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Case Study: Cummins' comprehensive strategy to own fuel cells

Jinze Dai, Ph.D., Analyst
October 26, 2021

In a bid to reduce Scope 3 absolute lifetime GHG emissions from newly sold products by 25% by 2030, the multinational engine and generator manufacturer has been bolstering its presence in the space of fuel cells in recent years.

In September 2019, Cummins acquired PEM fuel cell and electrolyzer developer Hydrogenics for $290 million. Also in September 2019, Cummins made the first investment in Loop Energy, a Canadian developer of PEM fuel cell range extenders for medium- and heavy-duty vehicles. In March 2020, Cummins decided to double down on Loop Energy upon a due diligence process. In 2020, the company received two grants from the U.S. Department of Energy. One is a $2.6 million project to develop a 20 kW solid oxide fuel cell (SOFC) power system to demonstrate its durability. The other is a $2 million project to develop thermal spray technology to reduce the manufacturing costs of solid oxide electrolysis cells (SOECs). The investment activities have given Cummins a diverse portfolio of technologies across the hydrogen value chain.

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USE CASE AND BUSINESS IMPACT

The company's M&A activities have led to an increase in piloting initiatives. The acquisition of Hydrogenics enabled Cummins to offer fuel cell products ranging from 8.5 kW (52 kg and 51% efficiency) to 93 kW (360 kg and 59% efficiency), mainly targeting buses, trucks, trains, and stationary power. Cummins is conducting field trials of its fuel cells with partners, such as on the trucks of ASKO, Norway's largest grocery distributor. In addition, the company is building a 10 MW/year fuel cell manufacturing plant in Herten, Germany, to supply Alstom's hydrogen-powered train called Coradia iLint. When it comes to the hydrogen infrastructure, Cummins formed a joint venture with NPROXX for hydrogen storage tanks and collaborated with Enbridge Gas to blend 2% green hydrogen into Ontario's natural gas network. On the upstream side, leveraging the electrolyzer technology from Hydrogenics, the company is investing €50 million to build a PEM electrolyzer plant in Spain with a planned manufacturing capacity of 1 GW per year in collaboration with Iberdrola. Moreover, Cummins is partnering with Sinopec to promote electrolyzer technology development in China.

#LUXTAKE

Cummins' hydrogen strategy is comprehensive, including the elements of acquisitions, investments, partnerships, and in-house R&D. The approach is vertically integrated, from downstream hydrogen utilization with PEM fuel cells to upstream hydrogen production with PEM electrolyzers. The company's global foothold and access to a large pool of potential customers seeking to decarbonize their vehicles and power supply will grant a significant advantage for future deployment and growth. On the other hand, Caterpillar, another major engine manufacturer, is also looking to offer low-carbon products but seems to adopt a different strategy: In September 2021, Caterpillar announced that it would offer 100% hydrogen engines and acquired a startup developing carbon capture technology targeting combustion engine exhaust. As the major engine manufacturers are diversifying their offerings by embracing hydrogen, clients should prepare for the accelerating adoption of hydrogen-powered heavy-duty vehicles and distributed generation.

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