Last week, the U.S. Department of Energy (DOE) unveiled its timeline for receiving and reviewing proposals to develop six to 10 clean-hydrogen hubs and said its aim was to decide by the fall of next year which projects will share up to $7 billion in DOE support. The competition for those dollars is sure to be fierce, with some of the strongest proposals likely to come from states like Texas and California that have a lot of renewable energy and ambitions to be leaders in the energy transition. Also, there is a joint effort by three states east and north of Texas to develop a hydrogen hub that would take advantage of their existing and planned hydrogen-production and wind assets, natural gas supply, refinery and pipeline infrastructure, and carbon sequestration potential. In today's RBN blog, we discuss the DOE's recent announcement and the three-state hydrogen-hub plan, which is dubbed H2ALO.
It's not every day that the federal government makes a multibillion-dollar commitment to help the energy industry develop new markets and new infrastructure, so we've been paying close attention to the provisions of the Infrastructure Investment & Jobs Act of 2021 that support efforts to bring down the cost of producing clean hydrogen and develop hydrogen hubs. Most recently, in our three-part Gulf Coast Highway blog series, we discussed the government's definition of a clean-hydrogen hub — namely, “a network of clean hydrogen producers, potential clean hydrogen consumers, and connective infrastructure located in close proximity” — as well as the criteria the DOE will use in selecting hub proposals that it considers worthy of its support (things like feedstock diversity, end-use diversity, and geographic diversity). We also examined the proposed Houston Hydrogen Hub and the prospects for a clean-hydrogen hub in the Corpus Christi area. Then, in Ventura Highway, we discussed the Angeles Link project and other efforts to develop a hydrogen hub in California.
Today, we begin with a review of DOE’s September 22 Funding Opportunity Announcement (FOA), which officially launched the process of receiving and reviewing hydrogen hub proposals and, ultimately, deciding which proposals merit federal support. In addition to laying out the effort's timeline (more on this in a moment), the FOA revealed that the department expects to select six to 10 proposals that will receive a combined $6 billion to $7 billion in funding, subject to the number, quality and funding needs of the applications received. (The infrastructure law had indicated that "at least four" hubs would receive backing.) The DOE also said that the remaining $1 billion to $2 billion from the law’s $8 billion commitment to hydrogen hubs may be reserved for additional hydrogen hubs or “other supporting activities.” Concept papers from hub proponents are due November 7, while full applications must be submitted to the DOE by April 7, 2023. The department expects to notify the winners in the fall of 2023 and complete award negotiations with them in the winter of 2023-24. Most of the selected proposals would each receive between $500 million and $1 billion in federal support, though it is possible that a proposal could receive as little as $400 million or as much as $1.25 billion, again depending on its size and need.
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