Clean hydrogen edges toward competitiveness

Meanwhile, states, cities, and regional entities across the US are lining up for a share of the $8 billion that DOE will dole out for a yet-to-be determined number of hydrogen hubs. The hubs were conceived by lawmakers as centers of clean hydrogen production, storage, distribution, and consumption.

On 6 June DOE published a notice of intent to issue a funding opportunity announcement, in which the department said it plans to award $6–7 billion of that $8 billion to 6–10 hubs. The Infrastructure Investment and Jobs Act requires that DOE award at least four hubs within one year of receiving proposals.

Each grant will range from $400–500 million to $1–1.25 billion, according to the announcement. The remaining $1–2 billion will be reserved for subsequent solicitations for future hubs, new technologies, or other purposes. Bidders are required to provide matching funds. The entire process, from planning to completion of hub construction, is expected to take 8–12 years. The hubs must be able to produce a minimum of 50–100 tons of clean hydrogen per day; DOE will give greater preference, and provide more funding, to bidders who show they can produce greater amounts. Bidders must have a plan for continuing financial viability once the federal funding runs out.

Congress set multiple requirements for choosing hubs. At least one must demonstrate so-called blue hydrogen, in which the CO₂ emissions in the production of hydrogen from methane are captured and permanently stored in geological formations. Nuclear energy and renewables are to power at least one hub each. Lawmakers further stipulated that at least one center demonstrate clean hydrogen use for electricity production, one for heavy industrial operations, one for residential and commercial heating, and another for transportation.

Congress also required DOE to ensure that the hubs be geographically dispersed and use energy resources that are abundant to their regions. The law instructs DOE to give priority to hub proposals that are expected to create opportunities for job training and long-term employment for the greatest number of residents in the area. The agency says it will require proposers to show “substantial engagement with key local and regional stakeholders to ensure these projects generate local, regional, and national benefits while mitigating significant environmental or community impacts.” Additionally, 40% of the overall hub benefits should flow to disadvantaged communities, without exacerbating their already disproportionate exposure to pollution.

Although DOE hasn’t committed to a date, some bidders say they expect the agency will formally open the competition for hubs in September or October. Bidders are then to submit concept papers within two months. The agency will notify bidders within a month regarding whether it encourages or discourages the bidders’ plans. Full proposals will be due four months later, and the agency may take “several months” to review them before making awards.

The Gulf Coast is a likely location for at least one hub. Most of the nation’s existing hydrogen-pipeline network is located in Texas and Louisiana. Houston alone is home to one-third of US hydrogen production, according to the nonprofit Center for Houston’s Future. Brett Perlman, the center’s CEO, says the center has organized a wide-ranging coalition of companies, universities, and nongovernmental organizations to “help catalyze the Houston region, and Texas, into a clean energy hub.” With an abundance of natural gas and wind-energy resources, Houston, and Texas generally, could qualify as both a blue-and green-hydrogen production hub.

Other regional partnerships have formed in anticipation of the hub competition. In March, New York Governor Kathy Hochul announced a collaboration with Massachusetts, Connecticut, and New Jersey that also includes dozens of corporations and universities. The governors of Louisiana, Arkansas, and Oklahoma have agreed to collaborate on a regional hub, and Colorado, Utah, New Mexico, and Wyoming have joined forces. Other states that are preparing solo bids or have pending legislation to do so include Arizona, California, Illinois, Kentucky, Nebraska, Pennsylvania, and West Virginia.

The Delta site may become the anchor for one hub, Shah says. There is room at the location for at least 70 more caverns of the same size as those to be excavated for the ACES Delta project, says Ducker. That amount of hydrogen-storage capacity “provides opportunities to help balance [electricity] load across the entire West,” he says.

Some states have multiple proposals. The University of Toledo is convening an Ohio-focused hub proposal. Frank Calzonetti, the university’s vice president for research, says the hub will power electrolysis with both nuclear and solar energy. The collaboration is to include the Davis-Besse nuclear plant near Toledo, which is already operating a 2 MW electrolyzer in a hydrogen demonstration that DOE is supporting with a $9.2 million grant. (See Physics Today, August 2020, page 20.)

