Green Hydrogen Development Depends on Funding

By Published On: November 30, 2021

Public and private financial support is critical to attaining a viable green hydrogen industry, which is considered a key strategy to decarbonize the power, transportation and industrial sectors, proponents stressed during the first day of a two-day online seminar by the non-profit Green Hydrogen Coalition.

The center of activity on the green hydrogen front in the West is the Los Angeles Department of Water and Power. It is converting the 1,800 MW coal-fired Intermountain Power Plant in Utah to an 840 MW facility fueled partially, then entirely, by green hydrogen starting mid-decade. LADWP is part of a coalition working to turn green hydrogen from a boutique industry into a cost-effective energy source, including by creating offtake agreements for three of the muni’s in-basin plants, which are to provide about 2,500 MW of peaking power. These efforts are central to a private-public coalition known as Hy-Deal LA announced in May.

“We are making this a reality,” Martin Adams, Los Angeles Department of Water and Power general manager, said Nov. 30 of the green hydrogen plant conversions. But he added, “serious investments” beyond those of Los Angeles ratepayers are needed to help drive down the cost of hydrogen energy, particularly of electrolyzers that produce the fuel, from about $5 a kilogram to about $1.50 per kg by the end of the decade.

“It will take partnerships to be successful,” agreed U.S. Department of Energy Deputy Secretary David Turk. He said DOE and the Biden Administration are committed to supporting the development of low- and emissions-free hydrogen to help slash climate emissions in half by 2030 and decarbonize the economy by 2050.

DOE is providing $400 million under its Hydrogen Shot program announced in June, which is now limited to hydrogen produced from water molecules split by excess renewable energy. It aims to lower the fuel’s cost to $1 per kg by 2030. There is another $1 billion for electrolysis-produced hydrogen in the pending Build Back Better legislation, along with tax credits, Turk said. In addition, the federal budget includes $200 million in grants to support hydrogen fueling stations in rural and disadvantaged communities.

The main challenges to commercialization are the current high cost of renewably-powered electrolysis that produces the fuel and transporting it to where it will be used. Hydrogen can be blended in small quantities with natural gas for transport in existing pipelines. Using existing pipes, however, raises fears by some environmental organizations that natural gas companies are pushing this option to continue the life of natural gas. Pure hydrogen will need new or refurbished pipeline networks to manage the distinct differences between hydrogen and methane molecules. Transporting hydrogen by tanker trucks is a much costlier option.

At the forefront of decarbonization solutions

“Green hydrogen is at the forefront of preferred solutions to decarbonize,” said Louis Ting, LADWP director of power, planning, and engineering.  The department is a major player having the highest revenue of any large public utility. Its territory covers 475 square miles.

The heart of HyDeal LA is the IPP conversion. It’s considered ideal because it’s located near both AC and DC transmission lines connected to LA, has abundant water resources, is close to growing renewable energy facilities, and sits atop huge salt caverns considered prime hydrogen storage centers, Adams said.

Hydrogen’s strongest attribute is its expected ability to provide long-duration energy storage and clean power for heavy-duty vehicle fleets, including aviation and maritime. Ports, including the huge ones in Los Angeles and Long Beach surrounded by disadvantaged communities, are “epicenters of poor air quality,” said Janice Lin, founder and president of the Green Hydrogen Coalition.

Rachel Fakhry, NRDC Climate & Clean Energy Program policy analyst, called for more studies to assess the potential for green hydrogen to cut emissions and to determine suitable locations for its development.

“Green hydrogen has to be the way to go,” she said, adding there must also be a strong and clear definition of green hydrogen and assessments of whether it is actually zero emissions. She also pointed to potentially huge emission reductions if refineries and fertilizer manufacturers convert to renewable hydrogen.

SB 18 by Sen. Nancy Skinner (D- Berkeley), which failed to advance in the last legislative session, would have defined “green hydrogen.” It generally refers to hydrogen produced by renewable fuels and biomass. In addition, the Public Utility Code also includes in the definition fossil-fueled hydrolysis, which comes with fairly high emissions.

Creating a robust green hydrogen market to power everything from turbines to marine vessels would create many new well-paid jobs, and help clean up some of the most polluted neighborhoods, according to Lin.

DOE’s Turk added, “There is a real advantage to being a first mover.”

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