Green Hydrogen Keeps Poking Its Nose Into The US Energy Business

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The green hydrogen industry has the potential to monetize excess capacity from wind farms and solar arrays, gathering up clean kilowatts that would otherwise go to waste. That puts the industry somewhat at odds with the current state of affairs in US energy policy. Nevertheless, new ventures continue to squeeze into the market.

Green Hydrogen And The New Tax Bill

Hydrogen is the multi-tasker of the modern era, which means that the pace of global decarbonization depends on how quickly hydrogen can shake off its carbon-loaded supply chain. The primary source of hydrogen today is natural gas, with coal playing a significant but lesser part.

Non-fossil options are becoming available as new technologies emerge to extract green hydrogen from water or various bio-based resources, as well as human-made waste streams. The challenge is to bring the cost down to parity with cheap, fossil-sourced hydrogen (see lots more green H2 background here).

Cost parity has been a tough nut to crack, and the new federal tax bill didn’t make things any easier.

The Republican-controlled Senate passed a final version of the bill that wasn’t quite as bad as the initial version proposed by the Republican-controlled House, but it was bad enough. In one representative analysis, the news organization Hydrogen Insight notes that the bill “remains far less supportive than the Inflation Reduction Act (IRA) ever was and is therefore unlikely to drive a similar scale of investments in US clean hydrogen production — while its impact on upstream sources of renewable energy could make it more difficult for projects to get off the ground.”

Green Hydrogen Seeks Renewable Energy

In other words, green hydrogen stakeholders are hobbled by the availability (or lack thereof) of renewable energy resources. In addition to burdensome provisions in the new tax bill, the new “American Energy Dominance” policy has also provided the President with a platform to take administrative actions against wind and solar development in the US.

However, the American Energy Dominance policy does explicitly support other forms of renewable energy, including hydropower, geothermal, and biomass. Nuclear energy has also received a big thumbs-up from the Trump administration, and the Energy Department is also moving forward with programs that support marine energy.

Though the advanced geothermal and marine options involve emerging technologies with limited application for the here and now, hydropower is a mature, available resource, and the Indiana-based global firm Cummins is taking advantage of the window. On September 3, Cummins announced that its Accelera branch has supplied a 35-megawatt electrolyzer to the UK industrial gas firm Linde to run on hydropower at its facility in Niagra Falls, New York.

“Powered by renewable hydroelectric energy, the system will generate green hydrogen to help decarbonize industrial operations and accelerate the clean energy transition in the U.S.,” Cummins explains.

Linde has been looking forward to the delivery for three years. “The new plant will be the largest electrolyzer installed by Linde globally and will more than double Linde’s green liquid hydrogen production capacity in the United States,” Linde explained in 2022. The firm cited aerospace, electronics, and manufacturing among the markets for green hydrogen, reflecting the diminished role of hydrogen fuel cells in the ground transportation sector.

Green Investors Seek Green Hydrogen

At the startup end of the scale, the Oklahoma firm Tobe Energy has leveraged the substantial oil and gas experience of its principles to develop a new low-cost electrolyzer system.

Exactly how low-cost remains to be seen, but Tobe claims that its new system can reduce operating costs by more than 50% compared to conventional systems, partly by reducing waste heat from the process. Its business model is based on turnkey, transportable electrolyzer systems for onsite use, which shaves down costly hydrogen transportation and storage expenses.

As with Cummins and Linde, Tobe identifies non-transportation markets for its green hydrogen in the near term, including steelmaking and fertilizer production. E-fuels are also in the works at some point in the future, leading to the potential for cracking into the aviation market, among others.

The latest news from Tobe cropped up on September 5, when the firm announced a $1.8 million round of seed funding. The round was spearheaded by Cortado Ventures with participation from the Scissortail and Hurricane branches of 46 VC, along with Techstars, Wavefunction VC, and a roster of angel investors.

Tobe has already laid plans for manufacturing its first 100 commercial-scale units at its plant in Oklahoma. Keep an eye out for the company’s first project, to be located at the Zeeco Advanced Research Complex in Broken Arrow, Oklahoma.

If They Can’t Make It Here, They’ll Pack Up And Take It There

The clampdown on the US green hydrogen industry is too bad for the US, but there may be a silver lining for decarbonization advocates elsewhere around the globe. Earlier today, the Massachusetts green hydrogen startup Electric Hydrogen announced the acquisition of the New York hydrogen project developer Ambient Fuel, with an eye on the EU market.

Electric Hydrogen has developed a transportable electrolysis system which the company claims reduces costs by up to 60%, as well as reducing the installation timeline. The company’s hydrogen-as-a-service business model further pares down the need for a substantial upfront investment.

“Rising demand for clean hydrogen in both the U.S. and E.U. is accelerating the already fast-growing market for U.S. technology,” Electric Hydrogen explains. “Adding Ambient Fuels’ deep development expertise and portfolio of U.S. project sites will expand Electric Hydrogen’s ability to partner with customers on co-development of hydrogen projects and provide dedicated capital resources where appropriate.”

The capital end of things is supported by the leading firm Generate Capital, which has staked up to $400 million on hydrogen projects around the world. “This complementary relationship combines Electric Hydrogen’s industry leading electrolyzer technology with project financing to create attractive offerings for customers seeking the lowest levelized cost of hydrogen,” Electric Hydrogen noted in a press statement.

“Working with Electric Hydrogen, we can help solve current finance and bankability challenges and reduce LCOH, enabling more hydrogen projects to reach Final Investment Decision,” adds Scott Gosselink, Managing Director at Generate Capital.

If those FIDs don’t materialize here in the US, no worries, Electric Hydrogen is prepared to leverage RED-III, the EU’s latest Renewable Energy Directive framework, for opportunities overseas.

About That EU Green Hydrogen Market …

Despite some fits and starts, the nations of Europe continue to advocate for the growth of a robust domestic green hydrogen industry to help cut down on imports of Russian gas. Imported green hydrogen is also in play, with Canada in the running in addition to an ambitious plan to pipe it in from Egypt.

US producers may not have an opportunity to rush to supply Europe with green hydrogen, but at least firms like Electric Hydrogen can chip into the effort by supplying electrolyzers. The new RED-III framework has motivated oil and gas refiners in Europe to switch to green hydrogen, as Wood Mackenzie assessed in August.

“European refiners are set to become significant producers or buyers of green hydrogen, initially to decarbonise the refining sector and its derivatives as fuel for marine and aviation,” the firm explained.

Image (screenshot): Acclera, the energy storage and fuel cell branch of Cummins, is sending a 35-megawatt green hydrogen electrolyzer to Niagra Falls, where it will run on hydropower (courtesy of Cummins).