OCED Observatory Newsletter, Issue 3: Hydrogen Hubs Scramble to Meet Deadline
The emerging hydrogen hubs are scrambling to meet the tight deadlines imposed by DOE for H2Hubs applications with the white paper due Nov 7. Meanwhile, some strong new hub contenders have emerged, and the potential impact of IRA hydrogen production subsidies also came into focus.
Contents
Large US Hydrogen-Related Projects
Reports From Nonprofits, Trade Associations, and Government
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Note From the Staff
The emerging hydrogen hubs are scrambling to meet the tight deadlines imposed by DOE for H2Hubs applications with the white paper due Nov 7. The FOA is very demanding for potential proposers, and inter-state coalitions should be viewed in that context. Some strong new hub contenders have emerged — notably the West Virginia-led ARCH2 project. California announced a state+1 strategy, with a one state hub plus hydrogen from the UT WISSH/ACES project. NM/CO/WY are developing a distributed hub concept with multiple H2 producers. A number of states are clearly rushing to compete, signing MOU’s without much detail available. And several potential hubs seem to be fading.
There has been very little public comment from anywhere after initial announcements, except for PR touting new partners coming on board. There are also plenty of hydrogen-related projects around the states that are not DOE-focused.
DOE also published the required Hydrogen Production Standard (maximum 4kgCO2/1kgH2 across the well-to-gate lifecycle). Commentators differ as to whether it is a strong or weak standard.
The potential impact of IRA hydrogen production subsidies also came into focus. The tight linkage between lower GHG emissions and increased subsidies favors green hydrogen and disfavors blue, until carbon capture is proven at scale at a competitive price.
Hydrogen Hubs News
▪ CA formed the Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES), a public-private hydrogen (H2) hub consortium. The Governor’s Office of Business and Economic Development and the University of California will lead the development of ARCHES proposal for the H2Hubs Program.
– CA SoCalGas, SDG&E, and Southwest Gas filed a joint application with the CPUC detailing three proposed hydrogen blending pilot/demonstration projects.
– CA UC Riverside completes CPUC-funded study of hydrogen blending. The study assesses the operational and safety concerns associated with injecting hydrogen into the existing natural gas pipeline system at various percentages.
– Port of Long Beach has joined ARCHES.
▪ ND/MN/MT/WY. The governors of North Dakota, Minnesota, Montana, and Wisconsin have signed an agreement to develop a regional clean hydrogen hub.
▪ WI/MN/MT/ND. The new Heartland Hydrogen Hub will be led through the proposal phase by ND, through the Energy and Environmental Research Center at the University of North Dakota, home to theNational Center for Hydrogen Technology.
▪ IL/IN/KY/MI/MN/OH/WI. MOU signed by Indiana, Illinois, Kentucky, Michigan, Minnesota, Ohio and Wisconsin to create the MidWest Hydrogen Coalition (M-H2 Coalition). This alignment does not seem far enough along to actually propose a hub in the time available.
▪ WV/OH/PA/KY. Appalachian Regional Clean Hydrogen Hub (ARCH2) announced, led by Battelle, including EQT Energy, GTI Energy, Allegheny Science and Technology (AST), and the state of West Virginia. Now attracting industry partners (e.g. Chemours — likely as fuel cell manufacturer — CNX Corp., Nucor Steel, Peoples Natural Gas, the Energy Innovation Center, Babcock and Wilcox, Air Liquide, and NETL). The Ohio Clean Hydrogen Hub Alliance (OH2Hub) just joined ARCH2. Initial list of participants. DT Midstream, Southwestern Energy, and Williams (all major energy companies) have also joined the hub
▪ CO/UT/WY/NM hub is coming into focus. Likely main emphasis on blue hydrogen from NM, with additional green hydrogen powered by wind in WY. End use focus on transportation. However, it seems to be in catchup mode. The hub just signed Atkins to become the lead manager.
▪ PA/OH. Proto-hub Appalachian Energy Futures (AEF) expands as DT Midstream, Southwestern Energy and Williams join. Other members include EQT Corp., Equinor, GE Gas Power, Marathon Petroleum (including its affiliate MPLX), Mitsubishi Power, Shell Polymers, U. S. Steel. Shell, Equinor, and US Steel appear to have committed to developing a hub concept and seeking DOE hubs funding. List of participating entities. Note — EQT is possibly not involved despite earlier interest. May be losing ground as ARCH2 gains momentum.
