Hydrogen startup Verdagy launches San Jose facility amid uncertain times

A robot equipped with a laser hovers over a nickel tray in Verdagy Inc.’s new California plant, checking the seams of what will eventually become an electrochemical cell. Unlike a battery, this cell is at the core of a system aimed at powering a future hydrogen-based economy — if and when that economy arrives.

Verdagy is a startup specializing in electrolyzers, which split water into hydrogen and oxygen. Earlier this year, the U.S. Department of Energy awarded Verdagy nearly $40 million to support plant operations as part of a federal initiative to boost climate-friendly fuel production and usage. Verdagy, which has secured $104 million in venture funding, will mark the plant’s launch in an industrial building near San Jose on Wednesday.

Hydrogen fuel is widely viewed as essential to decarbonizing heavy industries, as it can be produced and burned without releasing greenhouse gases. However, Verdagy is entering the market at a challenging time for hydrogen. High costs and the need for costly new equipment have slowed adoption among potential buyers. Additionally, according to BloombergNEF, the global electrolyzer market is oversupplied, with most producers based in China. Verdagy believes its unique approach to the technology will set it apart. Its advanced alkaline electrolyzers, designed to last 25 years, outshine the six-to-eight-year lifespan of conventional alkaline models typically produced by Chinese firms. Furthermore, Verdagy’s electrolyzers can adapt to fluctuations in solar and wind power output, unlike standard machines, and are designed for high-volume hydrogen production, with a focus on industrial-scale units.

“We definitely need a better solution all around,” CEO Marty Neese said during an interview at the plant, adding that Verdagy can “compete domestically as well as anyone globally.”

The U.S. government prioritizes domestic manufacturing of clean-energy technologies. Sunita Satyapal, director of the Energy Department’s Hydrogen and Fuel Cell Technologies Office, highlighted that as electrolyzer technology scales up, it’s more practical to manufacture these large, complex systems close to their market.

“With these technologies scaling up, it will get increasingly difficult to imagine importing gigawatt-scale technology,” she said. “Most manufacturing and assembly will likely stay close to the demand centers.”

Verdagy’s new factory currently has ample space for future growth. The plant is equipped with essential tools, including two welding bays for making electrolyzer cells, with plans to add more machinery for further components. This output will support Verdagy’s planned hydrogen production facility in Houston, which will have access to a dedicated pipeline for hydrogen distribution. Expected to open in 2026, the Texas site will demonstrate the effectiveness of Verdagy’s electrolyzers to potential customers.

“It’s about getting the first units out, securing the first sales, and building from there,” Neese said.

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