Mr. Jim Payne reports

DYNACERT AND CIPHER NEUTRON CATAPULT INTO THE HYDROGEN ECONOMY ESTABLISHING AN INTERNATIONAL R&D FACILITY IN THE GREATER TORONTO METROPOLITAN AREA

DynaCERT Inc. has concluded a collaboration agreement with Cipher Neutron Inc. (CN) to further jointly develop, produce and market state-of-the-art hydrogen technology, including AEM electrolyzer technology that is designed to produce green hydrogen for worldwide large infrastructure projects, and reversible fuel cell technology applied to emergency preparedness and efficient storage of hydrogen as a long-term source of power.

Cipher Neutron is a rapidly growing disruptive technology company focused on electrolyzers for green hydrogen production, and reversible fuel cells for power generation and energy storage solutions. Cipher Neutron combines a global group of collaborating scientists that team up with engineers, technology developers, experts in hydrogen technology, investment bankers, and people that have worked in hydrogen and power generation for decades. Cipher Neutron's innovative products, such as electrolyzers and reversible fuel cells under development, have unique advantages over other hydrogen production, power generation and energy storage solutions currently available in the global market.

Collaboration agreement

In collaboration with DynaCERT, CN plans to expand the development of DynaCERT's previously announced anion exchange membrane (AEM) electrolyzers with a goal to expand DynaCERT's collaborative research and development and to accomplish the following:

• A five-kilowatt AEM electrolyzer that can meet the commercial specifications of potential clients internationally;
• A 50-kilowatt AEM electrolyzer that can meet the commercial specifications of potential clients internationally;
• A 250-kilowatt AEM electrolyzer that can meet the commercial specifications of potential clients internationally;
• A line of reversible fuel cells to meet the growing variety of customers' emerging needs internationally;
• A production facility meeting the suitability requirements to offer these products to international clients in a timely and reliable manner and on a cost-competitive basis.

AEM advantages

AEM is considered as a superior hybrid solution combining the benefits of both PEM (polymer electrolyte membrane) electrolyzers and alkaline electrolyzers. The major issue with PEM technology is the high cost owing to the use of precious metals such as platinum and iridium as catalysts. AEM does not require such precious metals, making it more sustainable and cost-effective than PEM electrolyzers. The major drawback in alkaline electrolysis is its low current density and highly corrosive alkaline solution used as the electrolyte. The AEM technology offers higher current density using significantly reduced amounts of corrosive electrolytes compared with alkaline electrolyzers.

Green hydrogen cost reductions

Green hydrogen is defined as hydrogen that is produced from water electrolysis using clean electric power (that is, electric power from hydro, solar, nuclear and wind), resulting in a zero GHG (greenhouse gas) footprint. Grey hydrogen, by comparison, may often have a significant GHG footprint, as such hydrogen is produced by the steam methane reforming process.

One of the major hurdles of green hydrogen is its high production cost. CN and DynaCERT technology is designed to address this major industry problem. A typical commercially available electrolyzer consumes more than 51 kilowatt-hours (kWh) of energy to produce one kilogram of hydrogen or 77-per-cent efficiency (based on high heating value calculations of H2 Gas). Cipher Neutron's and DynaCERT's jointly developed five-kilowatt AEM electrolyzer slashes the energy consumption down to 48 kWh, thereby achieving 82-per-cent efficiency.

DynaCERT's highly efficient AEM electrolyzer can produce more hydrogen per kWh than typical commercially available electrolyzers and enables green hydrogen at affordable prices. For example, if clean electric power were available to a customer at four U.S. cents per kWh, the green hydrogen production cost of its five-kilowatt AEM electrolyzer would be under $2 (U.S.) per kilogram of green hydrogen gas.

The research and development goals of CN and DynaCERT are to eventually design and produce commercially larger systems capable of producing green hydrogen gas at more competitive prices, in order to excel at the ever-increasing competitive green hydrogen pricing marketplace and stay at the forefront and cutting edge of the hydrogen technology.

On a larger scale, CN and DynaCERT's one-megawatt AEM electrolyzer will be designed to achieve the production of 498 kilograms of hydrogen gas per 24-hour day as compared with 470 kilograms of the current lesser efficient electrolyzers commercially available today. This 28-kilogram difference in daily production of hydrogen gas equates to powering 36 compact fuel cell cars travelling up to 100 kilometres without producing any carbon dioxide emissions. This travel distance would otherwise represent over half a tonne per day of CO2 emitted into the atmosphere from typical gas-powered internal combustion engine cars, assuming a fuel economy of seven litres/100 kilometres.

