In January 2021 Agility Fuel Solutions and Hexagon Mobile Pipeline joined forces to create Hexagon Agility, a leading global provider of clean fuel solutions for commercial vehicles and gas transportation. The combination enables improved operational flexibility and the pursuit of combined global market opportunities.
Hexagon Agility is a leading global provider of clean fuel solutions for commercial vehicles and gas transportation solutions. Its product offerings include Type 4 vehicle fuel systems and gas transportation modules for compressed natural gas (CNG), renewable natural gas (RNG) and industrial gases, as well as propane options for powertrain systems.
For the full year 2020, Agility Fuel Solutions reported revenues of NOK 1,928 (1,844) million, with a reported EBITDA of NOK 273 (202) million. Sales growth was primarily driven by high demand from North American Medium- and Heavy-Duty Truck and European Transit Bus customers. Hexagon Mobile Pipeline reported revenues of NOK 349 (569) million, with a reported EBITDA of NOK -30 (40) million. Read more in the Board of Directors’ report.
A key competence of Hexagon Agility is integrating energy storage and fuel delivery systems into commercial vehicles. Its lightweight solutions are engineered for high performance, durability, and uncompromised safety. Hexagon Agility’s global commercial presence offers OEMs regional support to assist in the homologation of clean energy storage solutions with OEM vehicle platforms. Its energy storage and fuel delivery systems are backed by comprehensive warranties and an extensive global aftermarket service and support network, making clean fuels an attractive option for vehicle fleet operators. The reduction in vehicle operating costs offered by stable natural gas provides customers a competitive edge while significantly lowering corporate fleet carbon emissions.
North America is a primary market, where the business has roughly an 80% market share in natural gas heavy-duty commercial vehicles. Its systems and cylinders are installed on long-haul trucks, refuse collection trucks, buses, and other heavy-duty truck platforms.
The Transit Bus segment consists of a handful of OEMs competing for municipal tenders which designate fuel choice and system specifications. Refuse Truck and Heavy-Duty Truck demand is driven by a combination of certain committed large fleets with heavy investments in natural gas infrastructure and numerous smaller fleets which are driven by the environmental value proposition of natural gas and RNG, as well as government support for the transition to cleaner fuels through funding at local and national levels. Large fleet purchases typically vary significantly from year to year, distorting underlying trends in some markets.
Hexagon Agility’s other core market is Europe, where it has a strong Transit Bus market share exceeding 50% and where volumes continued to grow in 2020 ahead of tougher emissions requirements from the EU.
The business continued to benefit from increased adoption of cleaner energy alternatives, especially CNG and RNG. This was mainly driven by a large number of deliveries to key customers UPS, Anheuser Busch and a major global logistics supplier. Encouragingly, this trend was also visible among small fleet owners.
In 2020 the business captured significant volume in the Medium- Duty Truck segment with CNG package delivery vans for UPS.
North America and Europe are primary bus markets. There has been steady growth in North America for several years due to a continued focus on environmentally-friendly public trans- portation. However, volumes were lower in 2020 on the back of COVID-19 related delays. Strong sales volumes in Europe continued in 2020 on the back of the EU Clean Vehicle Directive, which aims for a reduction of overall transport emissions. This reform sets out minimum procurement targets for clean, light-duty vehicles, trucks, and buses for 2025 and 2030.
The Refuse Truck segment within North America is dependent on the buying patterns of key market participants that made long-term investments in natural gas infrastructure or products. Revenue was down by 20% in 2020, with COVID-19 having a significant impact on this segment and corporate refuse needs being greatly reduced. Continued consolidation within refuse is expected to lead to increased adoption of CNG/RNG in 2021. The increased adoption of RNG as a source of vehicle fuel from landfill gas provides an ideal example of the circular economy. It is expected to contribute to improved RNG pipeline supply and improved adoption in 2021.
Within the global commercial vehicle segment, Hexagon
Agility is the market leader for CNG and RNG fuel systems and Type 4 CNG cylinders in the Heavy-Duty Truck and Transit Bus segments. Hexagon Agility has also established its position in the North American medium-duty natural gas and propane fuel systems markets. The business competes with CNG cylinder manufacturers globally, with smaller CNG system integrators in North America, South America, and Asia, and with medium-duty engine fuel system vendors. Hexagon Agility also supplies Type 4 CNG cylinders directly to OEM’s which choose to produce fuel systems internally.
The business benefits from the increased focus on lower carbon emissions and the cost advantages of natural and renewable natural gas. Governmental mandates favor natural and renew- able natural gas vehicles. Fleet owners and users increasingly commit to becoming more sustainable and look to existing CNG and RNG technologies to achieve their targets.
The Heavy-Duty Truck segment volumes are expected to increase, driven by the strong focus on reducing emissions and low, stable, natural gas prices. The Refuse Truck segment is expected to pick up after last year’s softer purchases by large fleet customers. Growth in the Transit Bus segment is expected to come from European markets driven by the European Clean Vehicle Directive.
In 2014 and 2015, Anheuser-Busch converted 160 diesel-fueled trucks in Houston and St. Louis to fleets powered by Compressed Natural Gas (CNG). As the next step to achieve its sustainability goal of reducing carbon emissions across its value chain by 25% by 2025, the brewer will be expanding this fleet and investing in technology to transition to cleaner-burning renewable natural gas.
