Sunnova has been acquired. And its former CEO has launched a new startup. Photo via sunnova.com

Solaris Assets has completed its acquisition of the majority of Sunnova Energy International’s residential solar assets. Houston-based Sunnova filed for Chapter 11 bankruptcy this summer after piling up billions of dollars in debt.

Meanwhile, Sunnova founder and former CEO John Berger has launched a Houston-based home energy services startup, Otovo USA, which just received more than $4 million in seed funding.

Solaris now owns Sunnova’s residential solar services platform and its solar generation and storage portfolio, along with leases, loans and power purchase agreements. Sunnova’s operations are being shifted to SunStrong Management, an Austin-based asset manager for the renewable energy sector.

“By bringing together SunStrong’s asset management expertise with Sunnova’s nationally scaled customer base, we are creating a stronger, more capable leader in the solar industry,” Brendon Merkley, CEO of SunStrong, said in a news release. “Our priority is to maintain the highest levels of service for customers as we expand our footprint as a premier solar asset servicer.”

In June, Sunnova sold its new-home business to homebuilder Lennar for $15.2 million and sold certain assets to investment firm Atlas SP Partners for $15 million.

As of December, Sunnova’s debt totaled nearly $10.7 billion, Reuters reported. Sunnova faced numerous challenges in its quest to survive, including higher interest rates, the reduction of solar incentives in California, and a shakeup in federal subsidies for renewable energy.

Sunnova filed for Chapter 11 bankruptcy in June. A month later, a bankruptcy judge approved the court-supervised sale of Sunnova. Solaris’ acquisition of Sunnova closed Sept. 3.

As SunStrong absorbs the bulk of Sunnova’s assets, Berger — who quit in March as Sunnova’s CEO — has formed a new business. He’s now the founder and CEO of Otovo USA, a partner of European residential power company Otovo.

Otovo USA offers solar power systems, solar batteries, standby generators, EV chargers, electric-load managers, and other power generation and management systems. Otovo’s AI-supported offerings are now available in Texas; the company plans to expand nationwide.

Otovo USA raised its seed funding from the EIC Rose Rock Venture Fund, which invests in energy startups.

“Otovo USA is here to help the millions of Americans with home energy services that are fed up with the complexities of warranties, juggling multiple vendors, and long repair times,” Berger said. The startup, he added, “is bringing customers what they really need: reliable power and a single partner accountable for keeping it up and running. It’s your power, backed by ours.”

Eric Williams has been appointed executive vice president and CFO of Sunnova. Photo via sunnova.com/

Houston solar energy company names new C-level leadership

onboarding

Houston’s Sunnova Energy has named a new member to its C suite.

Eric Williams has been appointed executive vice president and CFO of Sunnova, an industry-leading adaptive energy services company. He brings 20 years of experience with 13 years in the energy industry to the company.

Williams replaces Robert Lane. Lane served as Sunnova's executive vice president and CFO from May 2019 to June 2024.

“I was drawn to Sunnova by its commitment to power energy independence and make clean energy more accessible, reliable, and affordable for homeowners and businesses,” Williams says in a news release. “Building on its unique accomplishments and strong history as an industry leader, I am confident in Sunnova’s ability to create value for all stakeholders and realize its vision for a clean energy future.

"I also count it a privilege to succeed Rob Lane, whose leadership and contributions have been invaluable," he continues. "I am grateful for his help ensuring a seamless and effective transition, and I am eager to begin working with his talented team.”

Prior to taking this position, Williams served as CEO and executive vice president of Diversified Energy Company where he helped establish the company’s asset backed securitization structure and led the issuance of approximately $2 billion in securitized debt.

"Eric’s extensive background in the energy sector and impressive track record in finance and accounting will be invaluable to Sunnova, and we are confident he will be a key driver in our growth and success going forward," William J. (John) Berger, CEO at Sunnova adds. "As a seasoned financial leader with deep experience in leveraging the capital markets, we believe Eric is uniquely positioned to continue building Sunnova’s strong financial framework and create more long-term value for our shareholders.”

The new center will house Sunnova technologies, including a microgrid system powered by a grid simulator and a solar array simulator with the ability to replicate various grid and solar array conditions. Photo via sunnova.com

Solar energy company to open new tech center in Houston

coming soon

A Houston energy services company has announced the upcoming opening of a state-of-the-art energy testing and integration technologies hub.