Capital cost reduction of green hydrogen electrolyzers

Research and development teams of DynaCERT and CN have focused on cost-efficiency and mitigating material costs. Operational efficiency and the core material costs go hand in hand with design engineering. DynaCERT's five-kilowatt AEM electrolyzer is highly efficient and has achieved a higher current density of two amps/square centimetre as compared with 0.07 amp/square cm in a traditional alkaline electrolyzer. Each cell in its five-kilowatt AEM electrolyzer produces 28 times more hydrogen gas than a traditional alkaline cell of equivalent size. This cost reduction in raw materials, the elimination of the use of platinum group metals as catalysts, coupled with the company's unique design, allow the AEM 250-kilowatt stacks planned by DynaCERT and CN to be priced below $950 (U.S.)/kilowatt, believed to be a most compelling proposition to users of electrolyzer technology.

Current global market

CN and DynaCERT have pioneered a five-kilowatt AEM stack (a key technological subcomponent of an electrolyzer) and plan to take their breakthrough transformative work to the next level with a trailblazing 50-kilowatt electrolyzer. This cutting-edge development is set to meet the current targets of the global hydrogen market, with the visionary scientists of the two companies going even further by planning to develop a futuristic 250-kilowatt electrolyzer to meet and bid for future large infrastructure projects. The five-kilowatt AEM electrolyzer is planned to be market ready by Q4 2023, making it the largest-capacity single-stack AEM electrolyzer commercially available today.

Hydrogen use today is dominated by industry, namely oil refining, ammonia production, methanol production and steel production. In today's hydrogen production, steam methane reforming accounts for more than 95 per cent of the worldwide production of hydrogen, also known as grey hydrogen. Steam reformers use heat, pressure and catalysts to produce hydrogen gas from fossil fuels such as natural gas. This process generates about 10 kilograms of carbon dioxide per kilogram of hydrogen produced. As per the International Energy Agency, current production of grey hydrogen, mainly used in the chemical and petrochemical sectors, is responsible for more than 900 million tonnes of CO2 emissions per year. As a result, switching those industry sectors to low-emission hydrogen use is a priority.

Growth of green hydrogen market

Green hydrogen is the only hydrogen type fully compatible with net-zero emission targets and sustainable, climate-safe energy use. Green hydrogen produced by AEM electrolyzers of DynaCERT and CN has the potential to emerge as a vital clean energy carrier. The global green hydrogen market size is valued by Grand View Research at $3.2-billion (U.S.) in 2021 and is expected to expand at a compound annual growth rate or CAGR of 39.5 per cent from 2022 to 2030.

Reversible fuel cell technology

Cipher Neutron's remarkable work in developing the world's first patent-pending reversible fuel cell using graphene slurry to store hydrogen in a non-compressed form is set to modernize the industry. Cipher Neutron's dynamic and versatile reversible fuel cells can be used both as an electrolyzer in its E-mode (hydrogen generation mode) and as a fuel cell in its FC-mode (power generation mode). Cipher Neutron plans to be the first company to commercialize reversible fuel cells for residential and industrial use.

Reversible fuel cells

Cipher Neutron's unique all-in-one reversible fuel cell technology is designed to replace the need for two separate systems, that is, an electrolyzer system and a fuel cell system, thereby offering significantly less expensive solutions to clients that require both fuel cells and electrolyzers.

The growing demand for reliable emergency preparedness devices in the world has created an international need for an economically viable source of backup electricity during periods of surging prices and times of natural disasters, war and suffering. Cipher Neutron's reversible fuel cell technology can provide carbon-free power storage in the form of hydrogen and supply of electric power on demand at attractive prices.

Emerging off-grid solar and wind power projects use electrolyzers for hydrogen production used to store energy and for later use in fuel cells to supply uninterrupted power to their intended loads. These hydrogen projects typically include expensive and costly energy sources, electrolyzers, hydrogen compressors, hydrogen storage tanks and fuel cells. Cipher's reversible fuel cell technology reduces such costs significantly.

The combined benefits of these two proprietary technologies, and the elimination of components, allow for significant reductions in project investment capital and operating and maintenance costs in applications where DynaCERT and CN expect to emerge as strong bidders for large global infrastructure projects, chemical and steel production, and off-grid remote projects, in the next decade.

In a bid to target off-grid communities, including but not limited to cottages, remote villages and islands, CN plans to launch in the market by Q1 2025 its five-kilowatt and 10-kilowatt reversible fuel cells.

Graphene technology for safe and efficient energy storage

Furthermore, CN's labs have demonstrated that using graphene slurry for hydrogen storage eliminates the requirement for hydrogen compressors and, accordingly, CN's research team has applied for a patent relating to this breakthrough technology.

