Temasek is looking to play a central role in the development of hydrogen as the world’s next big "clean" energy source.

This week, a subsidiary of the Singaporean state-owned investor - Venezio Investments - announced a non-binding deal for a joint venture deal with Nanofilm Technologies to create Sydrogen Energy, which will market parts used in the production of fuel cells and electrolyser systems in hydrogen production. Nanofilm claims that its solutions can drastically cut the cost and improve the durability of technology that is necessary for the development of the hydrogen economy.

Hydrogen is expected to play a growing role in the alternative energy sector. Low carbon hydrogen-based synthetic fuels could be used in shipping and aviation, as well as cars as an alternative to electric vehicles. Hydrogen could also be used in domestic and industrial heating systems and furnaces, and power production.

Temasek is not the only SOI focusing on the development of hydrogen as the next big play. Abu Dhabi’s drive to go green shifted up a gear in January. The Abu Dhabi Hydrogen Alliance brought together Mubadala, the increasingly active Abu Dhabi Developmental Holding Company (ADQ) and national oil company ADNOC to “establish Abu Dhabi as a trusted leader of low-carbon green and blue hydrogen in emerging international markets.” The alliance is seeking to extend the use of hydrogen as an energy source in utilities, transportation and industry.

Ensuring hydrogen is a truly green energy source will be a focus of efforts to grow the hydrogen economy. According to Frost & Sullivan, global hydrogen production will rise from its current 71 million tonnes to 168 million by 2030. Currently, hydrogen production is produced from fossil fuels with electrolysis playing only a small role in production and the large bulk derived from gas, oil and coal. Most output is associated with the production of petrochemicals, fertilizers, methanol and steel. Frost & Sullivan’s report states that “global green hydrogen production will skyrocket at a compound annual growth rate (CAGR) of 57% between 2019 and 2030, rising from 40,000 tons to 5.7 million tons.”

Green hydrogen growth will come on the back of regulatory decarbonization efforts to boost hydrogen consumption, with a focus on markets with a high penetration of renewable energy. China – a major focus of Temasek’s investment strategy – is boosting the development of hydrogen-based technologies and infrastructure to support a transition from a carbon-based to a hydrogen-based economy.

However, electricity requirements in hydrogen through electrolysis has made it prohibitively expensive, making up well over half of total production costs. Electrolysis uses electricity to split water into hydrogen and oxygen in an electrolyzer. Bringing down costs, improving scalability and ease of deployment of electrolysers technology, and “greening” production will be central to stimulating early adoption. And that’s where Temasek-backed Sydrogen Energy is seeking to provide solutions, with the application of Nanofilm's technology.

Nanofilm’s nano-coating technology is currently used in the production of automotive parts and electronics. The company claims that its coating solutions and production processes are greener and more sustainable by replacing limited precious base materials and extending the life and durability of materials used in critical components for fuel cell and electrolyser systems.

“The proposed partnership will feature heavily in our sustainability commitment, as we entrench our role as a critical supply chain player in the hydrogen economy, contribute to carbon neutrality and offer a sustainable energy source for the global economy,” said Nanofilm’s executive chairman Shi Xu.

Related funds ADQ Mubadala Temasek