New fuel: A hydrogen fuel facility at the Port of Long Beach in California. Hydrogen produced in Texas is forecast to be the cheapest in the United States. — AFP
New York: Despite federal policy uncertainty stunting growth prospects, US clean hydrogen industry leaders at the BloombergNEF summit see one bright spot: Texas.
President Donald Trump’s tariffs are impacting the industry as are the murky fate of federal tax credits and the US$7bil hydrogen hub programme. Those incentives are seen as critical to green hydrogen producers.
Unsubsidised, the average cost to produce the gas using renewable electricity and water is about US$8 to US$9 per kilogramme, according to BloombergNEF.
That’s about four times higher than using fossil fuels.
BloombergNEF hydrogen analyst Payal Kaur said more federal funding is needed to make clean hydrogen cost competitive, though “we’re probably not going to get more support from this new administration”.
But the heads of major industry players see an opportunity to bring down production costs for the clean fuel by tapping cheap renewable energy in Texas.
Green hydrogen producer and equipment maker Plug Power Inc is among the companies planning to build in the state.
The company has a liquid hydrogen production facility in the works a few hours west of Dallas that it says will create hundreds of jobs.
“Politics are local, and people care about jobs,” said chief executive officer Andy Marsh.
He called the characterisation of the US green hydrogen industry as dead “not fair”.
When complete, Plug’s Texas facility will produce 45 tonnes of hydrogen per day, doubling the company’s current capacity.
The plant, powered by an adjacent wind farm, will be funded in part by a US$1.66bil loan guarantee from the Energy Department’s Loan Programs Office.
Electrolyser maker Verdagy Inc is also building a clean hydrogen plant near the Gulf Coast in Texas, which will initially be able to produce 9,000 tonnes per year, according to president Rahul Bammi. The company has already secured offtake agreements.
Pairing electrolysers powered by cheap, renewable energy and running them nearly around the clock makes it possible to bring costs down, said Bammi.
Verdagy will run its Texas plant at 80% capacity, and the company is simulating that plant in California today.
“We know we can get that 80%. It’s not a theoretical construct,” Bammi said.
That’s helping Verdagy bring green hydrogen costs down to US$3 per kilogramme, and Bammi projected the company could get costs down to US$2 per kilogramme in two to three years
That price is far below estimates released late last year of the global cost of green hydrogen, which ranges from US$3.74 to US$11.70 per kilogramme.
The group found hydrogen produced in Texas will be among the cheapest in the United States, though it projects that the per-kilogramme cost in 2030 will be US$4.82. — Bloomberg
