NCPA is exploring a hydrogen production facility with help from a DEED grant

by Peter Maloney
APPA News
April 13, 2021

The Northern California Power Agency (NCPA) is exploring the possibility of building a “green” hydrogen project, thanks in part, to the support of a Demonstration of Energy & Efficiency Developments (DEED) grant from the American Public Power Association.

The aim of the proposed project would be to build a hydrogen production and storage facility that could use over-generation associated with renewable energy resources to produce green hydrogen via electrolysis.

“We have been looking at the emerging technologies that can provide storage for renewable generation and hydrogen seems to check all the boxes,” Joel Ledesma, assistant general manager, generation services, at NCPA, said. “Producing hydrogen is not new but producing it at scale for the electric power grid is what is emerging.” The state of California, and the whole nation, is struggling with storage and generation that can be used to phase out fossil fuel generation, he added.

NCPA has evaluated other storage technologies but has found that lithium-ion battery storage is expensive for long term storage, pumped hydro storage is capital intensive and heavily regulated, and flywheel storage is difficult to scale up to meet commercial needs. NCPA has also evaluated technologies such as flow batteries, thermal salt storage, and compressed air energy storage and thus far deemed them not beneficial to its objectives.

NCPA would store the hydrogen produced at an electrolyzer and then blend with natural gas to be used as fuel at its Lodi Energy Center (LEC), a fast-start 300-megawatt (MW) combined-cycle plant the joint action agency uses to provide power during times of high demand.

NCPA’s current generation portfolio includes geothermal, hydropower, and natural gas-fired power plants with about half of the portfolio being emission free.

NCPA commissioned Black & Veatch to study the feasibility of a hydrogen production and storage facility. About half of the $96,600 study cost was covered by the DEED grant, which ran from December 2020 to February 2021.

Based on preliminary analysis and input from the turbine equipment manufacturer, NCPA believes its Lodi plant could co-fire up to 45 percent of hydrogen by volume.

“The blended fuel would provide about a 20 percent reduction in emissions from the Lodi plant and would be a step toward transitioning the facility to be fueled 100 percent by hydrogen,” Scott Tomashefsky, regulatory affairs manager at NCPA, said.

NCPA is considering siting the electrolysis facility near the Lodi plant, which would provide the dual benefit of being able to provide hydrogen for the transportation sector as well as using it for power generation. “To make hydrogen viable for the electric grid, it needs to be produced at a large scale,” so adding transportation could help make the project economics work, Ledesma said.

Among the primary conclusions of the study were that producing hydrogen using water electrolysis is technically feasible using commercially available technology and several vendors with commercial experience are available.

But even though there are several electrolyzer facilities operating around the world, the hydrogen energy storage facilities on the scale considered in the study are a relatively new phenomenon. The study also found that capital costs for hydrogen production and storage equipment is high and that electricity pricing contributes significantly to overall levelized costs. Nonetheless, projected pricing through the life of such a facility would appear to be “reasonable,” according to the DEED report.

In the study, Black & Veatch said it sees the potential for levelized cost of energy (LCOE) parity for a hydrogen facility that is used for co-firing a generator, as long as capital costs are reduced as much as possible, recovery and sales of oxygen from the facility are pursued, and renewable energy credit (REC) revenues can be shared with the renewable energy providers.

“Hydrogen may be feasible and practicable with the right incentives,” Ledesma said. The areas that need more study or follow-up, according to the DEED report, include:

• Additional analysis of third-party ownership of a potential Lodi hydrogen facility to increase capacity factors and allow for off-site sales to transportation and industrial markets;
• Contact with potential renewable energy developers regarding the potential for REC revenue sharing, as well as possible off-takers or distributors of recovered oxygen;
• A better understanding of potential permitting requirements at the local, state, and federal level; and
• Continued monitoring of activity in the California Legislature regarding carbon dioxide markets and incentives for hydrogen energy storage.

The study marks another step toward our goal of eventually being able to fire the Lodi plant entirely with hydrogen, Ledesma said. NCPA plans to present the idea to its governing commission in order to adopt it as an emerging technology to track.

“California is seriously looking at whether natural gas remains in the future configuration of the power grid.” Tomashefsky said. “This study provides more context and helps move the conversation forward on what to do with the existing natural gas infrastructure.”

The study also does double duty, Ledesma said. It not only provides NCPA with valuable input as it negotiates a future with lower carbon dioxide emissions, but it helps inform other utilities and the public as a whole, so “we look at it as a dual benefit.”

APPA will host a webinar related to the project on May 4, 2021 from 2:00 pm to 3:00 pm EDT.

Additional details about the webinar are available here and DEED members can access the full project report here.