Cipher Neutron's polymer acid electrolyte-based reversible fuel cell with graphene slurry has the similar energy density as lithium-ion batteries. This non-toxic energy storage method combines a lower carbon footprint, affordable recycling options and unparalleled safety, especially for residential and commercial applications.

Significant investment by DynaCERT

Under the collaboration agreement, DynaCERT plans to invest in CN up to $17.5-million upon the exercise of common share options at various prices granted by CN to DynaCERT. DynaCERT may exercise such options at various expiry dates up to July 31, 2025, which may give DynaCERT up to a 50-per-cent ownership of CN based on current CN shares outstanding on an undiluted basis.

The proceeds of this investment are expected to be used by CN, in collaboration with DynaCERT, to develop a state-of-the-art international hydrogen research and development facility in the Greater Toronto Metropolitan Area, which will enable the development of AEM 250-kilowatt electrolyzers while ensuring DynaCERT and CN retain their role in the hydrogen economy. As well, part of the proceeds shall be used to establish the necessary production and quality control facilities for the company's line of reversible fuel cell models and AEM electrolyzer models.

In order to quickly advance DynaCERT's and CN's penetration in the hydrogen economy and the AEM electrolyzer industry, DynaCERT has committed to exercise certain of its CN options in amounts ranging up to 50 per cent of the net proceeds of any equity financing by DynaCERT up to a maximum of $5-million at favourable seed capital exercise prices of CN equity to DynaCERT. When DynaCERT exercises such options, DynaCERT may then own 25 per cent of CN on an undiluted basis.

In conjunction with executives at Cipher Neutron and DynaCERT, Galaxy Placements Inc. has, at no cost to DynaCERT or CN, acted as corporate strategy adviser in certain of the structuring of the hydrogen business collaborations between these two international leaders in hydrogen generation. To accelerate the fulfilment of Cipher Neutron's and DynaCERT's global business, further future private financings by Cipher Neutron may provide institutions with an opportunity to gain large potential upside exposure to international hydrogen infrastructure projects.

Gurjant Randhawa, MEng, PEng, president and chief executive officer of Cipher Neutron, stated: "Cipher Neutron and DynaCERT share ambitions for transforming and accelerating the energy transition. Our portfolio of technologies can help place both companies at the forefront of tackling climate change with practical and implementable solutions. We are enthusiastic to be supported by DynaCERT in its ambitions for a more sustainable future. There is enormous global demand for green hydrogen and clean energy, and engineering solutions such as those pioneered by Cipher Neutron and DynaCERT collaborating together are vital to increasing world options to reduce greenhouse gases. We look forward to working with DynaCERT on a variety of AEM electrolyzer and green hydrogen projects in Canada and around the globe, the many plans that will help to enable industries and the world to move beyond the detrimental effects of fossil fuels."

Jim Payne, president and CEO of DynaCERT, stated: "While maintaining and supporting our current HydraGen technology and network worldwide, DynaCERT is proud to expand our relationship with Cipher Neutron, a highly respected and skilled partner with a proven track record in AEM electrolyzers. This collaboration will help us strengthen our supply chain and underpin our ability to deliver on our growing AEM electrolyzer initiatives. With a partner like Cipher Neutron, DynaCERT is also in a very strong position to become a global leader of the hydrogen economy, not just with AEM electrolyzers, but also in green hydrogen infrastructure projects. For the rapidly developing hydrogen economy, this collaboration is a gamechanger. By bringing together one of the most highly regarded green hydrogen and fuel cell companies in Canada which operates globally, and with DynaCERT's technology and manufacturing capabilities, we are designing the potential for future volume and scale for green hydrogen that hasn't existed until now in most parts of Canada. This partnership confirms Cipher Neutron's world-class position in flow field design and catalyst-coated membranes, the key performance-defining components of our AEM electrolyzers and reversible fuel cells."

AEM technology

Anion exchange membrane (AEM) electrolysis is the latest advanced technology designed to produce green hydrogen. AEM allows negatively charged hydroxyl ions to pass through the membrane and restricts positively charged ions. These restricted protons combine to make hydrogen gas on the cathode side and the hydroxyl ions combine at the anode side, producing water and oxygen gas.

About DynaCERT Inc.

DynaCERT manufactures and distributes carbon emission reduction technology along with its proprietary HydraLytica telematics, a means of monitoring fuel consumption and calculating GHG emissions savings designed for the tracking of possible future carbon credits for use with internal combustion engines. As part of the growing global hydrogen economy, the company's patented technology creates hydrogen and oxygen on demand through a unique electrolysis system and supplies these gases through the air intake to enhance combustion, which has shown to lower carbon emissions and improve fuel efficiency. The company's technology is designed for use with many types and sizes of diesel engines used in on-road vehicles, reefer trailers, off-road construction, power generation, mining and forestry equipment.

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