of the support equipment, whether it's chillers or air compressors or backup power generators. They're sourcing and designing the control system for the plant. The list goes on and on. Okay. So the EPC has a

substantial scope in the project. The electrolyzer supplier, their price might not have gone up. Their price might have been $1,000 a kilowatt, a dollar a watt, for their scope. What is their scope? It's the stack. Often it's what's called the balance of stack, which is some of the plumbing and support equipment around the stack. And it might or might not include the rectifier, which is the power conversion equipment that takes the AC from the grid and converts it down to the DC power that drives the stack to produce hydrogen. So the electrolyzer scope is pretty well defined. Those prices are pretty well defined. What's really ballooned out of proportion is the EPC or the construction costs. Okay. So how do you solve it? I mean, not just the EPC,

but they're tied to each other. Like, what is the, what's the solution to the CAPEX problem? We could talk about what's the solution to the overall system costs too, but on the Kappex side, how do you get away from this EPC ballooning and drive down the cost of the stack? Because I think you need to. Yeah. And I think it is important to talk about the overall solution cost as well, because they're not necessarily decoupled. But just starting with the capital cost, the secret to it, it's no secret, is to think at the system level holistically. So what are those, all of those costs? Maybe let me back up. When we think about our product and the scope of our product and how we presented into the market. The guiding light for us, the North Star, is levelized cost of hydrogen.

So we think about it from the perspective of our customers' project pro forma. And when you look at the problem that way, you very quickly have to accept that the EPC cost must be in scope for your engineering team to try to address. There's just a big chunk of cost that's being thrown to the wind, left to others to contend with. And you could throw your hands up and say, well, yeah, but there's nothing that can be done about that because construction costs what construction costs. But it turns out that's not really the case.

Now, there's a deep technology component to the solution, which is actually, quite simply put, making the electrolyzer as dense as possible. That enables the balance of plant construction to also be quite dense and small. and hence amenable to what's called modularization, which is just the chemical industry's terminology for moving the construction from the field to a factory, where the costs can be well-controlled and well-managed. That's what we do at electric hydrogen. We build a fully modularized plant,

which leverages our extremely dense, powerful stack technology, to bring a total solution to market that minimizes the EPC's cost and hence minimizes the total installed cost. And by the way, there's some other things that are kind of obvious that need to be done. For example, not having a building because buildings are very expensive, particularly buildings that house hazardous processes like hydrogen production. There's also the thing about the modularization piece that I want to get more specific about, because people use the term modularization constantly in everything that I spend time on. And in the context of a green hydrogen world, there's sort of an even more extreme version of modularization as well.

You can imagine building factory-built small electrolyzer stacks and then numbering up. And so if you want to build a 100 megawatt project, you're going to build 101 megawatt electrolyzer stacks and then put them all in series, basically. that's not what you're talking about, though. You're talking about modularizing something that is still basically at the scale of the chemical industry, right, but is dense enough that it can be built off-site and transported to site.

So that is like a key distinction, I think, right? It absolutely is, Shail. And I'll admit to you that early on in our company's history, we debated and analyzed both approaches because it is appealing to think you can build in a small package a thing that's, you know, maybe let's call it a 2 megawatt electrolyzer

that's completely self-contained and simply focus on cost reduction and automation. Which is the small thing. You said you spent a long time in solar. That's what worked in solar. Yeah. Right? It's super modular. Actually, yeah, yeah.

It's actually interesting to take that solar analogy further. Actually, if we look at inverters in the solar industry, we've seen both approaches. We've seen large central inverters, and we've seen more recently, like in the last decade, the advent of string inverters for large utility scale systems. And there was a lot of principled debate early on, which one made more sense. And there are good reasons to think string inverters could make a lot of sense in large solar arrays. Turns out not so much. The industry kind of went back to large central inverters as a more effective.

cost-effective solution, not only because the construction costs are lower, but also operation and maintenance complexities are more manageable. You can see the same thing going on in green hydrogen, but it turns out that, at least based on our analysis, and I think we're seeing it play out in the industry, the idea of integrating onto a site hundreds and hundreds of very small containerized electrolyzers, it turns out to be quite expensive. And in no small part it's expensive because it's very hard to drive the cost out of those units, but also because the footprint of the entire plant ends up being quite large, and hence EPC integration costs get large again. It turns out it's hard to get the power

to all of those boxes and aggregate and collect the hydrogen from all of those boxes and get the water, the clean water to all of those boxes, et cetera, et cetera. Virtual power plants are becoming a reliable way for utilities to manage capacity, but enrolling devices is just the start. What really matters is confidence, knowing those resources will perform when dispatched and being able to prove it from the control room to the living room. Energy Hub's platform handles the full picture, from near real-time forecasting, locational dispatch, and the kind of rigorous verification that holds up when

