Powered by hydrogen, Hyundai's trucks aim to conquer the Swiss Alps

Bell Food AG

28/02/2020 08:00

* First Xcient truck to be rolled out in March 
    * Vehicles will be fuelled by 'green' hydrogen
    * Swiss fleet operators to test trucks, and the economics

    By Vera Eckert and John Revill
    FRANKFURT/ZURICH, Feb 28 (Reuters) - Hyundai's  005380.KS 
hydrogen-powered 18-tonne trucks are set to hit the roads in
Switzerland next month as the South Korean automaker looks to
establish a case for its zero-emissions technology in a low
carbon world.
    Invented nearly two centuries ago, hydrogen fuel cells first
lost out to combustion engines and now trail electric batteries
in the push for greener transport because they are expensive,
hydrogen is hard to store, and most of it is extracted from
natural gas in a process that produces carbon emissions.
    But when it comes to trucks, Hyundai and its partners argue
that electric batteries won't always do the job because the
bigger the payload, the bigger - and heavier - the battery, and
that's a problem for crawling up Swiss mountains.
    And with more than half of Switzerland's energy coming from
hydropower, the country has the potential to extract "green"
hydrogen from water with electrolysis, an energy-intensive but
carbon-free process if powered by renewable electricity.
    "It is not enough to produce a truck. You have to take care
of the entire ecosystem, find like-minded partners and show this
all makes sense for the customer," said Mark Freymueller, chief
executive of Hyundai Hydrogen Mobility (HHM).
    "It is possible to do this with a holistic approach and the
right mindset," he told Reuters.
    To be sure, Switzerland's green hydrogen is far more
expensive than diesel now but Hyundai hopes that as governments
clamp down on carbon emissions and the cost of producing the
clean fuel drops, the numbers could start to add up.
    McKinsey & Co said in study in January that the cost of
hydrogen made with renewable energy could drop to 2 euros/kg by
2030 from 3-4.5 euros now - achieving cost parity with diesel
for heavy vehicles, once the relative efficiency of the power
sources and the lifetime costs of a truck are factored in.
    While hydrogen has long been vaunted as a potential
alternative to fossil fuels, expectations that fuel cells will
have a role to play as the world decarbonises has helped push
hydrogen-linked stocks to their highest in over a decade.
    
    NORWAY NEXT?
    For now, Hyundai is relying on government tax breaks for
fuel cell trucks and its own subsidises to help make them
economically viable for its partners: the end users, filling
stations and green hydrogen suppliers.
    Hyundai's H2 Xcient trucks have a 190 kilowatt fuel cell and
seven high-pressure tanks holding nearly 35 kg of hydrogen,
giving them a range of more than 400 km - far further than heavy
goods vehicles powered by electric batteries on the market now.
    Hyundai declined to say how much its subsidies will amount
to. Globally, the company is betting heavily on hydrogen with
plans to spend $6.7 billion on hydrogen technology by 2030 and
to increase its annual capacity for fuel cells to 700,000.
    It is starting out with 50 H2 Xcient trucks but plans to put
1,600 on Swiss roads by 2025 and is looking to launch similar
projects in at least two more European countries this year, out
of Austria, Germany, the Netherlands or Norway.
    In Switzerland, HHM, the leasing unit set up by Hyundai and
Swiss startup H2 energy, has partnered with Hydrospider, a joint
venture of H2 Energy with industrial gas maker Linde  LIN.N  and
Swiss power utility Alpiq  ALP.SG .
    Hydrospider is about to start producing hydrogen for 40-50
Hyundai trucks at a 2 megawatt (MW) electrolysis plant at
Goesgen. Stefan Linder, a member of Hydrospider's board of
directors, said as more H2 trucks go into service it would have
to boost capacity to 70 MW to 100 MW by 2023-2025.
    In preparation for launching hydrogen trucks in Norway this
year, H2 Energy has formed a partnership with Nel ASA  NEL.OL ,
Greenstat and Akershus Energi to supply green hydrogen.
Hydropower provides Norway with nearly all its electricity.
    
    SUBSIDISED MODEL
    The Swiss H2 Mobility Association - a group of nearly 20
firms - will be the first users, including the country's biggest
retailer Migros, dairy producer Emmi  EMMN.S , grocery chain
Coop  BELL.S  and filling station operators SOCAR and Tamoil.
    End users such as Migros have committed to leasing Hyundai's
trucks on pay-per-use contracts which give them mileage,
warranty, services, insurance and access to sufficient hydrogen.
HHM says its contracts will ensure Hydrospider and filling
stations get sensible margins from the start.
    "We are not fooling ourselves, it is initially a subsidised
business model," said HHM's Freymueller, adding that this would
be the case for the introduction of any new technology. 
    Over 10 years, an assumed investment of 1.3 million Swiss
francs ($1.3 million) in a pump could be recovered if 15 trucks
visited it exclusively for their annual fuelling needs, HHM
estimates. 
    Supermarket chain Migros is taking three Xcients and plans
to measure their performance against a Mercedes-Benz  DAIGn.DE 
truck powered by an electric battery, three biogas-fuelled
trucks from Italy's Iveco  CNHI.MI  - and diesel.
    At the moment, Migros says it pays 50 million Swiss francs a
year in heavy vehicle environmental duties (LSVA) levied on all
vehicles over 3.5 tonnes using any roads in Switzerland. The
Hyundai trucks will initially be exempt from LSVA. 
    Rainer Deutschmann, director of corporate transportation
logistics at Migros, which operates 900 trucks shuttling between
22 production sites and nearly 900 shops, told Reuters he
expected several technologies to play a role in decarbonisation.
    "We will see on each journey what the energy consumption
will be depending on the geography and topology," he said.
    "With an electric battery, instead of carrying merchandise
around you are carrying around the battery. You have a 200 km
range, which you can use for a city, but you cannot use it for
the Alps," he said. "H2 you can use for everything."
   ($1 = 0.9763 Swiss francs)

 (Editing by Edward Taylor and David Clarke)
 ((vera.eckert@thomsonreuters.com; +49 69 7565 1228; Reuters
Messaging: vera.eckert.thomsonreuters.com@reuters.net))