Sunnova Energy International Inc. will open the Sunnova Adaptive Technology Center in 2024. The center, which will come sometime in the first quarter of the year, is part of Sunnova Adaptive Home, Sunnova Adaptive Business, and Sunnova Adaptive Community service offerings. Founded in Houston in 2012, Sunnova aims to “create a better energy service at a better price.”

The ATC will house Sunnova technologies, including a microgrid system powered by a grid simulator and a solar array simulator with the ability to replicate various grid and solar array conditions. An interchangeable inverter and battery test beds, and a fully-functioning model home equipped with full-sized appliances, including a range, oven, refrigerator and HVAC system, will also be part of the new ATC.

This will assist Sunnova engineering teams to perform system level validation to integrate disparate technologies for reliable operation during various grid, solar and home conditions. The ATC will also be the home for service technicians that help with customer issues.

"We've always been committed to ensuring high standards of quality and service excellence for our customers," William J. (John) Berger, CEO at Sunnova, says in a news release. "With the ATC, both our customers and dealers can trust that they are partnering with a company that has an unwavering focus on innovative technologies, integrated energy solutions, quality control, and service excellence."

This announcement comes just two months after the completed expansion of Sunnova’s Global Command Center, which is a similar facility that works with cutting-edge technologies, and customer service. The ATC will also continue to develop its customer-facing experiences like the Sunnova App, and its Sunnova Sentient technology platform, which works with energy management.

“The ATC won’t be a static configuration, but a responsive, flexible arrangement that will effectively pull together top, industry-leading technologies to deliver customized energy solutions to our customers,” Michael Grasso, executive vice president and chief revenue officer at Sunnova, says in the release. “It’s a tremendous effort to qualify hardware and integrate all the technologies we work with – but doing all of this ensures the services reaching our customers are top of the line.”

Sunnova's platform is expanding in Puerto Rico. Photo courtesy of

Houston solar company expands in Puerto Rico, receives DOE funding

island opportunities

A Houston renewable energy company has announced two initiatives that are hoping to provide more grid stability on the island of Puerto Rico.

Sunnova announced that it's expanding its Sunnova Sentient Virtual Power Plant platform. The company has also been selected by the United States Department of Energy’s Grid Deployment Office to be a part of a $440 million investment from the Puerto Rico Energy Resilience Fund.

Sunnova's VPP platform is expanding in Puerto Rico through a collaboration between the Sunnova Power Flex Program and LUMA's Customer Battery Energy Sharing program in Puerto Rico. This plan is "to transform the role of distributed solar and storage customers in enhancing grid stability during peak demand periods, all while offering them financial incentives for their participation," according to Sunnova's release.

Puerto Rican residents can opt into the Sunnova Flex Power Program and will be compensated for the power supplied by their batteries. According to Sunnova, a battery could earn up to $1,000 for this first pilot year.

“We are incredibly excited about the possibilities that our industry-leading VPP platform—delivered to our customers through our Sunnova Flex Power Program—holds for the people of Puerto Rico,” John Berger, CEO of Sunnova, says in the release. “As we continue to spearhead the transition towards a cleaner and more robust future, extending our VPP platform will not only help reshape the energy landscape in Puerto Rico but also empower our valued customers to play an integral role in bolstering grid stability. We eagerly anticipate the transformative impact this program will have on our customers and the Puerto Rican community at large.”

Sunnova has 52,000 solar and storage customers on the island and has installed storage to a capacity of 800 MWh.

“We're excited to collaborate with Sunnova on this important initiative, which signifies a major step in our ongoing efforts to enhance energy reliability for Puerto Rico. We're dedicated to achieving a more stable energy supply, reducing disruptions, and securing a resilient energy future, ultimately benefiting the people of Puerto Rico,” Jessica Laird, VP of Customer Experience at LUMA, says in the statement.

Sunnova's selection by the DOE Grid Deployment Office makes the company one of the eight to receive chunk of a $440 million commitment to install rooftop solar and batteries in PR.

Houston-based Sunnova Energy has secured a loan from the Department of Energy. Photo via sunnova.com

DOE loans Houston company $3B for project that will provide solar energy to underserved communities

ray of sunshine

A partial loan guarantee from the U.S. Department of Energy will support more than $5 billion in loans for Sunnova Energy equipment and technology that’ll supply solar energy to underserved communities.

