Hydrogen Agency Lhyfe Pretends Minor Income Acquire Overcomes Technique Failures & Huge Internet Losses

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Lhyfe’s latest press launch—one other simply earlier than Christmas, finish of the week, hope nobody notices effort like others I’ve assessed in latest days—reported on within the normally glorious Hydrogen Perception business publication, claims that revenues doubled in 2025 and that the corporate is now strategically refocusing and slicing bills for 2026. On the floor, this feels like progress and self-discipline. In observe, it follows a well-known sample seen repeatedly in hydrogen for vitality firms. Relative progress charges are highlighted as an alternative of absolute scale, structural losses are downplayed, and narrowing scope is framed as strategic readability somewhat than retrenchment. Doubling income from a small base doesn’t handle whether or not the enterprise mannequin is viable. It capabilities as a rhetorical system, one which creates the looks of momentum whereas masking deep weaknesses. This sample has proven up throughout hydrogen mobility, hydrogen heating, and inexperienced hydrogen provide performs, and it hasn’t ended nicely but, and is unlikely too.

What’s really occurring is that Lhyfe grew income from €5 million, a nothing burger in industrial agency phrases, to €10 million. In the meantime, prices remained a lot greater than income they usually ended the yr with continued huge web losses, €21.7. That’s higher than the web lack of about €29.1 million of 2024 and the web lack of about €33.5 million the yr earlier than, however this isn’t a development that’s resulting in revenue, its simply burning money.

In that context, slicing out the individuals who even have engineering, procurement and development abilities, a part of a 30% value take out effort for 2026, is simply going to sluggish the bleeding considerably, and convert the EPC euros into engineering consulting agency palms. The one means that makes financial sense is that if Lhyfe was paying their EPC workers Silicon Valley charges, which there isn’t a proof to help. Public reporting on Lhyfe’s H1 2025 accounts exhibits personnel bills elevated solely modestly (about €0.5m) in contrast with H1 2024, whereas headcount remained roughly secure round 196–198 staff, suggesting general workers compensation traits weren’t the dominant value driver in comparison with exterior bills. Reducing 20-50 EPC isn’t going to make up the losses, however it’s definitely going to make Christmas sad in a bunch of houses.

In different phrases, claims of doubling income and blaming governments are rhetorical methods to make a really dangerous yr and a worse yr to return sound like a win by a scrappy underdog.

A helpful method to assess Lhyfe’s scenario is thru Richard Rumelt’s framework for good technique. Rumelt argues that technique rests on three components: a transparent prognosis of the issue, a guiding coverage for addressing it, and coherent actions that align with that coverage. When firms battle, it’s usually not as a result of they lack effort or competence, however as a result of they misdiagnose the issue they’re attempting to unravel. Lhyfe’s press launch and acknowledged refocus present a transparent window into how the corporate is diagnosing its scenario and the place that prognosis goes improper.

The express prognosis in Lhyfe’s messaging is that the inexperienced hydrogen market exists and is rising, however that exterior components equivalent to regulation, allowing, and coverage uncertainty are slowing deployment. Income progress is offered as proof that demand is actual and increasing. From this angle, the duty for administration is to sharpen focus, scale back prices by about 30%, outsource engineering and development, and focus on probably the most promising finish markets. This prognosis treats the issue as certainly one of execution velocity and political friction somewhat than market fundamentals.

Another prognosis, grounded in observable actuality somewhat than fantasy and investor relations, appears completely different. Outdoors of legacy industrial hydrogen makes use of, demand stays fragmented, intermittent, and coverage pushed. Prices stay excessive, utilization stays low, and clients not often decide to long run, unsubsidized offtake. On this context, income progress displays the persistence of subsidies and pilot packages, not the emergence of autonomous markets. Treating this as a brief slowdown attributable to regulation misses the structural mismatch between inexperienced hydrogen provide economics and buyer willingness to pay.

