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Future Focused: A Look at Hydrogen and BayoTech in 2023

Article by Mauricio Vargas on January 24, 2023
4 minute read

We’ve come through another critical and active year, both for BayoTech and the hydrogen sector in general. It’s an exciting time to be in this industry. Not only are we at BayoTech building a fast-growing enterprise. We, along with our customers, peers, supply chain partners, service providers, industry groups, and investors, have the opportunity to make meaningful reductions in greenhouse gases and help the world transition to clean, low-carbon energy.

Growth and Challenges in 2022

BayoTech matured operationally in 2022 and continued to expand our customer base with some of the world’s leading companies focused on decarbonization. We built our 700th high-pressure gas transport trailer and finished the year with strong revenue growth. Probably the most exciting news is that we also broke ground on our first hydrogen hub in the greater St. Louis area and have five additional sites in the permitting process.

None of this has come easily. We are building BayoTech in a time of high inflation, disrupted supply chains and capital constraints. The Ukraine/Russia conflict inflated natural gas prices through most of 2022, and though they have declined in recent months, the impact from this event and the resulting drive for energy independence and decarbonization remains. Also, fast growth brings its own challenges around operational efficiency while maintaining a culture where people can thrive. Fortunately, we have assembled a team with the skills and creativity to meet these challenges. We solidified our workforce over the course of 2022 with 42 new employees who are mission-oriented and who share our commitment to impact the world in positive ways.

BayoTech in 2023

The coming year holds enormous potential for BayoTech. After years in product development, our proprietary hydrogen production technology will enter the market. Our first hydrogen production hub will come online in St. Louis in Q2, for which we’re building up the local workforce. We plan to hire at least 10 more employees to serve our anchor hydrogen customers in the region. Permitting continues for our next five hub locations in Northern California, Southern California, Albuquerque, Tulsa and Detroit.

We’ll also be moving NorAm Valves, our high-pressure valve business, to our third Tulsa site to accommodate rapid growth, quality testing, cylinder recertification and our new Tulsa hydrogen production hub.

As fuel cell applications are deployed throughout the US, demand for our hydrogen transport equipment continues to grow. We are forecasting a record year based on our current backlog of business.

BayoTech compressed gas trailer

Hydrogen Now and Where it’s Going

On an industry level, the year was marked by a mix of rapidly-evolving market dynamics, government initiatives and impacts of the Russia-Ukraine war. In the United States, the Production Tax Credit, part of the 2022 Inflation Reduction Act (IRA), is stimulating growth of clean hydrogen production. This bodes well for BayoTech in 2023 and beyond, enabling us to produce zero carbon-intensity hydrogen at never-before-seen prices. For the UK & Europe, we will continue to see countries evolving their energy mix as they wean energy consumption from Russia and deal with their own headwinds around inflation and supply chain disruptions.

The US Department of Energy rolled out the US Regional Clean Hydrogen Hubs program, or H2 Hubs. This will be a central driver across the industry, helping increase demand for hydrogen production, transportation, compression and dispensing. It will also generate demand for people and companies with expertise in the hydrogen industry.

I believe we are in a crucial transition stage for the hydrogen industry, which is still quite nascent despite amazing progress. Comparable to the automobile industry of the 1920s, or the internet of the 1990s - many companies are vying for position, with different ideas and approaches. We will see a lot of consolidation and shakeouts as the stronger well-funded business models are successful, especially in this increasing cost-of-capital environment. 

Future of sustainability

Sustaining Momentum

I’m often asked how the hydrogen industry can maintain or increase its momentum. Although I see a lot of talk about hydrogen generation, there is not enough focus on hydrogen demand and applications along with ways to transport hydrogen where it’s needed economically and required to accelerate deployment. Hydrogen and fuel cells have the potential for use in a broad range of applications, across virtually all sectors. Realistically, and especially at this stage of the industry, we must focus on growing the applications that offer the strongest business cases. This includes:

  • heavy industries, such as steel and cement manufacturing, 
  • heavy duty transportation like freight trucking, rail transport, aviation, and forklifts 
  • power generation for backup or emergency power in buildings, and supply electricity in places that are not connected to electric power grids  

We believe electric will continue to replace gasoline for vehicles for commuting and city driving. Ultimately its AND not OR in the portfolio of decarbonization solutions. So, let’s focus on the sectors where hydrogen will have the greatest demand and utility.

I also believe government involvement can have a material impact, and we’re seeing this impact in the US through passage of the IRA bill. The oil industry was subsidized in its early stages to stimulate not only supply but innovation and applications. We’ve seen the same with solar and wind power. Hydrogen is now in this same position. Government support will foster R&D, business startups, infrastructure and market growth while the industry matures, and reduces costs to become self-sustaining.

I’m most grateful to everyone on the BayoTech team, especially for their commitment to our mission of offering solutions to major problems facing the planet. I look forward to another exciting and impactful year.

Mauricio “Mo” Vargas

President & CEO

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