The $3 billion partial loan guarantee equates to a 90 percent guarantee of up to $3.3 billion in loans. In turn, Sunnova says, that’ll support more than $5 billion in loans to about 75,000 to 115,000 U.S. households. It’s said to be the largest single commitment to solar power ever made by the federal government.

At least 20 percent of the Project Hestia loans will be extended to customers with FICO credit scores of 680 or less, and up to 20 percent of the loans will be earmarked for homeowners in impoverished Puerto Rico.

The Department of Energy (DOE) says Sunnova’s Project Hestia — a virtual power plant — will provide rooftop solar, battery storage, and energy software to residential customers and create more than 3,400 jobs. Sunnova, an energy-as-a-service provider, says each residential power system will feature energy technology accessible by smartphones and other electronic devices.

“The software will give customers insight into their household’s energy usage and greenhouse gas emissions, allowing customers to reduce electricity use — or even contribute electricity to the system in markets that allow such contributions — when the grid is under stress,” says DOE.

The estimated 568-megawatt Project Hestia is poised to help avoid the emission of more than 7.1 metric tons of carbon dioxide over the next 25 years, DOE says. The project will produce enough energy to power roughly 425,000 homes per year.

John Berger, CEO of Sunnova, says the federal loan guarantee “marks the beginning of an exciting chapter in our pursuit of a cleaner and more equitable energy landscape. With our collaboration with the U.S. Department of Energy, we are embarking on a journey that expands clean energy access and delivers economic benefit to Americans in disadvantaged communities.”

As of June 30, Sunnova had 348,600 customers in the U.S., up from 279,400 at the end of 2022. The company projects a 40 percent rate of customer growth in 2024 compared with 2023.

The publicly traded company posted revenue of $328.1 million in the first half of 2023, up from $212.7 million during the same period last year.

Last month, in an interview with EnergyCapital, Berger explained misconceptions about solar power, predicted the rise of the home as a power station, and highlighted the importance of energy independence.

John Berger, CEO of Houston-based Sunnova, explains the importance of energy independence and solar's role in achieving it. Courtesy of Sunnova

Houston solar exec says a major key to slowing climate change is offering energy independence

Q&A

Following extreme temperatures and increasing grid instability this summer, CEO and Chairman of the board of residential solar power service company Sunnova Energy Corp., John Berger, is encouraging individuals to take charge of their energy needs.

Berger founded the Houston-grown company back in 2012, before solar energy was seen as a hip, clean power source. Now, Sunnova (NYSE: NOVA) is a leader in residential solar installations.

In a discussion with EnergyCapital Berger broke down misconceptions about solar power, predicted the rise of the home as a power station, and highlighted the importance of energy independence.

EnergyCapital: In the wake of a record breaking heat wave, how do you anticipate renewables being incorporated into the market as demand response soars?

John Berger: It's a rethinking of the entire system. What goes with that is let's rethink our regulatory structure. In this regard, I'm not talking about renewable energy versus fossil fuel. I'm talking about enabling and empowering the consumer and enabling and empowering the individual, whether that's a homeowner, a business owner, or apartment dweller. We don't do that in this country. We don't do it, outside, maybe Houston, Dallas, and a couple of other small markets. That's inhibiting the transition greatly. The monopolies want higher prices, because the more money they spend, the more money they make. They are not embracing change. They are not embracing technologies. They're not embracing demand response. Because that limits their revenue. So, we should recognize that that's the system. We shouldn't expect a different outcome when we've given us some incentive structure that: spend more money, don't change and don't adopt new technologies.

We need to change the entire energy system because technologies like solar, storage, software, and hardware exist and need to be adopted. We need to have the right regulatory system to allow consumers to adopt them. We need to have the right price, so that consumers can adopt these technologies at a pace that's far quicker than what we're seeing now so that they can ultimately address climate change.

As soon as we unleash the individual and empower the individual — powering energy independence is our tagline — we will solve the ultimate risk to humanity that is climate change a lot faster.

EC: Though solar is rising in popularity, are there any misconceptions about solar power in relation to residential installations that have persisted?

