A Bill Gates–backed startup is determined to solve the ‘pain in the neck’ problem keeping green hydrogen from fulfilling its clean energy potential

August 2, 2022, 12:00 PM UTC
H2SITE co-founder Jon Melendez Rey.

In a world desperate for clean energy, green hydrogen ticks a lot of boxes—it’s zero-carbon, abundant, and versatile. Yet harnessing green hydrogen’s full potential remains just out of reach.

For years, climate activists have buzzed about zero-carbon hydrogen fuel as a way to decarbonize industries like steel production and oil refining that rely on its dirty cousin—“gray” hydrogen, made from natural gas. And soon green hydrogen could power trucks, buses and eventually ships and planes (Rolls-Royce is testing a hydrogen-powered airplane engine), and be burned to generate heat and electricity.

But all that promise comes with a catch: There’s currently no way to transport hydrogen, economically and at scale, from locations where it can be made with copious and cheap renewable energy—from Spain to northern Africa, Oman, and Australia—to the sites where it would be used.

“From a transport perspective, it’s a pain in the neck,” says Andrés Galnares, chief executive of H2SITE, a Spanish hydrogen transport startup. H2SITE’s solution to the problem is a membrane reactor—a kind of filter system—that allows existing pipelines to quickly and cheaply carry green hydrogen from where it’s produced to where it’s needed needed most.

The company in June received 12.5 million euros ($12.8 million) in a Series A funding round led by the Bill Gates–founded Breakthrough Energy Ventures: money that H2SITE will use to build its first commercial reactors to extract pure hydrogen from compounds into which is it blended—just as Russia’s invasion of Ukraine causes global demand for green hydrogen to skyrocket.

Wartime urgency

Green hydrogen is produced by blasting renewably generated electricity through water in a device called an electrolyzer—a process that separates the water into oxygen, which can be released into the atmosphere, and hydrogen (H2). Hydrogen is turned into fuel by recombining it with oxygen to produce electricity or by burning it like natural gas for industrial and residential uses.

Russia’s war in Ukraine, which sent European natural gas to five times (and often much more) its typical pre-conflict price, raised the profile of green hydrogen and its potential to replace carbon-based fuels. Eager to wean itself from Russian dependence, the European Union in May quadrupled its 2030 goal for green hydrogen usage to 20 million tonnes a year—half to be produced in Europe.

The world needs to solve green hydrogen’s transportation conundrum—and fast.

Rystad Energy HydrogenCube

“Left to its own devices, a market for hydrogen in Europe that has interconnectivity is probably 20 years away,” says Maarten Wetselaar, CEO of CEPSA, a Spanish oil and gas company that is investing $5 billion in green hydrogen production and transport in the Andalusia region of Spain. But, he adds, motivated by a wartime focus, it could technically be created in less time—maybe a decade.

Lots of pipes, but not the right ones

Europe is home to more than 200,000 kilometers of natural gas pipelines, according to the EU. But those pipes can’t carry anything close to pure hydrogen.

Hydrogen is a gas, but it is a much smaller molecule than natural gas, and if a high concentration of it—more than 5%–20%, depending on the pipe—is sent through typical steel natural gas pipes, the tiny molecules can creep into minute cracks in the steel and widen them, thus weakening the pipe—a process called embrittlement.

One option is to build dedicated hydrogen pipelines—there are about 4,600 kilometers of these in the world, according Minh Khoi Le, head of hydrogen research at Rystad Energy—but that will take decades and billions of dollars.

“The challenge with hydrogen transport is to do it on a big scale so that we can decarbonize completely,” says Le.

H2SITE’s answer to the transport problem is to pump hydrogen through existing infrastructure and thus cut the time and expense required to get the green fuel flowing.

Imagine pouring a can of soda down your kitchen sink. Now, run down to where your home’s drainage pipe heads out to the street. There, stick a special filter in the pipe, and a few seconds later, watch as soda pours out of it, separated from everything else flowing through the pipe, as pure as when it left the can.

That, at least metaphorically, is how H2SITE’s equipment works.


H2SITE’s solution began to take shape just over a decade ago when its two lead scientists—Jon Meléndez Rey and José Antonio Medrano—were Ph.D. students at Tecnalia, a research center in Spain’s Basque country, and the Eindhoven University of Technology in the Netherlands, respectively. Meléndez Rey was developing the nascent technology behind membranes that could filter hydrogen from other substances, while Medrano’s was designing the process behind such filtering. The membranes that existed at the time were prohibitively expensive for industrial use, recovered too little hydrogen, and allowed too many impurities through. For hydrogen to be used in fuel cells, it must be 99.97% pure.

What Meléndez Rey and his colleagues landed on are essentially tubes wrapped with a membrane of palladium foil that are grouped like bristles on a hairbrush and then inserted into a tank—the reactor. Once a hydrogen mix enters the reactor, the tubes attract the hydrogen, which then passes through the foil and flows up through the tube to a storage unit or a hydrogen pipeline. With this technology, a mix of natural gas and hydrogen could be injected into an existing natural gas pipeline, and at the other end, H2SITE says its reactors can suck 99.97% pure hydrogen from the mix—just like the imaginary soda. Their system is cheaper than existing designs and can recover more hydrogen.

“Say you inject 10% hydrogen and 90% natural gas in Huelva, Spain,” Galnares says. “In Paris, I connect one of my [reactor] boxes to the natural gas infrastructure and I extract all the hydrogen and the natural gas continues in its old transport system. Infrastructure meant to transport nonrenewables can now transport fuel like pure hydrogen.”


In 2019, Meléndez Rey and Medrano’s laboratory groups at Tecnalia and TU Eindhoven spun out their technology to commercialize it, and H2SITE was born. Meléndez Rey and Medrano were its two founding scientists; Galnares joined from the French utility company Engie, which provided seed funding and was later part of the consortium that invested alongside Breakthrough Energy Ventures.

Ammonia road

Another H2SITE solution is to transport hydrogen via ammonia, a widely produced chemical compound that already has a well-defined international supply chain.

In a reactor process designed by Medrano and his colleagues, ammonia, a compound made of nitrogen and hydrogen, is passed through a catalyzer made up of aluminum particles and other metals such as nickel. The ammonia breaks into nitrogen—which makes up about 78% of the Earth’s atmosphere—and hydrogen, which then passes through the same membrane. (The hydrogen extracted this way would only be green if the ammonia were “green”—a product fertilizer makers are just starting to produce.)

According to Le of Rystad, these membrane reactor filters are unlikely to be much used in the short term, as most hydrogen production facilities are being built near the industrial sites where they will be used. But, he says, “it could be a crucial technology when you look to scale up hydrogen to be a global commodity.”


Galnares estimates the cost of extracting a kilogram of hydrogen would run from as little as 10 cents—to purify hydrogen that’s sent through a hydrogen pipeline and picked up impurities on the way—to $1.50 for extracting it from ammonia, though he cautions that H2SITE is a young company, and the costs could come down if it can scale.

Galnares declined to reveal H2SITE’s Series A valuation.

Today, H2SITE is building reactors that can make 200 kilograms of hydrogen a day to resupply vehicle fuel cells. It’s also designing multiton units to power ships. These are small steps toward replacing dirty fuels with green hydrogen, but ones that point to the newfound urgency of the transition.

Each week, Fortune covers the world of innovation in Breakthrough. You can read previous Breakthrough columns here.

Read More

CryptocurrencyLeadershipInvestingClimate ChangeMost Powerful Women