An unconventional crowdfund: LINE Hydrogen sees green vision backed on Birchal
Jun 9, 2022 | Business News Australia
“I guess it is unusual for a company like us to go through a crowdfund. We went into the process on the back of quite a lot of requests on social media, and so we thought we’d give it a shot,” said LINE Hydrogen founder Brendan James.
Queensland-based LINE Hydrogen is raising money to build an $83 million green hydrogen production facility in Tasmania, and has already received more than $1 million from retail investors on equity crowdfunding platform Birchal, typically the home to fashion companies, inventors and distillers with built-in, passionate customer bases.
Though its renewable energy proposal is an unconventional proposition for regular Australian retail investors, around 514 backers have come on board to take a minor stake in the business, demonstrating the serious desire out there to support companies tackling climate change via technology.
Founded by former metallurgical engineer and investment banker Brendan James, Brisbane-headquartered LINE Hydrogen has secured more than $1.1 million in funds on Birchal. While the funds are just a drop in a rising ocean in terms of the capital it will take to get the Tasmanian facility up and running, further backing from the Federal Government and the company's own coffers are making the ambitious plans a reality with expectations for production by the first quarter of 2023.
And with seven days of its crowdfunding campaign still to go, LINE Hydrogen could fill up its tank with even more capital from everyday Australians.
Backed by a $5 million investment from the Federal Government, LINE Hydrogen’s commercial-scale hydrogen facility will be built just outside of George Town, Tasmania, and once finished will be producing green hydrogen for heavy vehicles like trucks and buses on the The Apple Isle.
Rather than burning fossil fuels and releasing carbon dioxide and other pollutants into the atmosphere (as is the case for the production of commercial ‘grey’ hydrogen), LINE Hydrogen will be producing green hydrogen with solar energy, using a process called electrolysis, from which the only byproducts are drinking water and medical-grade oxygen.
Speaking to Business News Australia from Canberra where he is based, founder Brendan James admitted he was taking an unusual route to raise capital for an energy company, but noted it sets the company up well for an ASX listing down the track.
“I guess it is unusual for a company like us to go through a crowdfund. We went into the process on the back of quite a lot of requests on social media, and so we thought we’d give it a shot,” James said.
“We’ve been overwhelmed with over a million dollars raised and 514 shareholders. That improves our flexibility going forward with a listing in the future - having these shareholders on board is one of the requirements for listing, so that makes things a lot easier for us.
“Ultimately what we want is a significant amount of Australians owning the Australian hydrogen economy.”
James’ interest in green hydrogen began when he returned to the mining industry in 2015, having started his own firm called BIM Metals. While there, he grew frustrated with how larger mining operations were running entirely on diesel - not just the trucks and machines, but the power generators as well. Something needed to change.
“I’m a big believer in global warming effects, and I think the industry needs to become sustainable,” he said.
“We started looking at solar and batteries and that was too capital intensive, and we needed something that could run 24 hours a day and hydrogen was the only thing that could do this. This was six or seven years ago and no one really understood the industry at the time.
“So we started building our own electrolysers and fuel cells, and fast forward five or six years and we realised we’d built up a significant amount of knowledge in the hydrogen industry.”
From there, James said he started receiving inquiries about whether they could produce hydrogen for others, which led to the birth of LINE Hydrogen as a separate company.
Functionally, the Tasmanian facility will involve serious amount of infrastructure, including a solar plant that will feed directly into electrolysers. Those machines then take small amounts of water and split it into hydrogen and oxygen using a process called electrolysis.
“It’s a 99.999 per cent pure hydrogen that we then compress, or we can take it to liquid if there’s a product for liquid in the future,” James said.
“That will supply our hydrogen refuelling stations around Tasmania which will be used by heavy vehicles like trucks and buses.
“That’s all for domestic consumption, particularly Tasmanian domestic consumption.”
The Tasmanian facility is just the first stage in LINE’s grand plan to establish a clean energy supply for Australia more broadly. The founder hopes to build facilities in either South Australia or New South Wales next, with Victoria and Queensland on the horizon.
“Construction commissioning…it’s a lot of work,” admitted the founder.
“We want to make sure it’s smooth and stable.”
Not only that, James wants to ensure that the hydrogen produced at the site is on parity price-wise with diesel.
“A green margin is great, but no one really wants to pay more, particularly when your business is reliant upon your cost base,” he said.
“So the reason we’ve started up the size that we have is that it allows us to provide that hydrogen delivered into the Tasmanian network for diesel parity.”
The founder is in good company when it comes to the world of green hydrogen. Australian billionaire and investor Andrew ‘Twiggy’ Forrest has recently been spruiking the potential of the technology around the world. While James welcomed the attention Twiggy had brought the industry, he emphasised that the billionaire was keenly focussed on export opportunities for the technology, whereas he wants to set Australia up with clean, green hydrogen.
“[Export] doesn’t really suit us that much. We’re looking to put our hydrogen projects around heavy haulage fleets in regional Australia, that’s where we see the big opportunity,” he said.
“Australia consumes around 84 million litres of diesel every day, so we’ve got to improve our energy security in Australia - you’ve seen the effects in Germany for when you don’t have energy security and you’re relying on exports for your energy supply.”
But it isn’t just heavy vehicles that James has his sights on. With the current energy crisis ongoing in Australia, the founder noted he’d received plenty of requests to power more than just trucks and buses.
“Since we’ve stuck our head up, we’ve really been inundated with demand for all sorts of things, from energy to run boilers and for remote power generation,” James said.
“I think the efficiencies around hydrogen are going to surprise people as well. One of the things I like about hydrogen, and particularly when you go into hydrogen combustion for light vehicles like cars and motorcycles, is that one - it’s very light and secondly they are very cheap to produce versus even hydrogen fuel cells.
“I think if we can produce engines that not only run on clean, green power but are also very recyclable in terms of the components that go into them, then we’re in two ways improving the environment going forward. I think that’s one of the big benefits we’re going to see with hydrogen going forward.”