JB: I think the bigger one, whether it’s on a home or in a field, is that somehow since solar is intermittent, it's not reliable. It is intermittent to some degree, but — if you've ever run a utility system — coal is unreliable, gas fired power is unreliable, nuclear is even unreliable. We saw that in the winter storm Uri down in Texas. The gas wellheads froze off because they weren't prepared for the freeze. Were the wind turbines prepared for the freeze? No, they weren't either. The one source that performed better was solar. But you don't see that in a lot of the commentary because it didn't fit the political agenda that some have.

The question is, can you put enough of both on the system or on the home so that you can carry through whether it's a winter storm day or a heatwave in the summer? The misconception that solar will always be intermittent is the constant problem that we face. What are you going to do when the wind doesn't blow and the sun doesn't shine? My response: have you ever heard of a battery? We’ve got to get over that hurdle. Frankly, it's just an excuse and at best an uneducated excuse. We need to get over that and move on, and then figure out how we can best adopt the technologies of solar and storage that are plummeting in price, through empowering the individual.

EC: Sunnova is expanding into virtual power plants, can you discuss what that means and how they might impact grid stability?

JB: Virtual power plants, or grid services, or aggregation services — we call them energy services periods. There's a lot of different names for the same thing. It's basically taking solar storage software demand technologies and incorporating them into a centralized part of what we consider the grid — even though there's not a grid in the United States. The grid, as the common person understands it to be, is actually a haphazard collection of wires and centralized generation that was just put together over the last 130 years. There was not a master plan. You cannot physically move power from Houston to New York, for instance. You haven't ever been able to do that. We're trying to have that fill in of the small solar, the storage, the software, the demand side. We're saying each home, through this Sunnova adaptive platform with our sentient software connecting all these folks together, is likely to have some excess power that they can put onto a utility system or a regional system, so that the neighbor next to him can have that excess power if that neighbor needs it. It's a part of being a part of the Sunnova Club, that we can offer that value to you. That value may be that you get that extra power that you have to pay for where the value is the price in the wholesale market, or it could be that you get paid for that extra value that you happen to produce, through our adaptive platform. So it's a way of connecting homes together so that we optimize the solar and batteries that are on the other side of the meter or on the homes on the businesses. That's a way that you can squeeze more out of that investment that you made or that solar service that you have with us.

EC: As the cost of equipment for renewable energy systems, like EV charging stations and solar roof installations, decreases, is it possible to see a transformation of the home into a power station?

JB: I would go even further and say the home is the gas station now. That's what's already happened. It's fascinating if you really step back and think about it — the electric vehicle is becoming more popular, not necessarily because it addresses climate change, but because it's cool. And because it's enabled by software, AI, and a lot of the other things that make our experience in that car different. I think a lot of people now see and understand that. The other side of that is well, why can't that happen to your house as well? Like there's a lot of automation that should be happening in the house. There's a lot of software and hardware that's going in the house with the entertainment systems and all this other stuff.

You should reimagine how your house is powered and how it uses power. There's a lot of other things that you should be able to do in your house and it's more advanced than just flipping the light switches on and off and turning air conditioners on whether you're there or not.

We waste an enormous amount of energy in the United States. It's estimated that we literally burn over twice the amount of energy that we need and so therefore we're wasting over 50 percent of our energy usage. I mean, just think about the carbon release and the financial destruction that causes. We can do a lot better today with the technology. These technologies are available today and increasingly becoming more inexpensive.

EC: You describe Sunnova as “powering energy independence” — what do you mean by that and why is energy independence important?

JB: I think independence in your life just period is important. You want to have the ability to choose what you want to do in life. It's natural, especially Americans, to say, "I can choose anything I want to do. I can choose where I want to eat tonight. I can choose what car I buy." But for some strange reason, you can't choose your power provider in this country.

That's like if AT&T came to you on cellular and said, "We're going to actually triple your bill today. The regulator already signed off on it. We're gonna give you the flip phone back and take away Apple because Apple didn't agree to our terms. And you're going to like it." That's what we get from the electric industry. It's what we always get. That's unacceptable. We need to open things up to choice and Sunnova provides that choice to the consumers.

