HD Hyundai's secret weapon: Fuel cells emerge as next-generation power source

"Data center construction is the top priority for global big tech companies. They have been in contact with HD Hydrogen well in advance to secure the power solutions needed to run those facilities," a company official said.

HD Hydrogen's Pyeongtaek factory in Gyeonggi Province, visited Wednesday, spans 10,000 square meters — about 3,000 pyeong, with 1 pyeong equal to 3.3 square meters. Outside the factory, a single solid oxide fuel cell, or SOFC, sat in place, resembling an enormous shipping container. Standing 2.7 meters tall and stretching 14 meters long, the unit ran with barely a sound.

An SOFC is a type of fuel cell that generates electricity through a chemical reaction between hydrogen and oxygen. What sets it apart from other fuel cells is its use of a solid oxide as the electrolyte, which gives it relatively high power efficiency — around 60 percent.

The SOFC installed at the factory that day was the HD250, a 249-kilowatt model capable of powering 500 four-person households for an entire month. HD Hydrogen also offers the HD60, a 60-kilowatt model.

The Pyeongtaek factory was completed last year, and the facilities looked pristine — barely a year old. The first thing that caught the eye upon entering was the cell stack, the fuel cell's core component, made up of thin H-shaped metal plates. HD Hydrogen currently imports cell stacks but is also preparing to produce them domestically, depending on business conditions.

Workers were stacking quality-inspected cell stacks in sequence. Once that step is complete, the process moves on to assembling key modules including heat exchangers, followed by testing under actual operating conditions. Assembling the components inside a single fuel cell unit takes about 25 hours.

Last year, HD Hydrogen entered a domestic general hydrogen power generation tender and won a contract for 855 kilowatts. The Korea Electrical Safety Corporation is currently conducting product and manufacturing facility inspections. After clearing those inspections, HD Hydrogen plans to begin fuel cell production as early as next month. The Pyeongtaek factory has an annual production capacity of 50 megawatts.

HD Hyundai entered the fuel cell business in 2018. HD Korea Shipbuilding, the parent company of HD Hydrogen, established a fuel cell research institute that year and began developing SOFCs. In 2024, it acquired Convion, a Finnish company specializing in SOFC system technology, and used that foundation to establish HD Hydrogen.

HD Hyundai pushed into the fuel cell market because of the sector's strong growth potential. The construction of AI data centers has caused electricity demand to surge, placing mounting strain on existing transmission and distribution infrastructure — and fuel cells have emerged as one answer to that problem.

As a distributed power source, fuel cells are safe enough to install in urban areas and can be delivered far faster than other power generation options. According to HD Hydrogen, the current time-to-power for its fuel cells — the period from order to power delivery — is about 18 months. That is less than half the lead time for gas turbines at 60 months, and well below gas engines at 36 months. Byeon Jun-young, a senior engineer at HD Hydrogen, said lead times for gas turbines have been stretching longer as data center construction drives up demand. "Customers are turning to fuel cells as an alternative power source," he said.

Market research firm MarketsandMarkets projects the global fuel cell market will grow more than threefold — from 8.5 trillion won (approximately $5.57 billion) last year to 27 trillion won by 2030 — driven in part by the expansion of data centers.

Growing demand for eco-friendly vessels also drew HD Hyundai into the market. The International Maritime Organization decided last year, at the 83rd session of its Marine Environment Protection Committee, to introduce new greenhouse gas regulations. Under the new rules, shipowners that exceed emission limits from June 2028 will face a carbon tax of up to $480 per ton. Reducing that burden requires power sources that can replace conventional internal combustion engines. Fuel cells generate electricity from hydrogen and oxygen and produce far fewer pollutants.

Global shipping companies including Maersk and HMM signed memorandums of understanding with HD Hydrogen last year and are in discussions on areas of cooperation. Byeon said retrofitting fuel cells into existing vessels optimized for internal combustion engines is no easy task, but added that HD Hyundai's shipyard operations give it an edge. "Because HD Hyundai runs its own shipyards, we can reduce trial and error more than other fuel cell companies," he said.

HD Hydrogen is considered a latecomer in the global fuel cell market, where US-based Bloom Energy holds the top position. In South Korea, Doosan Fuel Cell has been a standout player; the company completed its own SOFC factory last year as it works to move beyond its traditional focus on phosphoric acid fuel cells. Oh Seung-hwan, executive director at HD Hydrogen, said the acquisition of Convion — founded in the early 2010s — gave the company a solid technology base. "HD Hydrogen has sufficient technological capability," he said.

To carve out a stronger market position, HD Hydrogen plans to accelerate the development of differentiated technology. The company is building an integrated global research and development organization that combines its domestic engineers with those at subsidiary Convion, with the goal of bringing core technologies in-house. Its current domestic content ratio for SOFC components stands at 56 percent.

HD Hydrogen aims to build its technological competitiveness and break into overseas markets by 2030, with a particular focus on supplying SOFCs for land-based power generation at data centers, in line with the growth of AI. Oh said fuel cells are already used in the United States not only at data centers but also at hospitals and retail stores as distributed energy sources. "Demand is steady, so we will begin full-scale overseas sales from 2028," he said.

The company also plans to release a combined SOFC and solid oxide electrolysis cell, or SOEC, model in the future. The integrated unit would use the SOEC during the day to produce hydrogen from surplus electricity, then use that hydrogen to generate power at night. Byeon said the concept is feasible because SOFCs and SOECs share about 80 percent of their components.