▪ PA. The Great Plains Institute and Team PA released a hydrogen roadmap for PA. Suggests seeking BIL hubs funding, but is mainly focused on longer term groundwork prep.
▪ OH. Energy Harbor plans Great Lakes Clean Hydrogen (GLHC) pink hydrogen hub based on its Davis-Besse nuclear facility. It is teaming with the University of Toledo, major industrial companies in the region, several DOE national laboratories, and others.
▪ LA/AR/OK. Halo has expanded and added Arkansas and Oklahoma. A coalition of south Louisiana organizations won a $50 million EDA grant, matched by a $24.5 million State grant to build a hydrogen innovation ecosystem in south Louisiana
▪ NYSERDA. The New York State Energy Research and Development Authority (NYSERDA) has signed over 60 clean hydrogen ecosystem partners to develop a clean hydrogen hub in the North- East US.
DOE
▪ Clean Hydrogen Production Standard. DOE released draft guidance for a Clean Hydrogen Production Standard (CHPS), developed to meet the requirements of the Bipartisan Infrastructure Law (BIL), Section 40315. It targets 4.0 kgCO2e/kgH2 for lifecycle emissions (i.e., “well-to-gate”).
▪ DOE has awarded $24 million to 3rd generation CSP technology, with ten research teams as the beneficiaries. Five of the ten are dedicated to industrial applications relation to green hydrogen, cement, and chemicals, while the other five pursue electricity generation and energy storage. The largest award was $4.1 million to Heliogen for 950-degree limestone heating; the full list can be found here.
▪ GAO reported on three planned large demonstrations of advanced nuclear technologies, which have received $4.6 billion in DOE project awards. GAO says DOE needs to “institutionalize” oversight of those projects, including through external independent reviews.
▪ DOE issued Industrial Decarbonization Roadmap.
State Activities
▪ Bloom Energy is adding a 240 kW electrolyzer to Xcel Energy’s Prairie Island nuclear reactor in Welch, Minnesota. The 8.75 MW plant will produce 1,350 tons of green hydrogen annually, from solar and wind renewable electricity. A scale-up to 20 MW is planned.
▪ An environmental coalition has petitioned to halt a hydrogen project by Oregon’s largest gas utility, citing a long list of problems with hydrogen blending. The $10 million project is expected to eliminate only 200 metric tons annually of carbon dioxide, or 0.003 percent of NW Natural’s annual emissions.
▪ Phoenix-based Nikola just acquired 900 acres of property for its first hydrogen production hub for producing hydrogen, using electricity purchased from Arizona Public Service for about 2 cents/kWH. The hub will initially produce 30 metric tons of hydrogen daily, and will scale up to 50 metric tons per day.
▪ LA. US chlor-alkali producer Olin and hydrogen company Plug Power launched a joint venture to build a 15 tonne/day hydrogen plant in St Gabriel, Louisiana.
▪ TX. World’s largest green hydrogen project has been announced in Texas, by local start-up Green Hydrogen International. The 60GW plant will produce 2.5m tons of hydrogen annually, powered by wind and solar and use an on-site salt cavern for hydrogen storage, focused on producing clean rocket fuel for SpaceX, via pipelines to the ports of Corpus Christi and Brownsville.
▪ CA. Southern California Gas, San Diego Gas & Electric and Southwest Gas this month jointly filed an application with the California PUC for hydrogen blending demonstration projects across campus based networks, initially at a 5% level, eventually reaching 20% (the article has a useful discussion of leaks and other incidents associated with blends above 5% in existing pipelines)
▪ Wyoming. Conversion of the existing Naughton Power Plant to a TerraPower nuclear plant is moving forward, utilizing existing infrastructure from coal. Ten such Wyoming coal plants are appropriate for such a conversion.
▪ New Mexico. Libertad Power announced a deal with Hyundai to produce green hydrogen from a new plant in Farmington, New Mexico. Diesel Direct will distribute the fuel to trucking fleets along aneast-west corridor between Los Angeles and West Texas, dubbed “The Southwest Clean Freight Corridor.” The project would involve building two additional hydrogen plants, one in Hobbs, N.M., and another in Arizona near the California border. Also in New Mexico, Universal Hydrogen will invest over $250 million to produce green hydrogen in a new facility in Albuquerque to provide aviation fuel.