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shaping policy and building projects. Together, we unpack how risk is priced, how incentives are structured, and how progress is actually made. Listen to Critical Capital on Spotify, Apple, or wherever you get your podcasts. Are you tired of overpaying for big-name PR firms, but not really knowing what they're delivering? Is your comms team wasting time reviewing lengthy messaging briefs and decks, instead of engaging journalists or producing content? Are you wondering why your competitors are getting press and you aren't? Fish Tank PR is an award-winning climate and energy tech, renewables, and sustainability. focus PR firm dedicated to elevating the work of both early stage and established companies.

Whether you need to position yourself as a thought leader in between project announcements or translate complex ideas and technologies into tangible, compelling stories that resonate with the media, Fshtankpr.com. Check out fish tankpr.com. That's F-I-S-C-H-Fish-Tankpr.com. Okay, so taking a face value that all the things you're describing as the solution work, I mean, I think it's important for people to have some understanding of where we think costs realistically can and should go then. We've talked about where they have been for the Siemens and Tis and Crips of the world in that $3,000 a kilowatt, actual delivered cap-x range. What's actually good? What is realistic but good?

And then we should talk about what the market looks like for good. Yeah, great. So I'll just give you R numbers. And, you know, I don't know that I've spoken publicly about our prices, but I'm going to here if you're okay with that show. This is your call. Let's do it. So we're pricing in the European market today with a total installed cost just north of $1,000 a kilowatt. Inclusive of EPC. Inclusive of EPC.

That's everything from the substation, the civil works, all of our equipment. the installation and commissioning. It's basically the bill to the project developer for a hydrogen plant. Now, of course, that varies from site to site, but that's rough numbers. That's about where we are. That's somewhere between a half and a third of the competitive benchmark, really whether you're comparing to a Chinese electrolyzer built in Europe by an EPC or a European OEM built in Europe by an EPC. by the way, the EPC business is pretty local. Yeah, we should spend a minute on the Chinese thing because that's the other big looming question here.

Like, are you going to, you know, the question everyone gets, you get all the time, I'm sure, is are we just going to get a flood of cheap electrolyzers shipped from China? And one, is that going to solve the problem, right? From a societal perspective, are we just going to get cheap electrolyzers like we've gotten cheap solar panels from China? and two, like, what does that mean if you're not a Chinese player in the market? Yeah, let's talk about that. It turns out a large industrial electrolyzer green hydrogen facility looks more like a, you know,

if you just walk up to it, it looks more like a gas generation plant, like a combined cycle plant, then it looks like a solar array. What do I mean by that? I mean, it's a complicated thing. It's got a lot of pipes and valves. and stuff going on, which makes it much less amenable to low-cost manufacturing at scale, kind of putting a low-cost product in a box in China and shipping it to someplace and letting someone install it. So it is true that the global market is flooded with really cheap Chinese

electrolyzers. These are like two megawatt electrolyzers that are the size of a school bus and weigh more than a school bus. And they need to sit in the building and have this like chemical plant wrapped around them to support them and operate them. So the normal approach that China has used in other industries to drive cost out really kind of only addresses the cost of the electrolyzer stack or stack and power conversion. It doesn't address the EPC component of the cost buildup. And so there's a limited opportunity for overall total installed cost reduction, taking that approach.

It's real, by the way. You know, we see integrators building or promising to build using Chinese equipment systems in the European market at a total installed cost, you know, right around maybe a little north of $1,500 a kilowatt. So still more expensive than our stuff, but quite a bit cheaper than the name brand European suppliers. So long story short, I don't think the same game that worked in solar works in. green hydrogen. Yeah. Okay. So let's talk about what the market then actually looks like here. I mean, we've talked about it's been too expensive. There's multiple components. There's maybe less willingness to pay the premium, at least there has been. But in your view, okay, if you can sell at $1,000-ish today and drive, and that's, you know, entering the market at $1,000 and presumably

we'll be able to drive cost down from there if you're able to scale, what does demand look like? what does it rely upon in terms of policy support? What's your view? What's your thesis of the market here? Yeah, the current market is still policy supported, primarily in Europe. So Europe has, to get a little policy wonky here, Europe has the Renewable Energy Directive 3, Red 3, so-called Red 3. Red 3 has a component in it called RFMBO, which is the part of the,

red three law that stipulates the um the gradual conversion to partial conversion to renewable molecules e-molecules and these these range from hydrogen itself um to things like green methanol and green ammonia for various purposes um that policy i think has been geez i don't know when when red two and three were enacted but it's been years um But the way European policy works, the EU law has to be what's called transposed or translated into national level rules, which then drive project decisions. And those rules are being transposed as we speak. It's underway.

