Universal Hydrogen, the pioneering company that flew partially on hydrogen power from Moses Lake in March last year, has burned through $100 million it raised from investors and failed.
The company was one of the few aiming to replace fossil-fueled flight with more sustainable and emission-free technology, in this case using hydrogen to power the engines instead of jet fuel.
The first flight over Moses Lake was celebrated by Gov. Jay Inslee as one of Washington State’s clean energy breakthroughs.
In March, Fast Company magazine placed Universal on its “Most Innovative Companies of 2024” list. Last month, trade magazine Aviation Week reported that “behind the scenes, the zero-emissions startup is busy preparing to take propulsion system testing to the next level” and was preparing 10 new flight tests.
But in a letter to shareholders Thursday, Universal Hydrogen Chairman and CEO Mark Cousin wrote that the board has officially decided to close the company after efforts to raise further funding from new investors failed.
“We were unable to secure sufficient equity or debt financing to continue operations and were similarly unable to secure a viable offer for a sale of the business or a similar strategic exit transaction,” Cousin wrote.
He said the company recently approached existing investors to participate in a rights offering but found insufficient interest.
“We are deeply proud of the work the team has done to create the first commercially viable hydrogen aviation ecosystem,” Cousin’s letter concludes. “It is our sincere hope that these efforts will live on as part of a future entity.”
Barriers to success
Universal Hydrogen was founded by Paul Eremenko, a clean energy visionary who previously worked as chief technology officer at Airbus, based on his belief that climate change concerns create an existential crisis for air transport in the coming decades. .
His charisma and technical expertise boosted the company’s early stage fundraising in Silicon Valley. Eremenko is still listed as CEO on the company’s website, but via email he said he left at the end of April.
He said private equity firms were eventually drawn to the concept because of higher interest rates and lingering fears of an impending recession.
Another obstacle was the upcoming US elections. “If [Donald] “If Trump were to win, investors saw a significant risk that the massive green hydrogen subsidy passed as part of the Biden Inflation Reduction Act would disappear,” Eremenko wrote.
Documents seen by The Seattle Times show that negotiations for $20 million in financing from a Saudi investment fund fell through.
In a last-ditch effort to save the company, Eremenko said management tried to team up with a regional airline that would retrofit its hydrogen-powered planes.
The documents show the airline was Florida-based Silver Airways. Silver has been losing money over the past year and has been financing its ongoing operations with debt, the filings said.
“I am sorry to hear that the merger did not go through and Universal Hydrogen is now being liquidated,” Eremenko said.
The letter to shareholders was signed by Cousin, Universal’s former chief technology officer, in the role of CEO. He could not immediately be reached Saturday.
The barriers to Universal’s success were always high.
The Los Angeles-based company had to create a hydrogen propulsion system and create from scratch a new logistics infrastructure that could deliver the hydrogen fuel to airports.
He also had to deal with the reality that hydrogen fuel takes up much more space on the plane than jet fuel, reducing passenger space.
Another major obstacle is that Universal’s project depended on a large and reliable supply of what is known as “green hydrogen”.
Green hydrogen must be produced using electricity from renewable sources such as wind or solar to make the process emission-free. Most of the hydrogen used today is produced from natural gas in a process high in carbon dioxide emissions.
Very little green hydrogen is currently being produced and scaling it up will require huge investments.
The Universal team designed its hydrogen-powered propulsion system so that it could be mounted on regional aircraft. And it worked on developing an ecosystem at airports where hydrogen would be delivered by truck in large cylindrical modules that could be loaded directly onto aircraft.
In March 2023 at Moses Lake, a small crowd of investors and press watched a De Havilland Canada Dash 8-300 turboprop repaired by Universal Hydrogen on a short pioneering flight intended to prove the viable technology.
On that flight, one engine was fueled by a hydrogen fuel cell, the other by regular jet fuel.
Universal later that year moved its flight operations to Mojave, California.
Meanwhile, across the Atlantic in Toulouse, France, Universal was refurbishing a larger regional airliner, the ATR 72, to develop mobile liquid hydrogen modules that could be transported by truck.
The idea was that this would create the infrastructure needed to distribute hydrogen to airports around the world.
Cousin’s letter told shareholders that the company’s French unit would also be liquidated.
Eremenko said he’s proud that while Universal failed, it achieved “extraordinary technical feats on an extremely aggressive timeline.”
“I hope our efforts form the foundation for the future of zero-carbon flight,” he wrote.
Universal’s demise leaves only one major player aiming to power hydrogen planes: ZeroAvia.
Also based in California, ZeroAvia has a research and development facility at Paine Field in Everett, where a team of about 40 people is working on the production of the hydrogen propulsion system.