Raffi Garabedian spent a dozen years developing solar panel technology at First Solar, a photovoltaics company that currently has a market value around $8 billion. The technologist then went on to co-found a clean hydrogen start-up Electric Hydrogen, which he’s currently building out as its CEO.

Garabedian’s career path may seem surprising. While solar power is almost universally accepted as a clean energy source, hydrogen production is often perceived as a shady corner of the climate space where oil and gas companies are using smoke and mirrors to invent a reason to keep their own infrastructure relevant.

But Garabedian knows all that. He also knows that not all hydrogen is created in the same way. And hydrogen is absolutely essential to life on earth and has tremendous potential to be a linchpin in critical business sectors that will otherwise be hard to decarbonize.

A decade ago, the solar industry was “an arms race” to develop the cheapest and best photovoltaics technology, he told CNBC. “Technologists like me, we were in the hot seat, which is what excites me,” he said. Now, the solar industry is in execution mode instead of quick-innovation mode.

So he asked himself, “What’s the next thing that needs to be done? What’s the biggest impact thing in decarbonization and climate tech that needs to happen? This is the thought process that led me to hydrogen.”

Hydrogen is already essential in chemical industrial processes, including refining crude oil into useful petroleum products, and for making ammonia-based fertilizer through the Haber-Bosch process, which has helped the world feed itself through massive population growth over the last century.

“Without it, millions of people die,” Garabedian said.

Some purists argue that hydrogen should only be produced and used in chemical processes and to make ammonia, but Garabedian rejects that view.

First, he argues, hydrogen fuel could reduce emissions in some sectors of the economy that would be very hard to decarbonize with electricity, like airplanes and large boats.

For planes, the weight of the energy source is critical and hydrogen is both energy-rich and very light — and generates minimal emissions when burned, unlike jet fuel. For long-haul shipping, freight liners need to be able to travel a long time and a far distance without refueling. Ammonia made from clean hydrogen and compressed hydrogen are both contenders for shipping industry fuel sources, and cleaner burning than the “bunker fuel” most large ships use today.

Hydrogen is also a potential option for long-duration energy storage, which is vital for scaling up solar and wind renewable energy.

A lot of people are focused on battery technology for energy storage, and in fact Garabedian sits on the board of ESS, a battery company looking to develop batteries for utilities to store energy for four to 12 hours. But for ultra-long duration — 100 hours of storage or more — natural gas is the most common solution today.

For ultra-long storage, hydrogen is less efficient than some other clean technologies, like batteries or pumped hydro, but the amount of energy (capacity) you can store is much greater, according to the Energy Storage Association.

With the right technology and infrastructure, solar and wind power could be used to generate hydrogen, which could then be stored and burned later when the sun isn’t shining or the wind isn’t blowing. It can also be shipped around the world to where energy sources are most needed — hydrogen can be converted into a liquid at a super cold temperature and stored and moved on in cryogenic tanks on special ships, similar to how liquified natural gas moves currently.

But there’s one big caveat to the use of hydrogen to make the energy sector cleaner.

The cheapest ways to make hydrogen today use natural gas. The process produces carbon dioxide, which contributes to climate change. Moreover, collecting and distributing natural gas inevitably results in methane emissions from fugitive leaks — and methane is an even more potent and dangerous greenhouse gas than carbon dioxide.

This so-called “grey” hydrogen and its cousin, “blue” hydrogen, which is produced in the same way but with an attempt to capture and sequester the carbon dioxide emissions, are non-starters for Garabedian.

“Fundamentally, I think most companies in oil and gas see blue hydrogen as a way to perpetuate their business model,” he said. He doesn’t think they can delay it forever.

“The end of natural gas is around the corner,” he said. “And having been through over a decade in solar, I have this sense that these transitions can happen a lot faster than the entrenched industry wants to believe they can happen.”

The answer, Garabedian believes, is to find a cost-effective way to generate generate hydrogen without the byproducts that warm the climate.

One clean way to generate hydrogen is by using clean energy sources like solar and wind to power electrolysis — splitting water, H2O, into hydrogen and oxygen.

Electrolysis is expensive today, but Electric Hydrogen aims to fix this by building “very dense” electrolyzers to run inside gigantic and super-efficient plants that can generate as much as 100 megawatts of power, where conventional plants operate at about 5 megawatts.

“The kind of plumbing here is not cheap – think high-pressure stainless steel like you might see in a chemical plant,” Garadedian told CNBC. Electric Hydrogen’s approach is meant to reduce the cost of each plant by minimizing plumbing and other infrastructural costs.

That’s the idea, anyway — Garabedian wouldn’t share details of the chemical technology involved for fear of giving away trade secrets.

It’s important to note that this is all at a very early stage, and the company has no revenue or customers today.

The company is just over two years old. In 2019, David Eaglesham, the initial CTO at First Solar, was an entrepreneur-in-residence at Bill Gates‘ climate investment fund, Breakthrough Energy Ventures, where he was studying how to produce hydrogen cheaply. Eaglesham learned Garabedian was interested in working on a new technology and the two decided to work together to build a hydrogen company based on some ideas Eaglesham had in his residency. Two other key players on the team are Derek Warnick, who has spent the last decade and a half working in clean energy finance, and Dorian West, who has 25 years’ engineering experience, including at 15 at Tesla.

The company officially incorporated in December 2019, and self-funded until March 2021, when Electric Hydrogen first raised money. In June, the company announced $24 million led by Breakthrough Energy Ventures.

Garabedian knows that success will only come if his solution lowers the cost of energy.

“The key point is price. These are commodities. We’re not selling Teslas, which you buy not just because they’re clean, you also buy them because [they’re] really fun to drive,” Garabedian said.

The cheapest hydrogen today is grey hydrogen made from natural gas down near Henry Hub, Louisiana, where it costs around $1.50 per kilo, according to Garabedian.

“That’s our target. Our target is to turn renewable energy into $1.50-a-kilo-or-less hydrogen, thereby making it an economical alternative to the dirty grey source,” said Garabedian.

If blue hydrogen becomes the industry standard, then the baseline price is likely to move to between $2 and $2.25 per kilo, which “makes it much easier for me to enter the market,” he said.

Garabedian learned the hard lesson about economics in his decade in the solar industry.

A dozen years ago, the solar industry was supported with subsidies and regulatory mandates, and about 2015, solar energy reached “grid parity,” meaning it costs the same as the wholesale price for electricity generated on the grid.

Those incremental economic decisions made business by business, day by day, will move the energy transition, according to Garabedian.

“Economics is what wins. It’s not that people don’t want to do the right thing. But it’s also not that people want to do the right thing. Businesses make economic decisions.”