At Kiko, we aim to be investors across the whole lifecycle of a company and we are enabled to do this by our highly flexible investment platform. Our funding structure allows us to invest across stages in innovative climate tech that we understand, care about and that excites us.
There are few areas we care more about than technology that uses breakthrough science to achieve a leap in our ability to solve a problem. And that’s what we discovered with Hysata.
Green hydrogen is one of the biggest and most dynamic markets in climate tech because it has recently become clear that a large hydrogen economy is essential to reaching our Net Zero goals. This is because there are no alternatives to green hydrogen when it comes to achieving zero carbon steel, shipping, ammonia fertilizers and methanol – sectors that between them account for 12% of global carbon emissions.
At Kiko we work closely with the Energy Transitions Commission (ETC), a think tank that among other achievements was instrumental in key outcomes from COP26 including the agreements on methane, reforestation and coal. In recent work with the ETC we projected that demand for green hydrogen is likely to grow to 500-800 million tonnes per annum by 2050, creating a new multi-trillion-dollar industry. Since then, the gas price crisis and invasion of Ukraine have redoubled policy determination to accelerate the process of hydrogen replacing fossil fuels.
Green hydrogen has also long been seen as a way of moving renewables from places where you have great natural resources – primarily sunshine and wind – to places with a great demand. Producing green hydrogen in places like Australia, with great renewable resources, and exporting it to countries with high energy demand is now attracting significant investment interest.
But while those in the industry have been aware of the potential of green hydrogen for quite some time, there have always been the questions of whether its production can be cheap enough and can really be ramped up quickly enough to the massive scale needed to make an impact on the climate crisis.
The most rapid technological process in decades
Efficiency and scalability are why Hysata is so exciting and these attributes are what has driven us to make this Series A investment – our first through the new Kiko Ventures platform. Put bluntly, the rate of technological progress at Hysata has been the most rapid we have seen for a new electrochemical technology in our 20 years in climate tech.
Electricity makes up most of the cost of green hydrogen and that is why achieving a significantly more efficient electrolyser delivers cheaper hydrogen. The Hysata team comprises electrolyser industry veterans, with deep expertise in the design and scale-up of novel electrolysers. The company has redefined the core cell architecture for alkaline electrolysis, producing a practical and scalable solution with game changing efficiency. The potential of Hysata’s new electrolyser is to make green hydrogen price competitive (<$2/kg) years earlier than had previously been assumed, accelerating the transition to net zero and increasing energy security.
A practical and scalable solution with game changing efficiency
Hysata’s new ultra-high efficiency electrolyser is based on a recent scientific breakthrough in alkaline electrolysis at the fundamental cell level. Capillary fed electrolysis (CFE) is a new cell-level process in which the water being split is introduced directly into the centre of the cell via the membrane rather than being forced onto the electrodes. This means that the water and product gases (hydrogen and oxygen) move in the same direction and eliminates the formation of bubbles at the electrodes, significantly increasing the efficiency of the process.
For comparison, Hysata’s electrolyser operates at 95% system efficiency (or 41.5 kWh of electrical energy for each kg of hydrogen), a giant leap in performance over incumbent technologies, which typically operate at 75% or less. As Kiko Partner Rob Trezona stated: “Having assessed scores of electrolyser technologies in my 20 years in cleantech, Hysata’s technology stands out as a true breakthrough. The company has redefined the core cell architecture for alkaline electrolysis, producing a practical and scalable solution with game changing efficiency”.
On top of this, Hysata’s electrolyser is built with commercially available materials, meaning the company can scale rapidly. This is reflected in the excitement that has been building over the last 12-18 months among potential customers with some of the world’s biggest companies being drawn to the efficiency and simplicity of Hysata’s product. The funding will allow Hysata to work closely with some of these to bring this much needed technology to market rapidly.
A perfect example of the Kiko effect
Our investment in Hysata is a great example of what we mean by life-cycle investing. Our journey with the company started before the launch of Kiko, working closely with our colleagues in IP Group Australia. The key inventor Professor Gerry Swiegers has been in the IP Group network for years, and we started discussions with him before the company was formed. We brought in globally renowned experts to verify Gerry’s extraordinary cell data, and once we were convinced of the breakthrough, IP Group helped him set up Hysata and spin it out of the University of Wollongong. We worked closely with the company to file the key patents to protect the invention and a member of the senior IP Group Australia team left to join the company as its CEO.
The technological starting point was raw science straight out of a university lab, but Hysata made exceptional progress following our seed investment in 2021, hitting its milestones and building an 18 FTE team of global talent. We therefore brought forward the £24m Series A to mid-2022 and introduced the company to co-investors, including Vestas Ventures, who have a strong relationship with us. We put in a significant ticket of £5.7m (A$10m) into the Series A to build on our initial seed position. Kiko Partner Rob Trezona sits on the board and Kiko will play an important role in developing Hysata’s business in Europe – the largest market for electrolysers – using our links with corporates through the ETC and our wider network.
Our mission is to build 5 transformative businesses in the next 5 years, and Hysata is well placed to become one of these.