BayoTech’s first production hub to be located in Albuquerque
Local startup built world’s initial compact hydrogen generator
BayoTech Inc. plans to build 50 hydrogengenerating hubs across the U.S. over the next three years, starting with its first on-site deployment in 2022 at a New Mexico Gas Co. facility in Albuquerque.
BayoTech, a local startup that launched in 2015, has built the world’s first compact onsite hydrogen generators based on technology originally developed at Sandia National Laboratories. The company has raised nearly $200 million in private equity to date, and established a manufacturing partnership with Farmington-based Process Equipment & Service Co. to build its hydrogen production units in New Mexico.
Now, it’s ready for aggressive commercial roll out of the generators, with NM Gas slated to host BayoTech’s inaugural “hydrogen hub,” the company announced on Friday in a news conference with Gov. Michelle Lujan Grisham.
“It’s a momentous day for us,” BayoTech CEO Mo Vargas said at the event, held at the company’s 15,000-square-foot headquarters near Albuquerque Balloon Fiesta Park.
“We’re building our first hydrogen hub right in our hometown in Albuquerque,” he said. “It’s the first stop in our path to become the world’s largest distributed hydrogen company.”
Those are lofty goals. But BayoTech has established extensive commercial partnerships with global companies to deploy its technology.
Last May, for example, BayoTech signed an agreement with Element Two — a UK-based deployer and operator of hydrogen fueling stations — to supply BayoTech production units for some 800 Element Two operations.
And in June, it signed a separate agreement with GreenCore — which currently operates hundreds of electric vehicle and hydrogen fueling centers across the U.S. — to supply BayoTech produced hydrogen for more than 1,500 fueling stations that GreenCore plans to build by 2026.
The company says it now has more than $1 billion in project proposals with customers in its commercial pipeline around the globe.
Lujan Grisham said BayoTech’s success demonstrates immense potential for diversifying New Mexico’s economy through hydrogen energy development.
“It can, and I believe will, provide an incredible, seismic opportunity for economic growth in the energy sector in New Mexico,” the governor said.
Hydrogen is emerging nationally and internationally as a critical tool for clean energy development as efforts to fully decarbonize the economy gain force. That’s because hydrogen is a clean-burning fuel that could potentially lower or eliminate greenhouse gas emissions in everything from power generation and transportation to carbonintensive industrial production and the operation of heavy machinery and equipment.
Lujan Grisham is now spearheading a new statewide initiative to turn New Mexico into a national leader for hydrogen development and production. Cabinet officials are putting the finishing touches on a proposed “Hydrogen Hub Act” to establish a legal framework for the state’s emerging hydrogen industry, laying out the needed rules and regulations to encourage investment and operations here.
It will be introduced as priority legislation in the upcoming session in January.
“It’s the cornerstone of what will occur in the session,” Lujan Grisham said on Friday. “We’re still working on some of the kinks to cover all operational aspects, because this is a brand new space.”
Government officials and private investors hope to tap into some of the $8 billion in federal grants to build hydrogen hubs and demonstration projects in the U.S., which was included in President Joe Biden’s $1.2 billion infrastructure bill, recently approved by Congress.
“The federal government is looking at hydrogen for the next phase of efforts to build the clean energy economy,” Lujan Grisham said. “...We can lead in this kind of energy development and innovation with private investment and federal dollars.”
Still, those efforts are not without controversy. Environmental groups are concerned that focusing on hydrogen production will slow efforts to develop wind, solar and other types of renewable energy.
They also question whether hydrogen production will actually lower carbon emissions, since current technology relies on natural gas in a process called steam methane reform, or SMR, which extracts hydrogen molecules from the methane, producing significant carbon emissions in the process. And to lower or eliminate those emissions, developers plan to use carbon capture and sequestration, which environmental groups say is a risky and commercially unproven technology.
BayoTech’s system as well relies on SMR, but its compact generators substantially reduce emissions compared with the massive, centralized SMR plants in operation today. In addition, the units are located onsite, substantially reducing carbon emissions from hydrogen transportation and delivery. That also immensely lowers the costs, while helping to cut or eliminate carbon emissions by end users who can replace fossil fuels with clean-burning hydrogen.
“You have to measure carbon reduction by looking at the full life cycle of hydrogen production, delivery and use,” said David Blivin of the New Mexico-based venture fund Cottonwood Technologies, which has invested in BayoTech. “Emissions and carbon intensity are reduced in every step along the way.”
Gerald Weseen, vice president for regulatory strategy and external affairs at NM Gas, said environmental concerns will be addressed through continued research and development. That’s a critical goal for the hydrogen hub partnership with BayoTech, which allows the gas company to fully explore the benefits and challenges of incorporating hydrogen into its natural gas distribution operations before deploying it.
“We need to look at the issues being raised, but if we don’t take action on it today, the technology will pass us by,” Weseen told the Journal.
BayoTech’s hydrogen generator will be located at NM Gas’s Metro Service Center at Edith and Griegos in Midtown, where the company will test hydrogen use in common household appliances before later considering the injection of some hydrogen into the company’s natural gas pipelines, which could lower fuel emissions when used in homes and businesses, Weseen said.
BayoTech currently employs 110 people, Vargas said. PESCO, it’s manufacturing partner in Farmington, is ramping up unit production now, with up to 200 employees projected in the next few years.