The infrastructure act requires that hubs arrange purchase agreements with consumers of hydrogen. Northern Ohio is home to a lot of heavy industry, including the largest flat-rolled steel plant in the nation and glass manufacturing. Industry partners that have signed on to the Toledo collaboration include General Electric Aviation, which in February announced a collaboration with Airbus to develop hydrogen-fueled aircraft engines. Others include the glassmaker Owens-Illinois, solar-panel manufacturer First Solar, and sustainable-aviation-fuel producer LanzaTech.

With an abundance of natural-gas resources in the region, the Columbus-based Ohio Clean Hydrogen Hub Alliance will focus on blue hydrogen. That process is in place at a handful of plants around the world. Most of those consume the hydrogen for their own industrial needs, such as fertilizer and synthetic-fuel production. In the US, a DOE-funded blue-hydrogen facility in Texas operated by the industrial-gas producer Air Products has been in operation since 2013. Its output is used in petroleum refining, while the CO₂ is piped to the state’s oil fields for enhanced oil recovery. Air Products said in October 2021 that it will build a $4.5 billion blue-hydrogen plant in Louisiana, with completion expected in 2026.

HyDeal Los Angeles, organized in Southern California by the Green Hydrogen Coalition, is projecting a green-hydrogen cost below $2/kg. Achieving that target will require pipelines to transport the hydrogen to salt-dome storage, the coalition says. The nonprofit has identified demand for 1–3 million tons of the light gas in heavy-duty transport, industry, and power generation in the Los Angeles basin. The largest prospective consumer for HyDeal LA is the Los Angeles Department of Water and Power, which operates four natural-gas-fired power plants in the area, with a combined capacity of 1600 MW. Los Angeles also has significant cement and oil refining activities, and it is home to more hydrogen fueling stations than anywhere else in the US.

HyDeal LA is patterned after Europe’s HyDeal Ambition, a coalition of producers and consumers who have committed to making and using 3.6 million tons of green hydrogen annually at €1.50/kg by 2030, equivalent to the price of delivered natural gas in Europe. The coalition was formed after the European Commission announced in July 2020 a goal for 10 million tons of green hydrogen a year by 2030. HyDeal Ambition’s first component, HyDeal España, will pipe green hydrogen produced at renewable-energy facilities in northern Spain to an industrial complex in the region beginning in 2025. That project aims for an electrolyzer capacity of 7.4 GW by 2030. Partners in the venture include the steelmaker ArcelorMittal, which last year announced it will spend $1 billion to halve CO₂ emissions from its Spanish operations within five years through the use of green hydrogen.

Jonathan Lewis, director of transportation decarbonization at the nonprofit Clean Air Task Force and an adviser to HyDeal LA, says that project is estimated to cost $25 billion. Although he notes that DOE has received some “pushback” from prospective hub proposers on the 50% cost-share requirement, he applauds the hub program. “The most compelling part of the policy is that it lifts both the demand side and supply side. Neither side has to make a leap of faith,” he says. “As producers are building out capacity, they know there is also investment being made on the demand side.”

State-government funding is likely to be needed for the cost sharing. Calzonetti says he is hoping to attract support from other states and institutions. He says that DOE may try to foster interstate collaborations, perhaps by marrying the Toledo-led collaboration with Illinois, the state with the most commercial nuclear plants. Illinois’s own proposal includes the University of Illinois at Urbana-Champaign and Argonne National Laboratory.

Although there is “tremendous demand” for hydrogen in industrial applications, he says, much will depend on the price. DOE’s Hydrogen Shot program, launched a year ago, established a target cost for green hydrogen of $1/kg in 10 years. That’s an 80% reduction from its current cost of around $5/kg, the agency says.

Ultimately, a hydrogen economy will require spokes as well as hubs. “We shouldn’t be looking at this as a competition between regions,” Houston’s Perlman told a panel discussion organized by the nonprofit Energy Futures Initiative. “Creating a real network is where the real power is going to come from, working together across the US to create a national market for hydrogen.”