We increasingly are taking more technologies on, like load management, storage, more software with our sentient software, and we're coming in and saying, "Look, regardless of manufacturer, we're putting that together. Whatever way you want to fund that equipment, that service that you're procuring, that's fine with us you want to do cash fine, we'll do a loan fine." We offer that lease PPA, but that financing isn't enabled. But then we wrap our service together regardless of how you choose to fund it, which is different from anybody else. We say we're going to be there within 24 hours to fix that problem for most of your issues, so that means we're going to keep that power flowing. That's all it means. It's really that simple. When we do that we can come in and say you're going to be a part of the Sunnova adaptive energy platform. Basically, you're going to be able to get more value, a lower bill, if you're able to sell some of that power you don't need on that particular hot day to your neighbor through Sunnova. We’ll handle everything so you don't have to do anything. Or we can give you some additional power that you may not know you need to charge a car up or something like that and the neighbor will provide it through the Sunnova adaptive platform. So it's about how we rethink the entire energy business.

We're putting it in the hands of the individual to make the decision about what they want, you know, going over that point about reliability, if you work from home, you have a high demand for reliability. You have a higher willingness to pay for higher reliability versus somebody that has to go to work every single day of the week. They may not have that same desire, and they probably don't want to have that level of reliability. You should be able to choose. The utility just decides, the monopoly decides who gets served well and who doesn't. There's no consumer coming in that says I have a higher demand. So what do people do? They'll get dirty generators. One of the biggest industry growth periods in the entire economy is backup generators that burn diesel and burn natural gas. Again, we're taking an industrial age system with an archaic, communistic approach with economics and having bureaucrats make the decision, so we're getting suboptimal outcomes all the way to suboptimal fighting climate change. If we just empower the individual they'd say, “Well, why don't we just put more solar panels on and put more batteries and manage the load better when I bought the electric vehicle?” Those are the kinds of solutions that can be crafted individually for each consumer and that's what we do here at Sunnova.

EC: As a long-time Houstonian, how do you envision Houston’s role in leading the energy transition?

JB: I think Houston has a key role. Houston is the most diverse city in the United States. It is that diversity that's given a lot of strength to Sunnova over the years. Our quality of life is really high. All that means this is a fantastic place to build and create the new global energy industry. We understand oil and gas very well. The bigger oil and gas firms in the world are headquartered here and that's fantastic. They’ll be a part of the solution, I would hope. But if you look at innovation and transformation in industry, there's about a 100 percent hit ratio that the incumbents actually don't lead the change, and in many cases don't make it through the change. And so what we have to do is recognize that new leaders, new companies like Sunnova need to be formed and grown up here. Take advantage of the great quality of life, the low cost structure, the diversity of its people and its communities, and really lead the world and transform the energy industry.

I'm absolutely convinced that the Texan way of doing things, the Houston way of doing things, is a key part of that and demonstrating leadership. We certainly will do our part to help lead Houston forward to be the lead dog if you will, on the transformation of the global energy business.

— — —

This conversation has been edited for brevity and clarity.

Ad Placement 300x100
Ad Placement 300x600

CultureMap Emails are Awesome

Houston startup secures $5M to turn oilfield wastewater into critical minerals

fresh funding

Houston-based startup Altillion has secured $5 million in seed funding to accelerate the commercialization of its proprietary IRIS and ALIX technologies, which convert oilfield-produced water into valuable minerals.

San Francisco-based EIC Rose Rock and Houston-based Flathead Forge led the round. Altillion says the funding will go toward pilot facilities and commercial deployments as the company looks to scale in the U.S.

“Altillion’s efficient and scalable technologies are needed more than ever to reshape critical mineral recovery and facilitate beneficial use of oilfield brines,” Jay Keener, Altillion’s CEO and co-founder, said in a news release. “We’re uniquely positioned to provide a stable, domestic supply of the critical minerals needed for electronics, batteries, healthcare and national defense technologies. This investment from EIC Rose Rock and Flathead Forge enables us to strategically accelerate this impact and is very timely given the current geopolitical dynamics.”

Altillion's IRIS and ALIX platforms extract minerals like iodine, lithium and copper from oilfield-produced water, geothermal brines and salars. This process allows companies to unlock new sources of revenue while also boosting the domestic critical minerals supply chain. The company announced earlier this summer that it will launch a feasibility project in the Permian Basin and aims to develop a path to commercial-scale implementation in the field.

