Paul Rodden • Season: 2023 • Episode: 246
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In episode 246, Chevron invests in ACES, and just how detrimental could the three pillars be in the US? I'll go over all of this on today's hydrogen podcast.
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Chevron invests in ACES, and just how detrimental could the three pillars be in the US? I'll go over all of this on today's hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where is capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen and this podcast will give you the answers. My name is Paul Rodden. And welcome to the hydrogen podcast.
In a press release on September 12, Mitsubishi power welcomes Chevron as partner in the advanced clean energy storage project. Mitsubishi power America's welcomes a new strategic partner to the advanced clean energy storage project in Delta Utah. Chevron through its Chevron new energies division, recently closed a transaction to acquire a majority interest in ACES Delta LLC, which is developing the Project. ACES delta is a joint venture between Mitsubishi power and Magnum development, a wholly owned subsidiary of Chevron. The addition of Chevron to ACES Delta underscores the immense potential the project brings to the advancement of lower carbon intensity solutions, specifically in the areas of hydrogen production, storage and utilization. ACES delta will leverage Chevron's experience in the fuels business alongside Mitsubishi powers industry leading clean energy technology solutions and services.
The goal is to further advance decarbonisation efforts facilitate growth in demand for hydrogen and develop future opportunities for commercially viable alternatives and the transportation power and industrial sectors. In a quote from Michael Ducker, Senior Vice President of hydrogen infrastructure for Mitsubishi power. The addition of Chevron to ACES delta is further evidence the partnership and commitment from a diverse group of experts and leaders are beneficial to the industry's continued pursuit of decarbonisation solutions. He continues by saying this project is a bellwether for the industry and serves as a model for future innovative clean energy products. We welcome Chevron and look forward to working together. Austin Knight, vice president of hydrogen for Chevron New Energy said, expansion of the lower carbon intensity hydrogen supply along with the development of innovative storage solutions is critical to the reduction of greenhouse gas emissions. At Chevron, we look for projects that are moving the needle in this respect, and the advanced clean energy storage project in Delta Utah is an example of a commercially viable project that will help advance a lower carbon future.
The advanced clean energy storage project is an industry and utility scale clean hydrogen facility designed to produce store and deliver green hydrogen to the Western US. It intends to use excess renewable energy such as wind and solar to power large scale electrolyzers supplied by Mitsubishi power that will produce lower carbon intensity hydrogen and oxygen. The advanced clean energy storage projects ACES one is expected to produce approximately 100 metric tons of hydrogen per day by mid 2025. The project intends to use Utah's unique geological salt domes to store the hydrogen across two massive salt caverns, each capable of storing 150 gigawatt hours of energy. The long duration energy storage capability of the salt caverns is expected to help improve resource adequacy by capturing excess renewable power when it's abundant and dispatching it back to the grid when it's needed. Offtake for the first two caverns has been secured by inter Mountain Power Agency for their IPP renewed project in central Utah.
The 840 megawatt natural gas power plant at IPP renewed plans to operate on fuel with up to 30%, lower carbon intensity hydrogen and 2025 and 100% by 2045. Okay, so a big announcement as Chevron gets majority interest of the ACES project in Delta, Utah. The Aces project has been around for quite some time, and this announcement further solidifies its validity. Now, this whole facility is responsible for the lion's share of energy used in Southern California. So it's vital that every piece of this project runs flawlessly. I had no doubts that the Mitsubishi units would work but the hydrogen handling was always a big question mark. With Chevron now involved. Their expertise in working with hydrogen is the perfect marriage to bring this project through to fruition. Okay,
I need to break away from the story for a second to share a quick word from our sponsor. From water electolyzers to flow batteries and fuel cells, Nafion™ Proton Exchange Membranes play a major role in advancing the Hydrogen Economy. Through their high conductivity, superior strength, and chemical durability, Nafion™ membranes provide the performance needed to make green hydrogen safer, more sustainable, and more affordable. Learn how Nafion™ ion exchange materials support the decarbonization of energy across the globe at www.nafion.com.
