DOE Offers Hydrogen Production And Storage Facility $504.4 Million Conditional Commitment

April 29, 2022

by Paul Ciampoli
APPA News Director
April 29, 2022

The Department of Energy’s (DOE) Loan Program Office on April 26 offered a conditional commitment for a $504.4 million loan guarantee to the Advanced Clean Energy Storage Project, which would be a first-of-its-kind clean hydrogen production and storage facility capable of providing long-term seasonal energy storage located in Delta, Utah.

The facility will combine alkaline electrolysis with salt cavern storage for grid scale energy conversion and storage using hydrogen as the energy carrier, DOE noted.

The Advanced Clean Energy Storage hydrogen hub was announced in May 2019, and within three years is in the final stages of debt and equity closing.

Currently, the hub has secured all major contracts including offtake; engineer, procure and construct contractors; major equipment suppliers, and operations and maintenance providers.

DOE said that the Advanced Clean Energy Storage project could accelerate the commercial deployment of the clean hydrogen sector as the 220-megawatt electrolyzer bank would be one the largest deployments in the world.

The project could also help reduce curtailment of renewable energy in the Western U.S. by providing long-term energy storage that is currently not available, supporting DOE’s Long-Duration Storage Shot, DOE went on to say.

Participants in the existing Intermountain Power Project (IPP) in Utah have excess supplies of renewable energy, particularly in the spring. This results in the curtailment of renewable energy during those months and a shortage of renewable energy during subsequent months, DOE said.

Advanced Clean Energy Storage would convert that excess renewable energy to hydrogen that can be stored and until needed. This will help to seasonally balance supply with demand and further stabilize the grid, DOE noted.

Utah’s Intermountain Power Agency (IPA), a separate legal entity and a political subdivision of the State of Utah, was organized in June 1977 for the purposes of undertaking and financing a facility to generate electricity — the IPP.

DOE further said that Advanced Clean Energy Storage will convert and store excess electricity to provide the hydrogen fuel to the IPA’s IPP Renewed Project, replacing a coal-fired power plant with a hybrid combined cycle gas turbine capable of operating on hydrogen fuel.

By converting and storing excess electricity via hydrogen to fuel the IPP Renewed Project, Advanced Clean Energy Storage will be able to provide long duration, seasonal storage necessary to support the increasing penetration of intermittent renewable electricity generation.

The IPP Renewed Project is scheduled for start-up in 2025 when existing coal-fueled generating units at the site shut down and will be operating on a 30% hydrogen blended fuel (provided by Advanced Clean Energy Storage). The IPP Renewed Project will use increasing amounts of hydrogen as feedstock, eventually transitioning to 100% hydrogen by 2045.

“While this conditional commitment demonstrates the Department’s intent to finance the project, several steps remain, and certain conditions must be satisfied before the Department issues a final loan guarantee,” DOE said.

DOE noted that it is working to implement the Infrastructure Investment and Jobs Act’s hydrogen initiatives, which includes $8 billion for Regional Clean Hydrogen Hubs.

According to DOE’s Hydrogen and Fuel Cell Technology Office, hydrogen from renewable energy costs about $5 per kilogram. Achieving the DOE Hydrogen Shot’s 80% cost reduction goal can unlock new markets for hydrogen, including energy storage, DOE said.    

A report available to members of the American Public Power Association offers details on where the emerging hydrogen market is in the U.S. and globally, what is driving the growing interest in hydrogen and what obstacles are preventing hydrogen technology from being able to scale-up. The report is available here.

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