▪ Texas. Mitsubishi Corp. signed an MOU with the Port of Corpus Christi Authority for a large-scale production facility for fuel ammonia. Operations are planned for the early 2030s, reaching 10 million tonnes annually by the mid-2030s.
▪ ND. DOE/LPO has invited Bakken Energy’s proposed hydrogen hub in near Beulah ND to apply under the Title XVII Innovative Clean Energy Loan Guarantee Program. Bakken plans to seek $1.7B DOE financing for the $2.35 billion blue hydrogen project, focused on end -users in long-haul trucking and agriculture, and (according to Bakken) implementing a new state-of-the-art Auto-Thermal Reforming (ATR) technology with 95% carbon capture rates. The loan would support acquisition of the Great Plains Synfuels Plant for conversion into a hydrogen production facility. Confusingly, this “hydrogen hub” likely does not qualify for OCED hydrogen hubs funding because LPO-funded projects are not eligible.
Large US Hydrogen-Related Projects
▪ US industrial gas company Air Products plans to invest $500m in a new green hydrogen plant in New York state, with commercial operation targeted to begin by 2027.
▪ Summit Carbon Solutions is partnering with 32 plants across the Northwest, including 6 in Minnesota, for its new CO2 pipeline project. Ethanol producers will use it to reach premium markets in states and counties that have adopted low carbon fuel standards.
▪ An early study for the 15,000 m2 Western Green Energy Hub Project includes plans to generate up to 50 GW of solar and wind power to produce 3.6 million tonnes of green hydrogen annually, for export to Europe and Asia. Total buildout costs are estimated at $70 billion (!!).
End-Users
▪ Enerview Venue will install Nickel Hydrogen batteries across maritime, large construction and other heavy industry projects. The deal with Nicon Industries calls for 50 MWh delivered in 2023, 100MWh in 2024, and 100MWh in 2025.
▪ Plug Power will provide Amazon with green hydrogen to power 800 long-haul trucks or 30,000 forklifts annually, beginning in 2025.
▪ Steelmaking in Germany. ThyssenKrupp is investing $2B, replacing the first of four blast furnaces will be replaced by a direct reduced iron (DRI) unit that reduces iron ore using hydrogen rather than expensive metallurgical coal. A new agreement between with BP also targets production of 400,000 tons of CO2-reduced steel by 2025. With with declines reaching 30% of current CO2 emissions by 2030.
▪ Ammonia. The newProject Nujio’qonik GH2 in Newfoundland Canada will use wind energy plus hydro as needed to produce green ammonia. However, the economics are sketchy: at best it seems to cost ~$1,000 tonne. Historically, ammonia sells for $200-400, but given the massive rise in NG prices (the key feedstock for standard production), ammonia is now >$1,000/tonne. Some traditional producers have shut down.
International News
▪ UK / France. French utility EDF plans to divert nuclear power to electrolyzers (at Sizewell B in the UK) at times when the supply of wind and solar is high, but critics claim the economics won’t work because using electrolyzers only occasionally will significantly increase the levelized cost of the hydrogen.
▪ EU. The European Commission published its 2023 Work Programme which includes creation of a European hydrogen bank (€3 billion) and comprehensive reform of the EU electricity market. The European domestic production target for hydrogen is ten million tons per annum, which combined with hydrogen imports should be enough to replace natural gas, coal and oil in hard to decarbonize industries.
▪ EU. The EU has authorized public funding for two initiatives by the multinational Italian companies Enel Green Power and Eni to create green hydrogen under IPCEI (Important Projects of Common European Interest) Hy2Use. This project will spend up to €5.2 billion to support research and development, the first industrial application, and the development of supporting infrastructure in the hydrogen value chain.
▪ France, Spain, and Portugal have agreed to replace the MidCat project with an underwater pipeline between Barcelona and Marseille that would carry gas first, followed by green hydrogen.
▪ German utility E.ON will partner with US hydrogen truck maker Nikola to decarbonize heavy-duty trucking. They plan to establish a hydrogen supply and related infrastructure for the heavy-duty truck market in Europe.
▪ UAE. The first hydrogen from the United Arab Emirates has arrived in Germany as part of a test delivery
▪ Chile. A green hydrogen delivery agreement was signed by Chile, Hamburg, and the Hamburg Port Authority.
▪ Germany and US. Topsoe will supply 5GW of solid oxide electrolyzer cells (SOEC) to First Ammonia, a US based, green ammonia plant developer. An initial 500MW of power will be installed in the world’s first commercial-scale green ammonia plants at sites in Northern Germany and Southwestern United States, to be operational by 2025.