Now back to the show. Next, in an opinion piece from the hill, Jack Brower writes, our clean energy transition requires hydrogen, we must treat it fairly. Jack writes while driving my Toyota Mirai on the Long Beach international gateway bridge. I admired the impressive logistics of the Los Angeles and Long Beach ports. However, he says he was dismayed by the diesel emissions despite the region's wealth and regulations. He said we urgently need technology to eliminate hydrocarbon combustion, greenhouse gas and pollutant emissions. Congress came together to pass the bipartisan inflation Reduction Act, which includes a substantial investment in clean energy technologies. Notably, clean hydrogen received a production tax credit to empower its competition against polluting hydrocarbons. Why? Because people worldwide demand cleaner air and rapid reductions in greenhouse gas emissions. Hydrogen stands as a known clean energy source capable of enabling deep emission cuts in the toughest to decarbonize sectors where direct electrification is an effective, it can replace hydrocarbons and petrochemical production and energy intensive industries like heavy duty shipping, freight operations, steel, ammonia, and cement manufacturing.
Scaling up clean energy technologies, including clean hydrogen is vital for achieving net zero emissions. Clean hydrogen offers crucial energy conversion, storage and transportation features essential for our economy. The US Department of Energy predicts a rising demand for clean hydrogen exceeding 2 million tonnes annually by 2030 and 20 million tonnes by 2050. To achieve zero emissions and all sectors rapidly scaling up clean hydrogen production is necessary to unlock deep decarbonisation and de pollution, Congress responded by enacting the clean hydrogen production tax credit. Despite this reality, a major debate is underweight regarding access to the credit, particularly whether to impose additional requirements and regulations. The quote unquote three pillars proposal suggests enforcing additionality, hourly time matching and originality rules for clean hydrogen producers. These rules entail building new clean energy assets for hydrogen production, using clean power instantly for electrolyzer operation and producing hydrogen in close geographic proximity.
With a direct grid connection to the clean power source. Yes, we must eventually deliver clean energy within the temporal and spatial constraints that are sought by these proposed requirements. However, to achieve a zero emissions future with all renewable and clean energy technologies functioning ideally, we need a realistic path forward. Implementing these suggested requirements now could undermine Congress's goals of scaling, clean hydrogen production and economy wide decarbonisation. Requiring additionality today, it would be misguided. It assumes that producing hydrogen through water electrolysis would make the grid dirtier without building more renewable power plants. However, it overlooks many state and federal incentives and mandates rapidly Greening the Grid. There is an abundance of new renewable capacity being built, sometimes overwhelming transmission and distribution infrastructure, causing grid interconnection delays, negative electricity prices and curtailed renewable generation. Building clean hydrogen now can improve grid resilience and deliver renewable energy to sectors unable to use it otherwise, forcing clean hydrogen plants to wait for electricity infrastructure to catch up would slow down these benefits unnecessarily.
To scale up clean hydrogen, we must avoid immediately imposing additionality and other constraints in the nascent industry. These requirements were never applied to previous emerging clean energy sectors. Similarly, hourly time matching and originality rules would hinder clean hydrogen projects in the crucial early years, which we can't afford. Preventing the growth of us clean hydrogen industry could lead to its expansion overseas, sacrificing our strategic clean energy leadership and jeopardizing energy security. Moreover, it may cost 10s of 1000s of domestic jobs. The proposed rules could also increase greenhouse gas and pollutant emissions by discouraging clean hydrogen projects and incentivizing the continued use of hydrocarbons like diesel, natural gas and heavy duty industries, ports and freight corridors.
Congress recognize the urgency of nurturing the clean, renewable hydrogen industry and action is required now, Establishing infrastructure and supply chains takes time. Starting the green hydrogen industry now is essential to achieve zero emissions by mid century, saving lives and enhancing the quality of life, especially your heavy industries and important logistical hubs like the one he experienced driving over that bridge. Okay, so another thought piece on the negative aspects of the three pillars regulations proposed around electrolytic hydrogen from renewables, Jack Bauer does make a good point that renewable projects are rapidly expanding. So to make additionality a must for electrolytic hydrogen without fully understanding the total capacity of available renewable electricity generation is absurd.
Now the EU has enacted these regulations, but their enforcement will be gradual, not fully coming into effect for several years. And so if the US does go down this route, my hope is it will follow suit and not hamstring viable projects before they have a chance to develop. But also keep in mind that these requirements are for electrolytic hydrogen from renewable sources. This does not impact any hydrocarbon feedstock, such as SMRs CCUS, or methane pyrolysis, nor should it impact leveraging excess nuclear power for electrolytic hydrogen generation, all of which have a development price point lower than renewable generated hydrogen.
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