The process is underway. I think Romania has transposed red three now. I think Netherlands are close. Germany is very close. Spain is about to do so. Long list. And so we are seeing in the short term a policy-driven market. What do I mean by policy-driven market?

I mean markets where the green product is more expensive than the gray product, but there is a compulsion to make a conversion, and hence an absorption of that cost by society. That's the nature of the market today in Europe. again, you know, kind of similar to the old German feed-in tariff days in the solar industry. There was a different mechanism, but still it got the industry going at high speed at the expense of the German taxpayer footing the bill. And in this case, what we're seeing is the European Union stepping up and saying,

yeah, we're going to foot the bill for some conversion to e-molecules so that we can get this industry going and see where the costs ultimately land. That's the market today. That is not a sustainable market, in my view, in the long term. It's a necessary first step for the P to X or green molecule industry to get going. And I'm incredibly grateful for Europe's continued, seemingly stalwart support for decarbonization. But we do recognize at least at electric hydrogen that we've got to collapse costs towards what we call fossil parity for the molecules that we produce. And it turns out that's a different number for different products.

It's also a different number for different regions of the world. So energy is complicated. Ammonia has a different price in different parts of the world. depending on whether you have natural gas and can produce ammonia locally or not, for example. So we are increasingly turning our attention to markets where we believe in the next few years, we can start to approach fossil parity on critical molecules that can achieve scale. I can give you a few examples of that as we talk. Yeah, give me an example or two of like, where could you achieve fossil parity,

what cost would it take on your side for that to be true? And similarly, is it like in those markets, is there a premium that has to get bought down? Is there a secondary benefit to green hydrogen that isn't entirely about the emission savings? Like, what's the theory of the case on how that plays out? Yeah. We are getting more sophisticated on that last point. And we experienced the same thing in the solar industry. If you remember, it initially was all about carbon.

And then later it was about energy security. And today it's about both, right? It's about energy security. It's about carbon. It's also about volatility hedging. You buy a green PPA that's a fixed price for 10 or 20 years. Whereas if you buy fossil power, your price for that power kind of floats with the fuel price. So there's various values that can be derived from conversion to renewables that are independent of the carbon footprint of the renewables.

And we're starting to see the same kind of more sophisticated point of view in the market emerging in e-molecules. I'll talk for a little bit about a market that I'm really interested in. And it's not a market we're incredibly active in. We've just dipped a toe in the water over there, but the market is Brazil. And give you, let's like a few facts about Brazil. So Brazil is a huge agriculture exporter. I think agricultural exports are about 20% of Brazil's GDP. Represent about 50% of Brazil's exports, with most of the rest being minerals, I believe.

for this industry to exist in Brazil requires a great deal of artificial nitrogen fertilizer so as you guys know right all agricultural products require nitrogen fertilizer there's not enough natural nitrogen to go around and so we make nitrogen fertilizer primarily from well almost exclusively from ammonia which either is used as ammonia or is converted to nitrates or urea or other molecules that are easier to distribute Brazil, it turns out, imports over 90% of its nitrogen. Its biggest import partner for fertilizer is actually Russia. So alarm bells can start to go off in your mind about the geopolitics of all this, right, the risks that Brazil's economy faces as a result of importing a critical feedstock for its primary industry to the country. but also think about it in terms of the money that Brazil is spending effectively abroad to support its agriculture industry.

