Kristiansand, Norway — Norway-based supplier of fibreglass pressure vessels and transportation modules for hydrogen, biogas and CNG, Umoe Advanced Composites AS (UAC), has entered into a joint venture (JV) to build up a large-scale production facility in China. A USD 60 million conditional order has already been placed with the JV.
“We believe our fibreglass-based pressure vessels represent a technological sweet spot for large scale hydrogen expansion in particular, and we are delighted that leading Chinese industrial and technology institutions share this view,” says Øyvind Hamre, CEO of UAC.
UAC today announces that it has entered into an agreement with Chinese investment fund Yield Capital, which has invested an undisclosed amount to become a minority shareholder in UAC. Yield Capital is the investment fund of incubation engine Beijing Tsinghua Industrial R&D Institute, which is the main player behind China’s hydrogen value chain and part of China’s leading technology university, Tsinghua University.
The majority of Yield Capital’s investment in UAC is earmarked the establishment of a joint venture company in China. UAC will become the majority owner in the joint venture with an ownership share of 50.001 per cent. The other owners are Yield Capital’s renminbi-fund in cooperation with Chinese industrial group Befar Group, which is one of China’s 500 largest companies.
Large scale production facility in China
The joint venture’s purpose is to build a production facility in China with an estimated annual production capacity of 12,000 pressure vessels. Such a facility will provide significant scale advantages and an improved competitive position for UAC in all markets, including China and the rest of Asia where the hydrogen market is experiencing huge growth.
The Chinese companies Hypower and Binhua Hydrogen Energy, a subsidiary of Befar Group, have already placed an order for hydrogen pressure tanks worth a total of USD 60 million. The order is conditional upon the establishment of the joint venture company and the production facility, plus customary product approval in China.
“The production facility in China will provide powerful scale advantages for customers that today develop their expansion plans based on conventional steel tanks. Further, the partnership with Befar Group and Yield Capital provides with the market access we believe is necessary to succeed in China,” says Øyvind Hamre, CEO of UAC.
Technological sweet spot
UAC specialises in the development and manufacturing of pressure tanks in fibreglass materials. Fibreglass is significantly less costly than for example carbon fibre. Moreover, fibreglass can because of its weight advantage transport 2-3 times more hydrogen compared to similar-sized tanks in steel.
It is this technological sweet spot between carbon fibre and steel that has encouraged Chinese technology investors to invest in UAC.
“UAC’s pressure vessel technology provides large environmental and cost savings compared with competing products. The hydrogen market is expected to grow significantly in the coming years and we are well positioned to become a major player in important markets, allowing even more customers to benefit from our technology and production ramp-up,” says Øyvind Hamre.
UAC’s headquarters and Norwegian production facility is located in Kristiansand at the South coast of Norway. UAC, which delivered record high revenues in 2020, also plans to invest in this facility. The plan is to quadruple the manufacturing capacity, from 1,000 to 4,000 pressure tanks annually.