Cummins dives into hydrogen as traditional engine business stalls

Cummins Inc. (NYSE: CMI) is acquiring businesses, forming partnerships and investing research dollars into a future hydrogen economy. Its across-the-board bets cover fuel cells for trains, ships and trucks – and the hydrogen fuel to power them.

The global leader in diesel engines recently formed a New Power unit as a home for its growing portfolio. The unit lost $38 million before interest, taxes, depreciation and amortization (EBITDA) in the second quarter on $10 million in revenue. But like any startup, that was expected.

Catching the fuel cell train

Cummins already leads the world in fuel cells for trains. It recently completed an 18-month trial with Alstom in Europe that covered 180,000 kilometers (about 112,000 miles), Cummins Chairman and CEO Tom Linebarger said.

“By 2022, there will be 41 of these types of trains powered by Cummins fuel cells running in Europe, making Cummins the leading provider of fuel cells for trains globally,” he said Tuesday on the company’s second-quarter earnings call.

“One thing about trains is there is a much lower volume than trucks. But they take a lot more fuel cell stacks,” Linebarger said. “So, we will be delivering pretty high volumes of fuel cells that will allow us to move to more cost-effective manufacturing technology.”

A year of hydrogen expansion

Cummins has grown its hydrogen and fuel cell portfolio over the last year by acquisitions, investments and partnerships. Its latest move adds high-pressure hydrogen storage tank technology in a joint venture with NPROXX.  

“The addition of hydrogen storage to our existing capabilities in hydrogen production and fuel cells enables us to accelerate the viability and adoption of these technologies in commercial markets,” Linebarger said when the deal was announced June 23.

In the last year, Cummins also has:

  • Spent $290 million in September 2019 to acquire Hydrogenics Corp. Hydrogenics makes proton exchange membranes (PEM) and alkaline fuel cell electrolyzers to generate hydrogen.
  • Made two investments in LOOP Energy, which makes a 30-kilowatt (kW) and 50-kW FC-REX range-extender systems for Class 6-8 trucks. LOOP claims its eFlow technology uses 30% less platinum and high-grade carbon composites than competing systems.
  • Signed a memorandum of understanding with Hyundai Motor Co. to make fuel cells for trucks and backup power generators for data centers.

The company has more than 2,000 fuel cell installations. It is talking with manufacturers about how to use its fuel cells in ships, data centers and trucks.

Solving the chicken and egg issue

Cummins settles the chicken-and-egg argument about whether hydrogen or fuel cell powertrains should come first in one word: “Both.” 

“In addition to the opportunities we see in fuel cells, we have a leading portfolio of both alkaline and PEM electrolyzers, which will be a critical part of the infrastructure to support the hydrogen economy,” Linebarger said. 

Cummins is working with French industrial gases maker Air Liquide to complete the world’s largest PEM hydrogen electrolysis plant before the end of the year. The 20-megawatt facility in Becancour, Canada can produce 3,000 tons of hydrogen annually.

Incentives and scaling

Cummins thinks scaling up both fuel cell stacks and electrolyzers is possible. Startup Nikola Corp. recently purchased $30 million of electrolyzers from Norway’s NEL Hydrogen for its planned network of hydrogen stations to support its Class 8 fuel cell trucks in late 2023.

“I would say the major driver to making fuel cells competitive besides hydrogen for fuel is volume on the stack and the related components,” Linebarger said. “And that volume will provide benefits and cost [reductions], as well as technical learning across applications.”

Being relatively new to electrolyzers, Cummins initially saw them as the egg to the fuel cell chicken. Now it views them as a strategic “significant growth platform,” Linebarger said.

Europe and China are offering significant incentives to produce hydrogen, especially carbon-neutral green hydrogen. Green hydrogen can be produced from biogas as a renewable resource. Cummins has two advantages: experience in power generation; and it is one of few makers of PEM electrolyzers.

The U.S. Department of Energy (DOE) awarded $3 million to Cummins on July 20 for PEM fuel cell systems for heavy-duty applications. It was one of 18 grants totaling about $64 million that support DOE’s H2@Scale vision for affordable hydrogen production, storage, distribution and use. 

“We are adding technologies, we’re adding partners [and] making sure that we can participate more significantly in this market, given the growth opportunity,” Linebarger said.

Related articles:

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Cummins enters its second century amid a trucking downturn

Cummins closes $290 million acquisition of fuel cell maker hydrogenics

Click to read more FreightWaves articles by Alan Adler.