DOE Plans to Invest Up to $1 Billion to Support Clean Hydrogen Hubs

by Peter Maloney
APPA News
July 7, 2023

The Department of Energy recently released a Notice of Intent to invest up to $1 billion in a demand-side initiative to support its regional clean hydrogen hub program.

The Regional Clean Hydrogen Hubs initiative is funded by the Bipartisan Infrastructure Law and aims to support the establishment of a national clean hydrogen network to help reduce emissions from energy-intensive sectors, such as industrial and chemical processes and heavy-duty transportation.

The Notice of Intent includes a Request for Information on the program’s design that the DOE said it intends to use to refine and validate its approach to providing demand-side support for the hubs to enter the clean hydrogen market.

A demand-side initiative is critical to ensuring the early commercial viability of a clean hydrogen hub because demand formation for a new energy source typically lags creation of reliable supply, the DOE said.

The demand-side initiative aims to support the growth and sustainability of clean hydrogen hubs by providing revenue certainty that hydrogen producers require to attract private sector investment, the DOE said. It said that the program also aims to help meet the needs of end-users who often prefer the flexibility to purchase hydrogen on shorter-term contracts and require confidence in the long-term availability of clean hydrogen before making critical, long-term investments.

Potential demand-side mechanisms could include one or more design factors such as pay-for-delivery contracts, offtake backstops, feasibility funding to support analysis by offtakers, or other measures that strengthen demand for clean hydrogen and increase revenue certainty for regional clean hydrogen hubs, the DOE said in the NOI.

The demand-side support mechanism should provide multi-year support for clean hydrogen produced by competitively selected projects affiliated with regional clean hydrogen hubs and help diverse entities take advantage of the potential of clean hydrogen, including non-profits, local government, and Tribes, the DOE said.

The White House, later this year, plans to announce the selection of six to 10 regional clean hydrogen hubs that will receive a total of up to $7 billion in federal funding.

Stakeholders all across the country have formed consortiums to bid for the clean hydrogen hub funding, including the Northeast, Southeast, Southwest, and Midwest.