▪ Norway. HydrogenPro is installing the world’s largest electrolyzer. It will produce or 100 kg/hour of hydrogen.
▪ China. Inner Mongolia has approved 17 renewable energy projects totaling 7 GW. These include seven wind-solar-hydrogen “demonstration projects” consisting of 435 MW solar, 1,240 MW wind, and 63,000 tons of annual hydrogen production capacity.
▪ China. Inner Mongolia Shengyuan Energy Group has invested over $170 million in a hydrogen production plant in Inner Mongolia, with a production capacity of 2 tonnes per day.
▪ Finland. CPC Finland and Prime Capital will build a 1GW green hydrogen and methane plant in Finland. It will include 200MW of electrolyzer power, and CPC Finland will provide 600MW of renewable energy. It will be operational in 2025.
▪ Australia. BP recently agreed to acquire a 40.5 percent equity stake in AREH (Asian Renewable Energy Hub), which uses solar and wind for power generation and to produce hydrogen and/or ammonia. AREH plans to generate 26 GW, about a third of all electricity generated by Australia in 2020. The AREH project will also generate 1.6 million tonnes of green hydrogen or 9 million tonnes of green ammonia every year.
▪ Australia. ENGIE will construct a 10MW electrolyzer for making renewable hydrogen, an 18MW solar PV system to power the electrolyzer, and an 8MW/5MWH lithium-ion battery for storage.
▪ UK. A £300 million hydrogen hub in Manchester, UK has been approved. The first phase will build 15-20MW worth of power capacity. Final capacity is expected to be 200MW.
▪ Denmark. 40 hydrogen projects are currently being scheduled, but site and pipeline locations are TBD. Some firms may change course in light of the uncertainty.
▪ UK. Air Products plans an 800MW blue H2 plant in UK; it accepts that the plant will raise the cost of energy and increase fossil fuel use.
▪ Egypt. $32 billion announced for green hydrogen and ammonia projects in the Suez Canal Economic Zone (SCZONE), in part targeted at the maritime industry; 13% of global trade is passing through the canal.
▪ Egypt. Fortescue Future Industries (FFI) (subsidiary of Fortescue Metals Group) plans a 9.2 GW project. It will produce green hydrogen and ammonia using wind and solar, and is positioned to become a hydrogen hub for Europe and the MENA region. At full capacity the project should house 4.5-6.5 GW of electrolysis capacity.
▪ Netherlands. 8 projects (100-850 MW) qualified for €783.5 Million in Dutch government subsidies. Half will be In Rotterdam. This is part of a €5 Billion package spread across Europe. Another €7 Billion is expected.
Economics and Investments
▪ Plug Power still expects to produce ~50 tons/day of green hydrogen by year-end 2022, down from an earlier forecast of 70 tons/day. It claims to be on track for its forecast 200 tons/day by end-2023. Plus has abandoned plans for plants in Pennsylvania and Canada, and is encountering permitting delays for another site in New York.
▪ Hydrogen investments break records. 680 large-scale hydrogen project proposals have been announced, representing a total of US$240 billion in direct investment between now and 2030, an increase of 50% since November 2021 alone
▪ Delta places huge order for sustainable aviation fuel made with 839MW of green hydrogenAmerican airline Delta is to buy 385 million gallons of green hydrogen-derived sustainable aviation fuel (SAFs), the largest deal of its kind made by a US airline,.
▪ Need for 24/7 production? The IEA 2019 Future of Hydrogen Report concludes that “even if electricity was free — as some claim excess renewable power would be — an electrolyzer costing $450/kW would produce hydrogen at a levelized cost of hydrogen (LCOH) of more than $4 per kg if it is used less than 500 hours per year. If it is used for 8,000 hours a year, the LCOH would fall to less than $0.50/kg.”
▪ Bloomberg NEF claims that an expected tenfold reduction in the cost of hydrogen electrolyzers coupled with ever-cheaper renewable energy will mean that green H2 will be cheaper to produce than NG-powered blue hydrogen worldwide by 2030. Of course, expectations are not always met. Further info on green vs blue hydrogen market dynamics.
▪ Hydrogen-focused investment manager Hy24 Partners has closed a €2 billion ($1.94 billion) hydrogen fuel infrastructure fund focused on the Americas, Europe, and Asia. It will invest across the clean hydrogen supply chain.
