WASHINGTON—Congress has staked $8 billion to expand regional hydrogen power networks in the United States, and the task of selecting proposals for “hydrogen hub” demonstration projects falls to the Energy Department’s Office of Clean Energy Demonstrations (OCED) through a program called H2Hubs. For the selection process to succeed, it must not only be effective, but also fair, transparent, and timely, according to a new report by the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy. To that end, ITIF proposes five core selection criteria and a weighting system to evaluate scale and scope, specific demonstration goals, operational plans, costs, and commercial potential.
“It is essential that DOE handles the selection criteria well,” said researcher Robin Gaster, who authored the report for ITIF. “Given the massive amount of funding, a substantial number of potential coalitions and alliances have assembled, along with heavy political and corporate interest. If DOE doesn’t manage the process well, the growing support for clean energy and climate technology demonstrations will be at risk.”
ITIF’s new report is the second in a series of briefings on hydrogen hubs. In the first report, ITIF laid out why capital expenditures to fund a hydrogen hub ecosystem should focus on the core plant and surrounding infrastructure. The second installment in the series details how DOE should approach the criteria it uses to select hub proposals.
DOE issued a notice of intent (NOI) in July outlining 24 criteria it would use to evaluate hydrogen projects for potential funding under the H2Hubs program. Noting any selection process with that many criteria leaves open the possibility of selecting any type of project, ITIF’s analysis recommends whittling the list down to five core considerations:
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Criteria
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Weight
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1. Scale and scope—larger and more ambitious is better.
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20%
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2. Operational plan—since success will largely rest on execution.
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10%
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3. Specific demonstration—programs should have defined outcomes.
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10%
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4. Cost—DOE needs to favor projects that are cost-effective.
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10%
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5. Commercial potential—showing what can be successful and sustainable.
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50%
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a) Market development plan
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25%
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b) Finances
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10%
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c) Risk management
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5%
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d) Management team
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10%
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In arriving at ITIF’s list of five core selection criteria, Gaster argues DOE should clearly differentiate between boundary conditions such as the scale of the core plant, direct selection criteria, and additional highly important elements to be negotiated after a selection has been made. Confusing these elements will result in unhappy bidders and complaints about outcomes.
“It’s important that DOE gets this right,” says Gaster. “Hub selection will be under intense scrutiny from applicants, their supporters and sponsors, and of course, top corporate management in the energy sector. DOE won’t be given the benefit of the doubt.”
Read the report.