“We are excited to partner with Altillion to scale and deploy these world-class technologies to access the vast wealth hidden in wastewater,” David Clouse, Managing Director of EIC Rose Rock, added in the release. “With Altillion, we’re expanding our ability to empower the energy industry to domestically source the critical minerals America needs for a robust economy and supply chain.”

Altillion was founded by Keener and COO Scott Buckwald in 2023. Keener previously founded KDH Trading, where Buckwald also serves as COO, according to his LinkedIn page.

Houston's KBR to provide tech for Singapore SAF plant

SAF agreement

Houston engineering and technology contractor KBR has been picked as the technology provider for what’s expected to be Asia's first commercial-scale ethanol-to-jet sustainable aviation fuel (SAF) plant.

The proposed plant on Jurong Island in Singapore is being developed by Keppel Ltd.’s Infrastructure Division and Aster Chemicals and Energy. KBR will provide technology licensing and Front-End Engineering Design (FEED) services based on its PureSAF technology.

The plant has a planned production capacity of up to 100,000 tons of SAF per year. The plant is subject to final investment decisions and regulatory approvals.

“We are looking forward to working with Keppel and Aster on this key project and to support Singapore’s ambition of becoming Asia’s leading SAF hub and advancing the ongoing efforts to decarbonize the country’s aviation ecosystem,” Stuart Bradie, KBR president and CEO, said in a news release.

According to KBR, its PureSAF Technology can process multiple feedstocks like bioethanol, syngas, carbon dioxide and hydrogen and convert them to SAF, diesel and gasoline.

The technology was developed by Swedish Biofuels AB and commercialized by KBR.

“KBR’s PureSAF is a feedstock-flexible, bankable technology that is designed to deliver a 100% drop in jet fuel, ready to power aircraft without blending,” Bradie added in the news release. “We are constantly innovating our SAF solution to make it compatible with feedstock availability in different regions and to enable the aviation industry to transition to low-carbon jet fuel with a cost-optimized approach.

KBR has also entered into a memorandum of intent with Keppel’s Infrastructure Division, which states that the companies will collaborate again on decarbonization efforts across biofuels, plastic recycling, digitalization via AI, and SAF.

KBR announced in October that it would spin off its Mission Technology Solutions business, nicknamed SpinCo. The scaled-down KBR, nicknamed RemainCo, would concentrate solely on sustainability technology and services designed to reduce carbon emissions and support energy transition efforts. SpinCo named its new CEO and CFO earlier this month.

Houston energy expert discusses why hydrogen still has a future

Guets Column

Not long ago, hydrogen was hailed as the next big thing in clean energy. Investors poured in, and countries from Japan to Germany built ambitious hydrogen strategies. It wasn’t a new discovery; hydrogen has been used for over a century in refineries and fertilizers, but it suddenly found itself reborn as the world began working toward decarbonization.

When hydrogen burns, the only byproduct is water. Green hydrogen, produced with renewable power, could replace fossil fuels in everything from trucks to ships to steel mills. But the momentum has cooled. Costs remain stubbornly high, several projects have been delayed or canceled, and policy support has wavered. In the U.S., a change in administration has created uncertainty. In Europe, some governments are slowing funding or revising hydrogen mandates. Even the International Maritime Organization (IMO) recently postponed a key vote on fuel-carbon standards.

Yet as Mike Graff , former Chairman and CEO of American Air Liquide, said in an Energy Forum episode with Ed Emmett at Rice University’s Baker Institute, “The world is always looking to make sure that energy is first available, it’s affordable, and then it’s clean. And I see hydrogen over time evolving in that manner.” He also noted that “companies have produced hydrogen and utilized hydrogen for over 100 years, and they’ve done that very safely… I think we can continue that moving forward.”

China has doubled down on hydrogen as part of its industrial strategy, building massive electrolyzer manufacturing capacity and funding dozens of pilot projects across transportation and heavy industry. Japan and South Korea also stand out as examples of how sustained policy support can drive hydrogen progress.

Where Hydrogen Fits Today

To understand hydrogen’s role now, it helps to remember what it actually does. About 76 percent of global hydrogen is produced from natural gas and used in refineries, fertilizer plants, and chemical production. This so-called “gray hydrogen” is essential but carbon-intensive.