▪ Cummins unveiled its fourth-generation hydrogen fuel cell engine, which comes in single 135 kW modules and dual 270 kW modules tailored for medium- and heavy-duty vehicles and buses. Scania of Europe and Daimler Trucks of North America have already established partnerships with Cummins to build and install these next-generation fuel cell engines in prototype vehicles.
▪ Werner Enterprises (freight carrier, transportation, and logistics company) signs letter of intent with Cummins Inc for 500 hydrogen fueled internal combustion engines - the third significant sales announcement from Cummins in two weeks. Production is targeted for 2027. More info available here.
▪ Marsh has announced the launch of a first-of-its-kind insurance and reinsurance facility to provide dedicated insurance capacity for new and existing low-carbon hydrogen energy projects.
Reports From Nonprofits, Trade Associations, and Government
▪ CSU details potential development of a hydrogen economy in Ohio by ramping up renewable power generation and repurposing portions of its nuclear fleet for hydrogen production.
▪ Decarbonizing iron and steel by 2050. Achieving net zero by 2050 presents a US$1.4 trillion investment opportunity for players across the iron and steel value chain. This will entail upgrading existing steelmaking routes, adopting new technologies and offset measures and exploring new high-grade iron ore mines.
▪ Technology options, economic assessment, and policy regarding low-carbon production of iron and steel. Steel currently contributes roughly 6% of global CO2 emission and 8% of energy-related emission (including power consumption emission).
▪ Concrete’s path to decarbonization. Currently, concrete is responsible for 50-85% of the embodied carbon in any building project, with One ton of Portland cement producing one ton of CO2 emissions. Buy Clean requirements come into effect on January 1, 2023. From that date, the General Services Administration and other government purchasing agencies must obtain Type III EPDs (Environmental Product Declaration) for all building materials used on federal projects
▪ An American Petroleum Institute (API) study found blue hydrogen could eliminate an average of 180 million metric tons of greenhouse gas emissions annually through 2050 and cumulatively save power generators $450 billion (assuming existing hydrogen production incentives).
▪ NETL has published “Cost of Capturing CO2 From Industrial Sources,” an update to an original 2014 study that examines the costs of retrofitting a variety of industrial processes with state-of-the-art carbon dioxide (CO2) capture systems. The report is accompanied by NETL’s Industrial Sources Carbon Capture Retrofit Database (CCRD), a tool that allows users to estimate the cost of capture for a given industrial plant or an entire industrial sector, using either study assumptions or user inputs.
▪ Houston Energy Transition Initiative (HETI) issued a detailed report on the energy transition in Houston and Texas more broadly, supported by McKinsey.
▪ A report published by Cleveland State University detailing the development of a hydrogen economy in Ohio points to Ohio’s need to begin ramping up renewable power generation and repurposing portions of its nuclear fleet to make hydrogen in order to meet hydrogen demand in the long term.
▪ Water. According to Bluefield Research, 85% of planned hydrogen facilities are in water-stressed regions. Overall, Bluefield estimates water needs at 24 l/kg, GHD estimates 60-95 l/kg, and Melbourne’s Yarra Valley Water, which launched a green hydrogen pilot program last month, estimates up to 80 l/kg. Kallis Energy Investments recently canceled a 6-gigawatt green hydrogen project because the necessary water was not available.
Other News
▪ Risks of ammonia as the method for shipping hydrogen.
▪ Federal funding breakdown (IIJA, IRA, CHIPS)
▪ Negative press. A group of German and US researchers claim that green hydrogen and derived electrofuels will likely supply less than 1% of final energy by 2030 in the European Union and by 2035 throughout the world, even if electrolysis grows as quickly as wind and solar power did in the past.
▪ Mitigating the hazards of hydrogen. Hydrogen’s wide flammability range (44.0-75 vol%) and a low ignition energy (0.018 mJ) make it relatively hazardous. The report suggests mitigations.
▪ Southern California Gas has announced that its “[H2] Innovation Experience” in Downey is now using renewable hydrogen produced onsite, to demonstrate the resiliency and reliability of a renewable hydrogen microgrid that can power neighborhoods.
▪ New York Power Authority demonstration project. NYPA tested power generation using mixtures of 5%–40% hydrogen and natural gas. NOx, CO, and ammonia slip levels demonstrated that emissions could be kept below state required levels using existing post-combustion emissions reduction systems, with no known adverse effects on the gas turbine operations.
