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Northeast Ohio startup flying high with defense contract for liquid-hydrogen fueled drones

a liquid hydrogen refueling and flight system for drones
Ryan Loew
Ideastream Public Media
A prototype of the liquid hydrogen refueling station under development by NEOEx Systems, Inc., sits in a hangar at Lorain County Airport.

Seven years toiling in a Lorain County Airport hangar has paid off for small business owner Mark Haberbusch, whose company has landed a multimillion-dollar defense contract to pursue liquid hydrogen-powered flight for drones.

Haberbusch’s company, NEOEx Systems, Inc, was awarded a $6.4 million subcontract earlier this year to develop systems that fuel and fly drones for the Army. NEOEx is developing a portable refueling station that delivers liquid hydrogen to drones weighing up to 55 pounds. Those drones, outfitted with NEOEx’s on-board storage and power system, can fly up to 20 hours and 1,000 miles. That’s many times farther than drones using gasoline or batteries.

Military use of drones is expanding rapidly as part of weapon systems and for war zone reconnaissance. Possibilities for commercial use of long-flying drones abound, such as delivering packages, inspecting power lines or flying into storms to gather data.

“Right now drones can fly an hour or so on battery power and they’ve got to come back home,” said Bill Whittenberger, a business advisor to NEOEx and past chairman of the Ohio Fuel Cell and Hydrogen Coalition. NEOEx is “extending the range of those drones by a factor of four or five or six. So you can send a drone out halfway across the continent and back and on some kind of mission. That’s what's really driving the whole business.”

Fueling drones

Liquid hydrogen has been used as a fuel for years, most notably to launch space rockets. Generating and storing large amounts of liquid hydrogen is costly and challenging because of the high pressure and extremely low, or cryogenic, temperatures needed, according to the U.S. Department of Energy.

NEOEx is developing a mobile refueling station to generate small quantities of liquid hydrogen. Aboard the drone, NEOEx’s system stores the liquid hydrogen and directs it to a fuel cell, where chemical reaction produces electricity that powers the drone’s flight. Water and heat are emitted as byproducts, making liquid hydrogen a cleaner energy source than fossil fuels.

“What we’ve developed and patented is the process of making liquid hydrogen in small quantities locally and putting it directly into the aircraft,’’ Haberbusch said. “We don’t need to store large quantities of liquid hydrogen. … We just make exactly the amount of hydrogen that the aircraft needs.’’

NEOEx’s plans call for a drone test flight of the NEOEx refueling and on-board systems in summer 2024 between Lorain County Airport in Elyria and Youngstown-Warren Regional Airport in Vienna.

In preparation for that flight and future production of NEOEx’s systems, Haberbusch is in hiring mode after years of working with a handful of interns and part-timers. The bloom from startup business to fast growth came after years of collaboration with organizations in the region’s entrepreneurial-support network.

From dream to business startup

Haberbusch, an aerospace engineer, had been thinking about the business potential of liquid hydrogen since college. At Case Western Reserve University, he earned bachelor’s and master’s degrees in fluid and thermal engineering science. His graduate work took him to NASA Glenn Research Center, where his focus was cryogenic power systems.

Mark Haberbusch is the owner of start-up company NEOEX Systems.
Ryan Loew
Ideastream Public Media
Mark Haberbusch, founder of NEOEx Systems, Inc., has worked for seven years at Lorain County Regional Airport developing a liquid hydrogen refueling station and on-board power system for drones.

His expertise landed him at Sierra Lobo, an aerospace research and development company in Fremont, Ohio. Haberbusch rose to Director of Research and Technology, with projects that included development of a liquid hydrogen system to power unmanned vehicles underwater.

Feeling the entrepreneurial urge, Haberbusch formed NEOEx, short for Northeast Ohio Exploration, in 2015. He pitched his liquid hydrogen system for drones to the National Oceanic and Atmospheric Administration. NOAA was looking to develop long-distance drones for collecting weather and storm data.

“The core of my proposal to (NOAA) was you don’t necessarily need a new drone,’’ Haberbusch said. “You get a new energy system. And they agreed and funded NEOEx Systems to take a look at that.”

NOAA awarded NEOEx a $120,000 research-and-development contract, spurring Haberbusch to leave Sierra Lobo and focus on his fledgling business. Early on, he gathered with a number of successful entrepreneurs and business executives funded through the Burton D. Morgan Mentoring Program at JumpStart, a regional venture-development organization. They advised Haberbusch on business strategy, marketing, fundraising and human resources. Most of those advisers still act as a sounding board today.

“It was a lot about strategy early on,’’ said Whittenberger, a former business executive in the catalyst industry. “He was trying to figure out just who his customer was going to be. We had a lot of discussions until we settled on that. He finally got a little bit of traction and now, oh my goodness, he’s got a tiger by the tail.”