The income doubling itself illustrates this hole. Lhyfe’s revenues elevated from a small base to a nonetheless small absolute stage, whereas working prices, capital depth, and stability sheet pressures stay massive. Industrial vitality firms don’t survive on relative progress charges. They survive on scale, margin, and sturdy contracts. When income progress is highlighted the ultimate consideration to losses and money burn, it indicators an try to handle notion somewhat than confront fundamentals. Rumelt warns that complicated targets with technique is a standard failure. Income progress is a metric, not a prognosis.

One of many pillars Lhyfe continues to emphasise is hydrogen mobility. This contains buses, vehicles, refueling hubs, and captive fleets. The persistence of mobility within the technique is telling. Hydrogen mobility demand has not emerged as a result of it outcompetes options. It has emerged as a result of governments funded automobiles, stations, and gasoline, usually in parallel. Battery electrical choices have continued to enhance in value, reliability, and infrastructure effectivity, whereas hydrogen mobility has struggled with uptime, gasoline value, and utilization. The demand that exists is protected and conditional. It is determined by subsidies, mandates, and political curiosity.

By retaining mobility as a core market, Lhyfe is implicitly assuming that this protected demand will stay secure or develop. That may be a dangerous assumption. Coverage help is episodic, budgets change, and procurement priorities shift. In Rumelt’s phrases, this can be a misdiagnosis of leverage. The corporate is treating politically created demand as if it had been market pull. That mistake has already led many hydrogen mobility initiatives to stall or collapse as soon as pilot funding ended.

It’s value reminding ourselves that this yr noticed:

• French hydrogen taxi agency Hype pivot completely to battery electrical
• world hydrogen gasoline cell automobile gross sales collapse to approaching nothing outdoors of fifty% to 60% subsidy offering South Korea
• Shell getting out of the hydrogen refueling station enterprise completely
• the variety of hydrogen refueling stations outdoors of South Korea decline by massive numbers
• gasoline cell heavy truck gross sales dropping whereas battery electrical heavy vehicles soared in China
• mining big Fortescue formally giving up on hydrogen and ordering billions of {dollars} value of absolutely electrical mining vehicles and gear
• Stellantis, GM, Daimler, Honda and Man withdraw from hydrogen vehicles
• hydrogen truck producers Hyzon, Nikola and Quantron bankrupt, together with many, many different companies within the hydrogen for transportation house
• Cummins begin a strategic evaluation of its failing hydrogen division, probably resulting in slicing it in 2026
• the UK’s HyHaul hydrogen freight hall being shelved
• hydrogen bus targeted Van Hool going bankrupt
• hydrogen truck and bus gasoline cell producer McPhy going out of enterprise
• hydrogen gasoline cell for transportation producers Ballard Energy, Gas Cell Power and Plug energy bleeding unprecedented quantities of cash amid collapsing inventory costs, reverse inventory splits, and geographical and phase retrenchment
• Quite a few transit businesses, together with most just lately Dijon in France, abandon their hydrogen bus acquisition efforts
• 26 Polish cities who had purchased or had been shopping for hydrogen buses begging the nationwide authorities for deep subsidies to pay for the gasoline they came upon was really very costly
• Decrease Saxony abandon its hydrogen practice plans, with solely 4 of 14 nonetheless operational
• practice producer Alstom drop hydrogen trains
• BP axe its hydrogen fuels division
• Airbus shelve its hydrogen aviation program
• and so on, and so on, and so on, and so on

Towards this twice-weekly drumbeat of hydrogen for transportation failures in 2025, Lhyfe’s technique for 2026 is to maintain specializing in hydrogen for transportation, an area the place it’s not remotely differentiated towards a lot larger and extra credible gamers.

Refineries type the second pillar of Lhyfe’s refocused technique. At first look, this seems extra credible. Refineries are massive hydrogen customers and face rising strain to scale back emissions. The issue is that refineries already meet most of their hydrogen wants by way of by product streams from their very own processes and thru gray or blue hydrogen produced on web site. These sources are low-cost, dependable, and built-in into refinery operations. Hydrogen is a course of enter, not a discretionary buy.