What’s new is the rise of low-carbon hydrogen, “blue” hydrogen made from natural gas with carbon capture, and “green” hydrogen produced by splitting water with renewable electricity. These methods are expensive, but they’re growing. According to the International Energy Agency, global low-emissions hydrogen output rose about 10 percent in 2024.

Hydrogen is also expanding beyond industry. As Graff explained, it already powers thousands of forklifts in warehouses across the U.S. and is beginning to appear in commercial trucking, locomotives, and even aviation prototypes. “You can now drive 600 to 800 miles on a hydrogen fuel-cell truck,” he noted, “and refuel in 30 minutes, just like you would refill for diesel.”

The Cost Challenge and a Gulf Coast Opportunity

So why the slowdown? One word: economics.

Even with generous tax credits, green hydrogen can cost two to three times more than conventional fuels. Electrolyzers are still expensive, though costs are falling as Chinese suppliers introduce low-cost alternatives.

Infrastructure is another hurdle. Pipelines, storage, and fueling networks need to be built from scratch.

But those same challenges point to opportunity, especially along the U.S. Gulf Coast. The region already has one of the world’s largest hydrogen pipeline systems and a well-established energy infrastructure. Texas, in particular, has a head start. It already hosts nearly 1,000 miles of hydrogen pipelines, about 64 percent of the U.S. total, and some of the world’s largest hydrogen storage sites at Moss Bluff, Spindletop, and Clemens. Out of 140 hydrogen plants operating nationwide, 43 are in Texas, supported by extensive refining and natural gas infrastructure. This combination of assets gives the Gulf Coast an unmatched foundation to scale low-carbon hydrogen and integrate production, storage, and end use across industries.

As Ken Medlock , Senior Director of the Center for Energy Studies at Rice University’s Baker Institute, explains in his report: Developing a Robust Hydrogen Market in Texas, Texas has all the critical elements needed to lead in a low-carbon hydrogen economy, including existing infrastructure, a skilled workforce, and proximity to industrial demand centers. That combination gives it a distinct advantage in scaling up hydrogen production and use.

Governments around the world are showing renewed confidence in hydrogen. The European Commission awarded nearly €3 billion to 13 major projects, while Japan and South Korea continue expanding fueling networks. China is leading one of the most ambitious buildouts, with more than 50 planned hydrogen projects and a rapidly growing fleet of fuel-cell vehicles. Despite recent setbacks, global investment has surpassed $100 billion, and projects in places such as Chile, where strong renewables and low-cost Chinese equipment help make projects feasible, are moving toward final investment decisions.

What Comes Next

Hydrogen’s future won’t depend on replacing every fuel, but on filling the gaps where batteries and biofuels fall short.

Transportation: This is where momentum is strongest today. Batteries dominate cars, but hydrogen fuel cells excel in heavy trucks, ships, and planes. As Graff noted, “You can design a commercial vehicle with the same utility as diesel but powered by hydrogen.” Airbus and Boeing are testing hydrogen propulsion concepts, and several ports are experimenting with hydrogen bunkering for cargo ships.

Industry: Steel, cement, and chemicals account for a quarter of global emissions. Hydrogen-based direct-reduced-iron (DRI) steelmaking is being piloted in Europe and Asia and could transform how these materials are produced at scale.

Storage: Hydrogen can store energy for days or weeks, serving as backup for renewables like wind and solar. But storage remains very costly and may only prove viable for the “last mile” of greenhouse gas reduction or grid stability.

These uses may sound niche, but that’s how technologies scale. They start small, gain an economic foothold, and expand as costs decline.

Conclusion

Hydrogen's early, perhaps irrational, exuberance may have cooled, but amidst the rubble of cancelled projects are the beginnings of an industry that could play a vital niche role on the journey towards a lower carbon intensity energy future. As costs fall and infrastructure around the world expands, hydrogen's role will expand into the nooks and crannies of the energy industry.

It won't replace every fuel, but it doesn't have to. Success will come from steady, project-by-project progress.

-----------

Scott Nyquist is a senior advisor at McKinsey & Company and vice chairman, Houston Energy Transition Initiative of the Greater Houston Partnership. The views expressed herein are Nyquist's own and not those of McKinsey & Company or of the Greater Houston Partnership. This article originally appeared on LinkedIn.