The automotive industry has struggled to adopt hydrogen at scale, but industrial users and data centers might have better luck. Vema Hydrogen has taken a significant step in this direction. The company inked a deal in December to supply California data centers, and it has now completed a pilot project in Quebec to power industry with hydrogen produced deep underground.
The startup uses a unique method. It drills wells in regions with specific types of iron-rich rock. When this rock is treated with water, heat, pressure, and catalysts, it releases hydrogen gas. Vema then draws the hydrogen to the surface for sale to industrial customers.
Pierre Levin, CEO of Vema, highlighted the efficiency of this approach. He stated that to supply the Quebec local market, which demands about 100,000 tons of hydrogen per year, would require only 3 square kilometers of land. Vema’s first pilot well will produce several tons of hydrogen per day. Next year, the company plans to drill its first commercial well, reaching 800 meters into the Earth. Vema expects to produce hydrogen from these initial wells for less than $1 per kilogram, a key benchmark for clean hydrogen.
Currently, most hydrogen is made through steam reformation of methane, an energy-intensive process that releases carbon dioxide. Cleaner sources exist but are more expensive. Hydrogen from steam reformation costs between 70 cents and $1.60 per kilogram. Adding carbon capture can increase those prices by about 50 percent, while the cleanest process, using zero-carbon electricity to power an electrolyzer, drives costs several times higher.
Vema’s method, called stimulated geologic or engineered mineral hydrogen, is positioned as one of the cleanest sources. Once the company refines its techniques, CEO Levin expects to produce hydrogen for less than 50 cents per kilogram, which would make it cheaper than any other source on the market.
The rocks Vema targets are widely distributed, allowing the company to drill wells close to power-hungry customers like data centers. California, for instance, has large formations of ophiolite, an iron-rich rock ideal for this process. If Vema can deliver hydrogen at its forecasted price, this geological quirk could turn California into a mecca for data centers.
Levin explained the strong market need, noting that many data centers are actively seeking decarbonized electricity sources and that Vema is already seeing strong traction with them.