For refineries to purchase inexperienced hydrogen from an exterior provider like Lhyfe, they would wish both a regulatory mandate that excludes blue hydrogen or subsidies that erase the fee premium. In different phrases, inexperienced hydrogen in refineries capabilities as a compliance value, not a aggressive enter. Treating refineries as a scalable market misunderstands how refinery economics work. In Rumelt’s framework, this once more displays a misdiagnosis. Pressured substitution is being mistaken for willingness to pay. That’s not a basis for sturdy technique.

Industrial, high-temperature warmth is the one industrial demand space Lhyfe has executed any work in. There are particular excessive temperature processes the place flame traits matter, as chemical processing plant designer Paul Martin has helped me perceive, significantly in some ceramics functions and in elements of cement clinker manufacturing. These instances are actual, however they’re slim. They characterize a small share of commercial warmth demand and don’t outline the sector as an entire. Even inside these niches, electrification choices equivalent to plasma heating, resistive methods, and thermal storage are advancing.

Extra importantly, industrial warmth decarbonization already has a less expensive, easier, and extra dependable pathway in lots of areas: biomethane from waste biomass utilizing anaerobic digesters. Biomethane can immediately substitute for fossil pure gasoline with out reengineering burners, furnaces, or kilns. It doesn’t require new tanks, new pipelines, or new security regimes. It suits current infrastructure and operational practices. Inexperienced hydrogen combustion, in contrast, requires redesign of burners, adjustments to supplies, new storage methods, and new security protocols. It’s tough to justify when a drop in gasoline different exists. For industrial operators, this issues greater than rhetoric and imaginative and prescient.

Because of this, inexperienced hydrogen is unlikely to service industrial warmth markets at scale, even within the small slices the place flames matter. Biomethane undercuts it on value, simplicity, and reliability. Electrification undercuts it on effectivity and long run trajectory. For these within the topic, Paul Martin and I spent 90 minutes working by way of the complete sector (half 1, half 2). Treating industrial warmth as a significant hydrogen market displays one other class error, complicated technical feasibility with financial attractiveness.

When these three pillars are examined collectively, a sample emerges. Lhyfe’s strategic refocusing removes some peripheral actions and reduces inside prices, however it doesn’t right the underlying idea of worth. Mobility stays as a result of it’s seen and sponsored. Refineries stay as a result of they give the impression of being massive on paper. Industrial warmth stays as a result of hydrogen for vitality varieties don’t perceive the shoppers or the competitors. None of those present robust leverage or sturdy benefit.

A coherent technique, in Rumelt’s phrases, would require a unique prognosis. It will acknowledge that hydrogen demand outdoors legacy chemical feedstocks is coverage constructed and structurally deprived. It will focus effort on makes use of the place hydrogen is unavoidable and the place clients can help long run contracts with out steady subsidy. It will align capital deployment, organizational design, and partnerships round these realities. Lhyfe’s present actions enhance effectivity, however they don’t align with such a prognosis.

Waiting for 2026, this issues. Value slicing and outsourcing engineering scale back burn fee, however additionally they scale back optionality. When paired with unstable demand segments, they improve dependence on coverage timing and grant continuity. Historical past means that this mix doesn’t result in restoration. It results in additional rounds of retrenchment, asset gross sales, or dilution.

Lhyfe is headed for chapter. They’ve €65 million left of €228 million in governmental grants with €25 million in debt. This may hold them limping alongside for a few further years, one assumes, however that’s it. Until they settle for empirical actuality and cease relying solely on governmental largesse—which is quickly diminishing in France because the Courtroom of Auditors has declared that hydrogen highway freight is an absurdly costly carbon mitigation wedge and the French senior financial council has weighed in to level to battery electrical highway freight as the apparent selection—they’re merely going to evaporate.

Lhyfe’s press launch reads as an try to regain management of the narrative. It’s clear that the corporate doesn’t perceive the markets it’s attempting to serve or the competitors. With out correcting that, strategic focus and value slicing is a beauty train. In vitality transitions, physics, economics, and infrastructure realities are unforgiving. Firms that misdiagnose these realities not often get limitless possibilities to regulate.