Cheap Hydrogen Could Reshape Data Center Locations
▼ Summary
– Vema Hydrogen is pioneering a method to produce hydrogen by drilling into iron-rich rock and using water, heat, and catalysts to release the gas.
– The company has completed a pilot project in Quebec and plans a commercial well, aiming to produce hydrogen for less than $1 per kilogram.
– This “engineered mineral hydrogen” is positioned as a cleaner alternative to the dominant, carbon-intensive steam methane reformation (SMR) process.
– Vema’s CEO projects future production costs could fall below 50 cents per kilogram, making it cheaper than any current source.
– The company targets locating wells near industrial users like data centers, particularly in areas like California with suitable rock formations, to supply decarbonized power.
While the automotive sector has faced challenges in scaling hydrogen adoption, a new opportunity is emerging for industrial power users and data centers. A novel method of extracting hydrogen directly from the Earth could provide a clean, low-cost energy source, potentially influencing where major computing facilities are built in the future. This shift hinges on the ability to produce hydrogen at a fraction of current costs, offering a compelling alternative for industries under pressure to decarbonize.
A company named Vema Hydrogen is pioneering this approach. After securing a deal to supply data centers in California last December, the startup has now completed a pilot project in Quebec. Their technique involves drilling into specific iron-rich rock formations. When water, heat, pressure, and catalysts are introduced, these rocks release hydrogen gas, which is then captured and brought to the surface for sale. Pierre Levin, CEO of Vema, highlighted the efficiency of this method, noting that supplying Quebec’s local market of roughly 100,000 tons per year would require an area of just three square kilometers.
The initial pilot well is expected to yield several tons of hydrogen daily. Plans are already underway for the first commercial well next year, which will extend 800 meters underground. Vema projects its production costs from these early wells will fall below the critical benchmark of $1 per kilogram for clean hydrogen. This stands in stark contrast to conventional production.
Currently, most hydrogen is manufactured through steam methane reformation (SMR), an energy-intensive process that extracts hydrogen from natural gas and releases significant carbon dioxide. While less polluting methods exist, they come at a premium. According to industry analyses, SMR hydrogen costs between $0.70 and $1.60 per kilogram. Adding carbon capture can increase that price by about fifty percent. The cleanest method, using renewable electricity to power electrolyzers, raises costs several times over.
Vema’s process, termed “engineered mineral hydrogen” or stimulated geologic hydrogen, is positioned as one of the cleanest sources available. The company’s leadership is confident that once their techniques are fully refined, they can drive production costs down to less than 50 cents per kilogram. At that price point, it would become the most affordable hydrogen on the market.
A key advantage of this geological method is the widespread distribution of the necessary rock types. Levin stated this allows Vema to drill wells near power-hungry facilities like data centers, minimizing transportation costs. For instance, California possesses extensive formations of ophiolite, an iron-rich rock ideal for this process. If Vema can deliver hydrogen at its projected low price, this geological advantage could transform California into a prime location for data center development. Levin confirmed strong interest, noting, “You have a ton of data centers who are trying to get some baseline, decarbonized electricity. We have very strong traction with them.” This potential to provide cheap, clean power could fundamentally reshape the geographic and economic landscape of the data center industry.
(Source: TechCrunch)
