Fuel sovereignty is becoming a defence capability
An Estonian fuel cell maker took a blunt argument to Denmark's DALO Industry Days: the pump price of diesel is a tactical illusion, and real capability depends on where your fuel comes from. We look at what fuel sovereignty means for Baltic defence planning, what NATO's own field testing actually found, and why an Estonian pavilion in Herning was a route-to-market story as much as a technology one.
NEWS
PtXBaltic
8/20/20265 min read
In a recent post, Ivar Kruusenberg makes an argument that's worth taking seriously, and it isn't really about hydrogen. It's about diesel. "The pump price of diesel is a tactical illusion," writes the CEO and founder of Tallinn-based PowerUP Energy Technologies. What a generator burns is the cheapest part of what it costs you. In a defence context, the rest of that cost isn't a line item. It's an exposure.
Capability stops where the fuel line stops
The load-bearing claim there isn't about fuel cells at all. It's about sovereignty. "True defence capability isn't just about hardware," Kruusenberg wrote. "It requires sovereign fuel and supply chain resilience." That framing lands harder in this region than almost anywhere else in Europe, because the Baltic states have spent four years unpicking energy dependencies that once looked permanent. Gas first, then electricity interconnection, then the grid frequency itself. Liquid fuel is the piece that has barely moved.
It's also the piece with the least optionality in it. A diesel generator is only as sovereign as the tanker that reaches it. Fine in peacetime, with the road open and the depot full. Rather different when the planning assumption is a contested logistics environment. Hydrogen doesn't fix that on its own, since a fuel cell running on imported hydrogen is just a different import. But it opens a door diesel structurally cannot: you can make the fuel at home, from domestic electricity, close to where it gets used.
The cost that never appears at the pump
Kruusenberg's economics run through the Fully Burdened Cost of Fuel (FBCF), the accounting concept that adds back everything the pump price leaves out. Transport and convoy protection. Storage and handling losses. The maintenance tail behind a diesel genset: oil changes, filter swaps, engines that seize after weeks at low load. Price all of that in, and a cheap generator at a remote site starts to look like a standing operating cost rather than a bargain.
A caveat is owed here, because FBCF numbers get thrown around loosely. The Afghanistan-era figures often quoted from US operations have been publicly disputed, and they vary enormously by scenario. There's no single credible multiplier that travels from one theatre to another. What survives scrutiny is the direction, not the digit. The further and the more contested the delivery, the wider the gap between pump price and real cost. Baltic hydrogen ecosystem stakeholders selling into defence should build their own site-specific numbers rather than borrow somebody else's headline.
Decentralised generation is risk mitigation, not grid replacement
In the comments under his own post, Kruusenberg narrowed the claim, and that's the most useful thing in the thread. Nobody is proposing to replace the grid overnight. The target is critical off-grid operations: lighting masts, mobile command units, remote sensor and radar positions, where in his words the logistical drag of trucking diesel is an unacceptable operational vulnerability.
That's a defensible position, and it travels straight out of defence and into civil resilience. Latvia and its neighbours run a long list of assets that have to keep working when the grid doesn't. Telecoms nodes. Water and district heating pumping stations. Border surveillance. Emergency coordination points. Every one of them sits behind a fuel line with a single point of failure. Decentralised generation in that context isn't a green gesture. It removes a dependency.
His closing line is the one to keep: if your forward operations rely on a fragile, single-point-of-failure fuel line, your equipment is already a stranded asset. Swap "forward operations" for "critical infrastructure" and it still holds.
What NATO's own testing found, including what didn't work
None of this is theoretical, and usefully, it isn't only vendor-reported. In summer 2023 the NATO Energy Security Centre of Excellence, headquartered in Vilnius, ran a field experiment with the French Armed Forces at a French military site. They put PowerUP's 400 W and 1 kW portable fuel cells, paired with battery storage, into military conditions.
The fundamentals came back well: consistent power output across conditions, efficiency in line with specification, durability in moderate field use, low maintenance, and very little specialist training needed to run the units. The limits came back too. Personnel reported real handling difficulty from the weight, the 1 kW unit especially in dismounted operations. Interval power operation failed outright, because the internal battery management wasn't built for unmonitored cycling. Fixable in software, but it failed. And the summary states plainly that fuel cells are not yet positioned to replace fossil fuels entirely.
We think that mixed result is more persuasive than a clean one would have been. A technology that gets independently tested, scores well on reliability, scores badly on ergonomics, then goes back to engineering, is on a normal industrial trajectory rather than a pitch deck.
An Estonian pavilion in Herning is a route-to-market signal
Step back from the argument and the more instructive story is where it was made from. PowerUP says it was on the ground at DALO Industry Days in Herning on 19 and 20 August, exhibiting on the Estonian National Pavilion. DALO Industry Days is the Danish Defence Acquisition and Logistics Organisation's own supplier event, a room full of procurement people rather than investors. A Baltic deeptech firm got into that room through a national pavilion, which is the cheapest credibility a small-country supplier can buy. The pavilion does the vouching that a company of that size can't do for itself.
The company behind the stand has the profile the region keeps saying it wants and rarely produces. Founded in Tallinn in 2016. Technology heritage from work with the European Space Agency. A product line running from a 21 kg, 400 W portable unit up to a 10 kW trailer-mountable system the company rates at 20,000 operating hours. A EUR 10 million Series A closed in November 2025, co-led by Mercaton and ScaleWolf with SmartCap's green fund alongside. Those are company and investor figures rather than independently audited ones, and the deployment claims, including battle testing in Ukraine, come from the CEO. But the shape is clear enough. Research to product to defence procurement, inside a decade, out of a Baltic capital.
There is no equivalent Latvian story yet, and that gap is worth naming. Latvia has the research base, the electricity mix to make the fuel case work, and the same threat picture. What it hasn't built is the pipeline that turns a laboratory result into something a foreign defence agency can buy.
The supply side is where the Baltic advantage is won
Here's the part the hardware story tends to skip. A fuel cell fleet is only a sovereignty gain if the hydrogen behind it is produced, stored and distributed regionally. Otherwise the region has swapped a diesel import dependency for a hydrogen one, with worse logistics and a thinner supplier base.
Which makes the unglamorous end of the chain the actual strategic layer: electrolyser capacity, compression and cylinder logistics, refuelling points, certification and handling competence. That's exactly where Baltic hydrogen ecosystem stakeholders can build something durable. Defence and critical-infrastructure demand also has a quality most hydrogen business cases here have lacked. It pays for resilience rather than for the lowest cost per kilowatt-hour. A young supply chain can be built against that kind of signal, and it doesn't wait on a subsidy round to show up.
Source: Ivar Kruusenberg on LinkedIn: "The pump price of diesel is a tactical illusion"