The U.S. Energy Dept says it will launch the process next month to award the first half of $1.5 billion allocated in the 2021 federal infrastructure law for technology research, development and demonstration projects to “dramatically reduce” costs to develop and refine gaps in clean hydrogen alternative power. 

The $750-million funding is “set to advance electrolysis technologies and improve manufacturing and recycling capabilities for hydrogen and fuel cells,” DOE said in a March 15 announcement—with the Biden administration intent to cut costs of hydrogen produced from emissions-free power such as wind, solar and hydroelectric to $1 per kilogram in a decade, from about $5 per kg currently. Federal funds would also aim to find ways to cut production costs for electrolyzers—which produce clean hydrogen from water—to $2 per kg by 2026.

DOE seeks a "concept paper" from funding hopefuls by April 19 with a full application due on July 19.

DOE said first round funding awards over five years would include $300 million for low-cost, high-throughput electrolyzer manufacturing; $150 million for fuel cell membrane electrode assembly and stack manufacturing and automation; $100 million for electrolyzer component and supply chain development; $80 million for fuel cell supply chain development; $70 million for advanced electrolyzer technology and component development; and $50 million for a recovery and recycling consortium.  

Energy Secretary Jennifer Granholm termed hydrogen "another incredibly powerful fuel for many different applications, from low-emissions use in the construction and manufacturing industries to energy storage to powering our cars and trucks."  

The funding offered through DOE’s Hydrogen and Fuel Cell Technologies Office is part of two programs enacted in the Infrastructure Investment and Jobs Act, which authorized $1 billion for efforts to cut the cost of clean hydrogen produced via electrolysis and $500 million for improved processes and technologies for making and recycling clean hydrogen systems and materials. the agency said.

In what DOE sees as evidence of an emerging sector, it said announced installations of electrolyzers in the U.S. rose to about 600 MW last year from about 200 MW in mid 2021. Clean hydrogen is essential for reaching President Joe Biden’s goal of having an emissions-free electrical grid by 2035 and net-zero carbon emissions by 2050, the agency noted.

Markets Ups and Downs

As the technology funding process unfolds, hydrogen is building its market base.

Technology developers and others touted its prospects at the giant CERAWeek by S&P Global energy megaconference held March 8-10 in Houston, with a Mitsubishi Heavy Industries executive telling S&P Global that it has shifted the focus of its hydrogen business to the US market over the last year, seeing it as the "tip of the spear" for energy transition. 

The company's hydrogen division was part of the joint venture that developed a hydrogen storage facility in Utah that will power the Intermountain Power Project to bring clean energy to the Los Angeles region. It will be the world's largest clean hydrogen storage facility once it comes online in 2025.

Mitsubishi Power, contractor TIC and engineer Sargent & Lundy also lead an EPC team selected this month to build a 1.2-GW hydrogen-capable combined cycle power project proposed by developer Entergy in Orange County, Texas.

The $1.19 billion Orange County Advanced Power Station received utility regulators' approval in January, with work to begin this year and complete in 2026. The plant, which will replace three boiler steam turbine units with a combined capacity of 1 GW that are set to be retired by 2026, will be equipped with Mitsubishi Power’s hydrogen-capable power train. At commercial operation, it would be able to burn 30% hydrogen and ultimately scale to 100%, Entergy said.

Regulators approved the plant without the hydrogen component mandated, citing emissions concerns in use of grey hydrogen derived from natural gas, but the project team is proceeding to develop its hydrogen capabilities, says a report by Power

Meanwhile, the European Commission announced a planned hydrogen funding scheme to award a fixed premium to hydrogen producers per kilogram of hydrogen for up to 10 years, according to Reuters. The first auction this year would offer around 800 million euros. The payments will be made once the hydrogen has been produced. The European Union wants to produce 10 million tonnes of renewable hydrogen and import another 10 million tonnes by 2030. It now produces less than 0.3 million tonnes of hydrogen from electricity 

Also, in what is described as a first-of-its-kind analysis, climate-change non profit advocate Clean Air Task Force announced that hydrogen fuel cell vehicles surpassed battery electric vehicles in some operational measures for long–haul heavy-duty rucking. 

It found that the fuel-cell vehicles outperformed in terms of the number of stops required (three vs. eight), total time spent refueling (1.4 hours vs. 43.8 hours) and available room for cargo (accounting for the size of equipment). The report also said that while building charging and refueling infrastructure for the two types of trucks could prove equally challenging, fuel-cell EV refueling technology "has the comparative advantage of being similar to existing diesel refueling technology, making for fewer barriers to transition."

Hydrogen powered construction equipment models were also touted at the large triennial CONEXPO-CON/AGG trade show held in Las Vegas on March 14-18.

Energy sector consultant Wood Mackenzie points to another key source of federal development funding in the form of the 45V production tax credit for hydrogen development included in the 2022 Inflation Reduction Act. But in a March 14 report, it says details have not been aired publicly by the Internal Revenue Service related to how project developers can gain credits worth up to $3 per kilogram. These include instructions needed for calculating mandated carbon intensity measures and for use of Renewable Energy Credits to offset emissions. 

"These rules ... could have significant implications for the economic competitiveness of electrolytic or green hydrogen projects and the carbon intensity and absolute emissions of power grids," says Wood Mackenzie. "Some organizations would like to see green hydrogen developers prove they are consuming 100% renewable power by matching their electrolyzer’s electricity consumption to renewable-power generation on an hourly basis."

Princeton University and National Oceanic and Atmospheric Administration researchers also point out, in a new report, risks of methane emissions from hydrogen use—even green hydrogen produced by clean energy sources. Their analysis contends that hydrogen gas easily reacts in the atmosphere with the same molecule primarily responsible for breaking down methane.

''Hydrogen is theoretically the fuel of the future,'' said university researcher Matteo Bertagni, the lead report author. ''In practice, though, it poses many environmental and technological concerns that still need to be addressed."

At the CERAWeek event, Jennifer Holmgren, CEO of Skokie Ill., carbon recycling tech firm LanzaTech, told attendees: “People are waiting for the magic hydrogen bullet to be ready and they’re not doing other things that they could do to decarbonize.”