[This is the third post in our Hydrogen Blog Series. Read the rest of the series here.]
In the last post, we identified that costs are one of clean hydrogen’s the biggest barriers. Another barrier is the lack of sufficient infrastructure for producing and transporting clean hydrogen. Here, we’ll discuss the Department of Energy’s (“DOE”) plan to tackle this barrier through its new Regional Clean Hydrogen Hubs Program, or H2Hubs. The H2Hubs Program was created through the 2021 Bipartisan Infrastructure Law (“BIL”). Per the U.S. National Clean Hydrogen Strategy and Roadmap (“Hydrogen Roadmap”)—which was finalized this past Monday, June 5—H2Hubs will provide up to $7 billion for the establishment of between six and ten regional clean hydrogen hubs across the country, the largest federally funded deployments of clean hydrogen technologies in the United States. Winners will receive up to $1.25 billion in funding from the federal government over four phases of development (planning, financing, construction, and operation) over the span of 8-12 years. DOE will also require that winners are able to secure a private funder to match the funding amount from the federal government. Through H2Hubs, DOE aims to create networks of hydrogen producers, consumers, and local connective infrastructure—which would be a major step towards breaking down the infrastructure barrier and accelerating the production of clean hydrogen across the country.
The Hydrogen Roadmap identifies eight key desired outcomes for the Program, including (1) clean hydrogen produced and used at scale in replicable demonstrations with sustainable business models for market lift off; (2) emissions and pollution reduction; (3) new sustainable jobs, including good-paying union jobs; (4) clear benefits for disadvantaged communities; (5) exemplary models for skills training, diversity, equity, and inclusion; (6) domestic manufacturing; (7) sustained economic growth and scaled-up clean hydrogen use; and (8) additional and sustained private sector investment in the industry.
H2Hubs is poised to help establish diverse facilities pulling from a variety of feedstocks and serving a large range of industries. The Program requires the DOE to approve hubs with different feedstocks, including fossil fuels (with carbon capture), renewable energy, and nuclear power. Additionally, DOE will require that the approved hubs service the power, heavy industry, commercial and residential heating, and transportation industries.
The application process for the Program opened in 2022 and closed on April 7, 2023. 79 applicants submitted initial concept papers. The size of the proposed hubs ranged one state to seven. While all applicants are permitted to move forward and submit full applications, in December, DOE encouraged 33 of the 79 applicants to continue with the process.
DOE will evaluate the applications on five criteria: technical merit, financial viability, the envisioned speed and strength of construction, the qualifications of the applicants, and plans to bring benefits to local communities and disadvantaged areas.
Concept papers and applications are private, but certain applicants have been publicly identified. We have been able to gather the following data: (1) the feedstocks proposed by applicants who were encouraged to submit applications are primarily from renewable sources, and (2) the proposed end uses are primarily industrial, followed by transportation, power generation, and finally residential/commercial heating.
Because the applications are private, there is some uncertainty around the types of facilities and projects that are proposed in each region. Both government actors and private companies have expressed interest in the program, and we know that state officials in every state have indicated support to DOE for hubs to be located in their own state.
Closer to home (for us, at least), is the coalition of Northeast states, consisting of New York, New Jersey, Maine, Rhode Island, Connecticut, Vermont and the Commonwealth of Massachusetts (“NE Hub”), which have proposed a $3.62 billion project and are seeking $1.25 billion through the H2Hubs program, with another $1.25 billion to come from a private funder. The NE Hub will produce clean electrolytic hydrogen for use in transportation, high-temp industrial thermal, and communal utilities for heat.
We expect more information about the proposals to emerge in the coming weeks and months. DOE has indicated that it expects it will hold pre-selection interviews over the summer, will select winners in the fall, and will begin to conduct award negotiations in winter 2023. The H2Hubs Program promises to help the industry overcome infrastructure hurdles and shape the future of clean hydrogen production in the United States.