If you put all that together, you have an interesting proposition for conversion of the Brazilian economy to local production of nitrogen fertilizer. But there's more. Because Brazil imports all of its nitrogen, and the reason for that is simple, Brazil doesn't have natural gas. so they can't produce fertilizer the old-fashioned way by cracking natural gas and running it through the Haber-Bosch process. Because Brazil imports all of its fertilizer,

the price of that fertilizer is relatively high due to the logistics costs of moving ammonia. Now, today, fertilizer coming into Brazil might be $450 or $475 a ton. But if you look back 10 years, the 10-year average is around. $600 a ton. And that, you can go 20 years back. It's about the same number, right? It's a very volatile commodity that's not typically bought on long-term contracts. It's traded in the market. It goes

up and down and up and down. So if we use that $600 a ton benchmark as the bogey for what I'll call fossil parity ammonia in Brazil, the billion dollar question is, can we achieve that? using electric hydrogens kit, green hydrogen production, to produce e-ammonia. And the answer turns out to be, yeah, we think we can. So we've done a lot of analysis on this particular market case. There's another really kind of positive fact pattern about Brazil. It has a great deal of hydropower and is increasingly installing more and more solar and wind. the result of this is Brazil's grid is around 90% green already,

and power prices, at least away from the coastal economic centers, are quite low, $30 to $35 a megawatt hour. That in and of itself allows us to make, on the order of $7 to $750 a ton ammonia today with our equipment, which is not quite fossil parity, but not a huge stretch from it. And with the other benefits to Brazil's economy and resiliency from on-shoring the production of fertilizer, we think there's a strong business case for Brazil as a country to start to build out local ammonia production. Now, if you take our technology roadmap a little further out, and you think about scale and also improvements we have coming in our technology,

along with what we expect to see in terms of continued cost reduction in wind and solar, we think we can get to actually cheaper than fossil hydrogen around the beginning of next decade, the next decade, so in the early 2030s. That's a pretty compelling case. That's a market where we think we can be cheaper than the fossil alternative for a critical, critical piece of Brazil's economy. That's the kind of market I get really excited about, because, you know, Now we're not talking about a solution that's better because it's green.

We're talking about a solution where green is the icing on the cake, not the whole cake. I think you said that, Shail. I think that's the, yeah, I mean, that's a, it's a short description of like where I think the world is at, not the world, but at least the U.S. is at at the moment, which is like, if you're going to be green, it's often insufficient to be green. You want it green to be the icing, not the cake itself, and you got to have some other benefits. universally true, but it's more true today than it was two years ago. I think it's pretty close to universally true today, with the possible exception being China.

Yeah, I mean, in China, things, right, various things don't hold in China that hold other places, that one probably among them. I guess I want to wrap up then with like, so that's a, I think a compelling promise land of like, let's remind ourselves that the goal of getting this market, the green hydrogen market, off the ground, is to, you. replicate a version of what we've already seen in solar, which is get it to scale, get it down the cost curve, get it so that it is cost competitive. And so you're painting the picture of like where it actually can be cost competitive straight up without a premium and carry all these side benefits. What does it look like to get from here to there? This is my final question for you.

So we started with the picture of the last five years. What does the next five or ten years have to look like. So I think the next five years looks like very, very tactical kind of one-off projects that are policy-driven in places like Europe that have the policy frameworks in place or emerging to motivate consumption of these molecules. And we're seeing that and we're very engaged in that market. That process will get us to scale where we can start to deploy in markets like I described around Brazil, but there are other similar markets. India is a great example of another very similar market with similar fact patterns, where we think we can actually solve not just an economic problem,

but a host of other problems that are geopolitical in nature. Why do you retain optimism about this market? Like, bring me into your head and explain to me why you're excited about the future in this market, despite that. Yeah, I mean, two things. Both of them long term, actually. I think the short term is a slog, but really two things. So thing one, I see a clear path to parity with fossil equivalent molecules in a number of industries and a number of places in the world that has me really excited. right so so so really it's all about getting to subsidy-free economics and when you get to that the market is is insatiable for a product like ours so that gets me very excited and the other thing that gets me excited is is my kids honestly again you know i i have kids in their 20s and i know

how they think about the problem of climate and energy and they give me optimism that the the situation we're in right now, it's a cycle. But if I look out, you know, five years out and think on a 10-year horizon, we are as a society going to implement innovations to fix the problem. All right, Rafi, as always, appreciate the conversation and the candor and the optimism. And we'll check back in once we've got a bunch of these multi-hundred megawatt, actually cheap green hydrogen plants up and running and see where we are on the cost curve. Well, Shail, we're building our first one in West Texas today, and it's going extremely well, so I'm looking forward to showing that off to you, and it's up and running. Rafi Garibadian is the co-founder and CEO of Electric Hydrogen.

This show is a production of Latitude Media. You can head over Latitude Media.com for links to today's topics. Latitude is supported by Prelude Ventures. This episode was produced by Daniel Waldorf, mixing and theme song by Sean Marquand. Stephen Lacey is our executive editor. I'm Shao Khan, and this is Catalyst.