Hexagon Agility's mobile pipeline business enables the safe transport of CNG, RNG, hydrogen, or other industrial gases by truck, marine vessel, or rail. Mobile Pipeline® is a clean energy solution that allows users lacking pipeline infrastructure to quickly and efficiently reduce energy costs and GHG emissions. Our Customers include energy-intensive operations, industrial gas users, producers of RNG, and fleet operators seeking to accelerate the deployment of alternatively-fueled vehicles. Hexagon Agility offers state-of-the-art Mobile Pipeline® solutions capable of transporting twice the gas of traditional products, that have been deployed in more than 20 countries around the world.
The Mobile Pipeline® product portfolio is the broadest in the market, comprised of the TITAN®, SMARTSTORE and X-STORE® brands to meet regulatory requirements around the world. These products are the benchmark for quality, weight efficiency, safety, and payload for composite transport solutions.
North America continues to be the largest market for Hexagon Agility's mobile pipeline business. Lack of infrastructure combined with growing energy needs and environmental objectives is driving demand for Mobile Pipeline® solutions. During the critical winter season, Hexagon Agility's solutions help to deliver natural gas to population centers, keeping homes warm and businesses running, while mitigating shortages and price spikes.
The oil and gas sector, historically powered by diesel, is embracing natural gas in its exploration and production operations. Stable natural gas is enabling customers to save tens of millions of dollars per fleet per year, while significantly reducing pollutant and greenhouse gas emissions. When combined with flare gas capture, this mobile pipeline solution is one of the most significant actions to fight climate change.
The USA's Renewable Fuel Standard and California’s Low-Carbon Fuel Standard continue to drive demand for RNG. While early projects targeted landfills and wastewater treatment due to their access to pipeline infrastructure, a second wave of projects now focuses on RNG derived from agricultural waste. Recent studies conducted by the California Air Resources Board, the Environmental Protection Agency (EPA) and the Department of Energy have shown that agricultural RNG has the lowest carbon intensity of any fuel, sometimes being carbon negative, meaning that it can be more effective than even wind or solar energy for reducing GHG emissions. For this reason, RNG has become highly attractive as a feedstock for producing hydrogen. While many of these agricultural sites lack pipeline access, Mobile Pipeline® is enabling the RNG they produce to be connected to the energy grid. This dramatic transformation of the energy supply has transformed municipal and agricultural waste from historical cost burdens to profit centers.
In the industrial gas segment, which has a large installed base of steel cylinder trailers, our Mobile Pipeline® solutions are enabling companies to reach new customers. Hexagon Agility is proud to now be a supplier to all of the major industrial gas companies in North America and Europe. The business expects this segment to grow as its product solution demonstrates its ability to improve safety and drive down operating costs.
Despite a well-developed natural gas infrastructure and a relatively inexpensive supply of imported LNG, Europe continues to develop projects that are aimed at environmental sustainability. Mobile Pipeline® solutions enable RNG to be moved to market and play an increasing role in Europe’s energy portfolio.
A large percentage of Asia’s industrial sector continues to be powered by petroleum fuels. Natural gas offers a cleaner and cost-effective alternative for reducing emissions. While imports have grown recently, price instability is causing countries and regional companies to examine domestic gas production. Local gas production, including RNG and flare gas capture, are significantly underdeveloped and present strong opportunities for Hexagon Agility.
Major pipeline projects like the Permian Highway Pipeline a collaboration between the government and private enterprise, were completed in Mexico in 2020. The significant increase in gas supply, combined with lower tariffs and more favorable rate structures, are driving conversion to natural gas across the market. The lack of pipeline infrastructure, combined with existing fleets returning to full utilization, is generating new market opportunities for Hexagon Agility.
Hexagon Agility's mobile pipeline business remains the world leader in the large-scale production of composite storage and distribution products for compressed energy gases. Our position is supported by a strong track record of safety and market-leading products. In the North American market, there is increasing competition from other Type 4 manufacturers and therefore more aggressive pricing. While Mobile Pipeline® products are often imitated, our TITAN® cylinder remains the largest composite pressure cylinder in the world and the benchmark for structural integrity, maintainability, and reliability. We maintain a favorable market position by providing customer service, continued innovation and our leadership in standards development. The competition in Latin America and Asia comes primarily from traditional steel cylinder solutions due to lower initial investment costs; however, large-scale projects and larger, more sophisticated customers continue to favor Hexagon Agility's Mobile Pipeline® solutions.
Hexagon Agility is expanding and diversifying its customer base. In the oil and gas sector, the demand for natural gas-powered operations continues with an intense focus on eliminating fugitive emissions and monetizing associated natural gas. RNG applications are encouraged by regulation and sustainability goals to reduce greenhouse gas emissions. Natural gas utilities are replacing older and heavier Type 1 steel cylinder trailers with modern trailers that have composite cylinders and are easier and more cost-effective to deploy. Some utilities are even beginning to include our Mobile Pipeline® products as another gas distri- bution solution, along with a physical pipeline. Industrial gas companies are reaching new customers requiring high-volume deliveries over longer distances.
Another new and rapidly-evolving segment that leverages the combined strength of Hexagon Agility is mobile refueling. The growing demand for CNG vehicles is outpacing construction of CNG refueling stations. Mobile Pipeline® products are providing mobile refueling units to accelerate the adoption of CNG in fleets and a more flexible and economical refueling solution.