Ardmore Shipping has joined forces with a maritime lender and a clean energy company on a hydrogen joint venture.
The Irish product tanker owner announced on Monday the three-way tie-up with Maritime Partners and Element 1, resulting in the creation of e1 Marine to develop methanol-to-hydrogen technology for the shipping industry.
"We are excited about the market opportunity for [Element 1's] methanol-to-hydrogen technology," Ardmore chief executive Anthony Gurnee said in a statement.
The announcement said Element 1's system produces hydrogen on demand at the point of consumption, alleviating the logistical challenges around the fuel.
Safe and cheaper
"We believe it is safer and cheaper than other alternatives for on board hydrogen delivery and, when using standard methanol, is operationally cost competitive with diesel engines even today, while emitting zero particulates, zero NOx, zero SOx, and 30%-50% less carbon than a diesel engine of the same power rating," Gurnee said.
"The [Element 1] system is carbon-neutral when run on renewable methanol, should prove to be very cost competitive with other alternatives, and if desired can be built or retrofitted to run on ammonia."
Fearnley Securities said that while the technology for fuel cells has matured significantly over the years, there is a major bottleneck for the hydrogen economy around the infrastructure of supplying the hydrogen to cells as a feedstock.
"This strategic relationship to use hydrogen as a feedstock aims to provide a solution to this problem," the investment bank added.
Fearnley added that the company could become an "enabler" for wide-scale deployment of fuel cells.
The move comes as shipping is faced with the challenge of finding new, lower emissions fuels in order to meet the International Maritime Organization's targets of cutting carbon dioxide emissions by 40% by 2030 and total greenhouse gas emissions by 2050.
Both methanol and hydrogen have been floated as alternative fuels, while other shipowners have considered LNG, LPG and ammonia.
Element 1 is an Oregon-based developer of small-scale to micro-scale clean energy technology, including hydrogen generation systems.
Maritime Partners is led by Bick Brooks and based in Louisiana. It provides vessel financing in both the coastal and inland sectors.
Investment in Ardmore
As part of the deal, Ardmore, Element 1 and Maritime Partners will each take one-third of e1 Marine. The company will "have a worldwide mandate for the marketing, development, licensing and sale" of Element 1's hydrogen generation systems for the marine sector, the announcement said.
The transactions also sees Maritime Partners invest $40m in Ardmore through two tranches of preferred shares carrying an 8.5% dividend, one tranche worth $25m and the other for $15m.
The shares will be redeemable after three years.
Ardmore will also take a 10% equity position in Element 1 for $4m cash plus 950,000 Ardmore shares, which Ardmore values at $11m.
Armistead Street, a consulting firm led by prominent equity analyst Michael Webber, provided advisory services to the parties throughout the process. Armistead focuses on renewables, energy and other industrial sectors from offices in New York and Houston.