BRITE Energy Innovators, an incubator for energy technology companies in Warren, Ohio, helped Haberbusch hone his fundraising pitch. That led to $25,000 in early-stage funding in 2016 from the Great Lakes Innovation and Development Enterprise, a technology-startup business hub based at Lorain County Community College. GLIDE later awarded $50,000 more that Haberbusch spent on capital equipment, including the refueling system’s cryogenic cooler.

In 2019, NEOEx won a pitch competition for startup companies sponsored by the Manufacturing Advocacy and Growth Network, earning $20,000 in engineering support. That enabled full design of the liquid hydrogen system prototype.

Military intrigued

The work led to a $150,000 small business development contract with the U.S. Air Force in 2021, which wanted NEOEx to study the feasibility of developing a liquid hydrogen refueling and flight system for drones. Haberbusch’s vision includes use of a portable, solar microgrid to power NEOEx’s refueling system.

The Air Force awarded a second grant of $750,000 in 2021 to conduct the flight demonstration next summer between the Lorain and Youngstown-Warren airports. Partners in the project are Ohio State University, with expertise in microgrids, and Avari Aerospace, LLC, a drone maker based in Cincinnati. 

The portability of the NEOEx refueling system, and the solar microgrid to power it, are big keys. The equipment can be taken to any airport or location where drones launch for military or commercial needs, Haberbusch said.

NEOEx’s refueling system includes an electrolyzer, which pulls hydrogen gas from water, and a cryogenic cooler to convert the gas to liquid hydrogen. It’s compact enough to be hauled by a pickup truck. In fact, Haberbusch and his team towed an earlier version of the refueling system, not including the microgrid, in September 2022 to an energy expo at the Pentagon in Arlington, Va., and then back to Lorain airport.

“You can imagine all the potholes and bridges and things we went over,” Haberbusch said. “I just crossed my fingers. We only lost one screw off a piece of equipment. … Everything was still connected. All we did was plug it back in the wall and it worked fine.”

The ability to generate liquid hydrogen in the field potentially reduces the logistics of delivering conventional fuels, such as gas or diesel, during military operations, said Matt Moran, a power-and-propulsion consultant who has worked with military clients. He is a paid consultant to NEOEx and worked with Haberbusch at NASA and on other projects.

“I think there’s a high degree of interest in this ability to liquefy hydrogen where you need it … whether it's an aircraft or a vehicle or some other type of mobile application,” Moran said.

With growing interest from the Pentagon and help from former U.S. Rep. Tim Ryan’s office in Youngstown, NEOEx landed the $6.4 million subcontract earlier this year through the National Center for Defense Manufacturing and Machining, a nonprofit based in Johnstown, Pa. The work is part of a much larger contract NCDMM won through the Army Contracting Command to research and develop cutting-edge manufacturing technologies for the military’s industrial base.

NCDMM and the Army Contracting Command declined to comment for this story. An overview of the NEOEx subcontract on Highergov.com, an online clearinghouse for government contracts, said the goal is to “develop and demonstrate advanced manufacturing technologies in support of next-generation unmanned weapon systems and their corresponding ground support equipment.”

Managing fast growth

Under the subcontract, NEOEx will continue developing the liquid hydrogen systems with the goal of getting them ready for limited production, Haberbusch said.

“The core of my proposal to (NOAA) was you don’t necessarily need a new drone. You get a new energy system. And they agreed and funded NEOEx Systems to take a look at that.”
Mark Haberbusch

“We’re adding features and capabilities and incorporating all the lessons learned,” Haberbusch said. “This is super hard and complicated. There are definitely things you’ll want to make better and improve before you go into production.”

Haberbusch’s biggest challenge will be managing fast growth, Whittenberger said.

“Mark likes to keep everything pretty tight to himself and he’s going to have to learn to let go,” Whittenberger said. “I think he’s doing that. I like his chances. He’s hiring the right kind of people and doing the right things. You know, he’s got a great solution, and I don’t see that out there anywhere else.”

While the nation’s defense forces look to be early adopters of the NEOEx technology, commercial demand for the product will likely make for “explosive growth” down the road, Whittenberger predicted.

Haberbusch believes the skills he built as a researcher serve him well as an entrepreneur and head of a growing business venture.

“A (business) startup is basically a research project,” Haberbusch said. “That's what I've been doing for my whole career is trying to figure out the unknown – who can help, where can you find answers. And so I have had no problems working in this environment. … You just take advantage of what you've done in the past and leverage that and it continues to grow. That's the entrepreneurship thing.”

Tom Breckenridge has three decades of experience in journalism in Northeast Ohio. Most of that was at The Cleveland Plain Dealer/Cleveland.com as an award-winning reporter, writing news and features with an emphasis on local government, economic development and transportation.