As the clean hydrogen sector grows from a tiny part of the hydrogen sector to the multi-billion-dollar industry it is now, tackling issues of supply and demand is one of the largest issues the industry faces. Therefore, the US Department of Energy (DOE) has announced its plan to handle this issue by choosing companies to receive funding who will then become part of the hydrogen value chain.
The US DOE has chosen to provide funding for six to ten regional hydrogen clusters, with the hope that this will encourage producers, infrastructure owners and offtakers to work together and jointly develop an extremely necessary hydrogen value chain. This value chain will present the companies with the opportunity to attract and gain financing, begin building their projects which they have planned and finally, decarbonise some of the country’s most heavily polluted sectors.
This project originally began as a programme outlined in 2021 Infrastructure Investment and Jobs Act and it was clear that it became popular incredibly quickly as 79 projects were originally proposed. As the US DOE could not fund all 79 proposals, they narrowed it down to just 33 for the second stage of applications, with the aim of encouraging the companies who showed the most promise to submit a full proposal. From this development, 22 companies agreed to propose their full project and now the US DOE must choose the winners.
There are multiple categories the companies who have made a bid need to fit in order to be considered as a potential winner of the funding. These criteria were created through studying both what all the projects offered, plus the data on the hydrogen projects and carbon dioxide infrastructure which are already being built or are in operation. This will allow the US DOE to make a fair choice based on what will benefit the country the most. The criteria from what the country needs is based on, the supply-side projects at each of the hubs must be producing a minimum of 50-100 tons per day, which will equal 18,250-36,000 tons per year if they are in operation every day. The hubs must also include end uses which are compatible with local demand and must also use or have plans to use infrastructure such as hydrogen or carbon dioxide storage. Alongside this, the hubs should be able to show carbon dioxide-equivalent emissions reductions on a well-to-gate basis, as well as be able and prepared to provide their own funding. Once the next selection has been made the winners will be chosen by comparing their proposals against necessary criteria provided by the DOE, these include geographic diversity, feedstock and production pathway diversity, end-user diversity and finally, employment.
Geographical diversity is important because the DOE wants to ensure that the hubs are spread throughout the US with at least two placed in areas that are fossil-fuel heavy. Feedstock and production pathway diversity is a key criteria because they want a certain number of hubs to specialise in fossil fuel-derived low-carbon hydrogen, which makes blue hydrogen, nuclear power-derived hydrogen, which makes pink hydrogen, and green hydrogen which is made from renewables. End-user diversity is integral because the project wants to ensure the hydrogen produced will go into use in multiple different sectors and they also value it going into employment in order to generate a wider variety of jobs.
Currently there are a few candidates who are viewed more likely than others such as, Alliance for Renewable Clean Energy Systems (ARCHES) based in California, HALO Hydrogen Club based in Arkansas, Louisiana and Oklahoma, and finally HyVelocity Club based in both Texas and Louisiana. As there are so many proposals the DOE have suggested that their choice will be based on geography over proposals in places as they want to ensure the projects they fund are well spread out and are located in the places they are needed most. This will be a tough decision to make and it may also mean that countries which fit the criteria perfectly will not be chosen because they are not in the area the DOE requires them to be in geographically. The choice will be made soon and all the criteria will be carefully checked to ensure the right decisions are made.