Backward and Forward Hydrogen Integration Strategies

Several key companies in the hydrogen sector are adopting backward and forward integration strategies to strengthen their position in the value chain and capture additional value. Backward integration involves acquiring or controlling the production of inputs or raw materials, while forward integration focuses on expanding into downstream activities or end-user markets.

Here are some examples of companies implementing these strategies:

Backward Integration:

  1. Plug Power: Plug Power, a leading provider of hydrogen fuel cell solutions, has pursued backward integration by acquiring United Hydrogen Group Inc. This acquisition enabled Plug Power to vertically integrate into hydrogen production. United Hydrogen operates a hydrogen production facility that uses steam methane reforming and electrolysis, allowing Plug Power to secure a dedicated supply of hydrogen for its fuel cell systems.
  2. Air Liquide: Air Liquide, a global industrial gas company, has undertaken backward integration by investing in hydrogen production technologies. They have developed proprietary electrolysis technologies, such as Proton Exchange Membrane (PEM) and Alkaline electrolyzers, to produce hydrogen from water using renewable electricity. By vertically integrating into hydrogen production, Air Liquide ensures a secure and sustainable hydrogen supply for various applications, including mobility, industry, and energy.

Forward Integration:

  1. Hyundai Motor Group: Hyundai, a major automotive manufacturer, is pursuing forward integration by developing a comprehensive hydrogen ecosystem. They have introduced hydrogen fuel cell electric vehicles (FCEVs) such as the Hyundai NEXO and are actively working on expanding the hydrogen infrastructure. In addition, Hyundai has set up a joint venture called Hyundai Hydrogen Mobility (HHM), which aims to offer fuel cell electric trucks as a service. Through HHM, Hyundai is vertically integrating into the transportation and mobility sector, providing a complete solution for zero-emission commercial vehicles.
  2. NEL ASA: NEL ASA, a Norwegian hydrogen company, is focusing on forward integration by expanding into hydrogen refueling infrastructure. NEL is involved in the design, development, and manufacturing of hydrogen refueling stations. By providing turnkey solutions, NEL enables the establishment of hydrogen fueling networks, supporting the growth of the hydrogen fuel cell vehicle market. NEL's stations are deployed globally, contributing to the advancement of the hydrogen infrastructure.

Hybrid Integration:

  1. Siemens Energy: Siemens Energy, a global energy technology company, has adopted a hybrid integration strategy by combining backward and forward integration. They have expanded their portfolio to include both electrolysis and hydrogen gas turbine technologies. Siemens Energy's electrolysis solutions allow them to produce green hydrogen, while their hydrogen gas turbines facilitate the use of hydrogen as a clean energy carrier. This hybrid integration approach enables Siemens Energy to offer integrated solutions for hydrogen production, storage, and power generation.
  2. Linde plc: Linde plc, a leading industrial gas company, has pursued a hybrid integration strategy by engaging in both hydrogen production and distribution. Linde operates large-scale hydrogen production facilities using various methods, including steam methane reforming. Additionally, they have an extensive network of hydrogen distribution infrastructure, including pipelines and transportation assets. Linde's hybrid integration enables them to provide a seamless supply chain for hydrogen, ensuring reliable delivery to various end-users.

These examples illustrate how companies in the hydrogen sector are adopting backward and forward integration strategies to strengthen their position, ensure supply chain control, and capture value across different stages of the value chain. These strategies facilitate the development of comprehensive solutions and drive the adoption of hydrogen as a clean energy carrier.

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