With a third of its economy tied to power generation, Wyoming is not a state that plans to sit back and watch energy transitions pass, taking its longtime livelihood with it. But building a new industry in a relatively small state is no easy task, according to Glen Murrell, executive director of the Wyoming Energy Authority.
“This is a competition for capital,” he said. But larger states with bigger balance sheets can offer various incentives to attract private companies; Wyoming’s options are limited.
The federal infrastructure bill could very well change that. Among the myriad of funding opportunities for projects such as large-scale carbon capture pilots, the infrastructure bill has allocated $8 billion to be split among four new “hydrogen hubs” in regions at select by the US Department of Energy. And while Wyoming isn’t about to put all its eggs in one basket — funding carbon capture or other demonstration projects certainly wouldn’t hurt — the scale of the hub’s funding, Murrell said, represents a “once in a generation” opportunity.
“If you consider how frugal the approach has historically been with respect to various constructions, you can’t look at the infrastructure bill and say it’s not enough,” Murrell said. “It’s 10 times, maybe even 20 times more than anything that’s happened in the last 10 to 20 years.”
Wyoming, of course, isn’t the only state to take notice of the federal government’s $8 billion offer. At the Electric Power Research Institute, Jeffery Preece, director of research and development for low-carbon resources, said he’s had conversations with about 15 regional groups seeking help with their requests. to become hydrogen centers – although the DOE has not yet published specific selection criteria.
The sentiment that the first regions to make significant investments in hydrogen will reap the greatest economic rewards is justified, Preece said. But while it might be easy to point to states like Ohio, California and Texas, where hydrogen investment has already begun, as the likely hydrogen hubs of the future, Preece doesn’t think the decision will be so simple. Winning the hub designation, he said, will take more than just the ability to create hydrogen – hubs will need to secure buyers, ensure the necessary infrastructure is in place and form a new massive workforce.
But even with all those pieces in place, the future of hydrogen is uncertain, Preece said. Selecting various hydrogen hubs – each with their own specialty – may be the best strategy for success.
Calling all buyers
Most conversations around hydrogen continue to focus on how it will be made, but potential production capacity is unlikely to be the limiting factor in creating future hydrogen hubs, Preece said. The real challenge, he said, will be ensuring production can connect to potential applications, especially given the DOE’s interest in funding shovel-ready projects almost immediately.
“The big issue in this area will not be hydrogen supply,” said Brett Perlman, CEO of the Center for Houston’s Future. “The real driver is going to be on the demand side – we have to go where the customers are.”
It’s also one of the Houston-area’s strongest selling points as it aims to become a hydrogen hub. Houston already produces about a third of the nation’s hydrogen, which means most of the biggest users and necessary infrastructure are already there, Perlman said.
“Today all of the hydrogen is used in feedstock, and therefore 95% of the petrochemical industry is on the Gulf Coast of Texas,” he said. “These are massive factories, worth trillions of dollars of investment, that can’t be anywhere. ”
Hydrogen in the region is currently produced using steam methane reforming to separate natural gas into its constituent elements, which means that the current hydrogen industry is carbon intensive. So the top question for hub planners in Texas, Perlman said, is which users will be the first to agree to pay a premium for green hydrogen, typically produced by using electrolysis to split water into hydrogen and oxygen.
They’re still working on answers to that question, Perlman said, but industries with higher margins such as specialty chemical makers seem likely candidates, and Texas has ample supply of low-cost wind and other forms of renewable energy to drive electrolysis. .
Bringing hydrogen to the masses
Murrell, Wyoming, agrees with Perlman and Preece on the importance of securing potential customers for their hydrogen. But that’s one area where Wyoming’s enforcement might struggle. The state has all sorts of options to create the alternative fuel – enough natural gas for conventional techniques, experience in carbon capture to mitigate emissions, vast wind resources, and nuclear presents an option for emerging technologies.
“The problem in Wyoming is about consumption,” Murrell said. “We can produce enormous quantities of hydrogen, all clean. But Wyoming is a very small state, and being able to complete the demand chain was our big challenge.
To address this shortcoming, Wyoming signed an agreement in late February with the states of Utah, New Mexico and Colorado that proposes the creation of a four-state hydrogen hub region in the Mountain West. Wyoming and New Mexico, with their wind, solar and natural gas resources, could focus on production while supplying buyers in the larger, more urbanized states of Utah and Colorado.
“It’s going to be a tough challenge for other hubs, to have all the pieces in place, and this interstate region has all the pieces checked,” Murrell said. “And the simple geography is good for us – we are in the central part of the country, and many other hub concepts are on the coast. If we want to build a national infrastructure, a hub in the middle creates a strategic piece.
Murrell’s view of how a hydrogen hub would evolve in the Mountain West differs from Texas’ vision. Instead of big industrial customers, Murrell thinks demand would grow first in the transportation and utility sectors — potentially starting with the intermountain power project in Utah.
Located in central Utah, the Intermountain Power Project is a coal-fired power plant being retrofitted to provide clean energy derived from the combustion of hydrogen in gas turbines to communities across southern Utah. California. It aims to start operations in 2025, starting with a mix of natural gas and 30% hydrogen, and progressing to 100% hydrogen as it approaches 2050. The project, which hopes to have a contract to hydrogen supply in place by the end of this year, is currently listed on the DOE’s H2 Matchmaker website as one of the nation’s largest potential hydrogen buyers.
The need to export the majority of its hydrogen out of state poses a question of storage and transportation, but Wyoming should have that covered, with access to existing gas pipelines extending to the west coast, said Murell. There is also potential for job growth in research and development as the industry seeks answers to additional questions about hydrogen storage and transportation. And at the same time, Murrell said, he would like to see the development of smaller buyers – fuel cells used as emergency generators for hospitals and the conversion of maritime fleets to hydrogen, with service stations built along. major shipping lanes such as I-80.
“Perhaps our biggest pitfall is that we will emerge brawny, politicized, overtaken by other parts of the country that have more political mass behind them,” Murrell said. “That’s the biggest risk, I think.”
Natural Gas Workforce Transition
Infrastructure to connect hydrogen producers to customers is also a priority in the Los Angeles area, where Southern California Gas has already proposed building a 100% hydrogen pipeline equivalent to 25% of Los Angeles’ existing natural gas network. the company.
“The main prerequisite for large-scale hydrogen is affordability,” said Yuri Freedman, senior manager of business development for SoCalGas. “But you have to have it at a cost people can afford, and the only way to get hydrogen to any place at low cost is by pipeline.”
But while critical, Preece said, buyers and infrastructure alone won’t be enough to land a hub designation — there’s also the question of how applicants will find the massive manpower needed to install. all these projects. A proposed hydrogen roadmap, produced by a group led by the Fuel Cell & Hydrogen Energy Association, estimated that transitioning to a hydrogen economy would create 3.4 million new jobs by 2050, with 700,000 workers needed by 2030 compared to 200,000 jobs in hydrogen. manufacturing today.
That’s why Freedman thinks hubs will most likely grow around existing natural gas production centers: while many of the jobs that will enable a hydrogen economy don’t currently exist, some of the skills needed to kick-start the process are already used in the natural gas industry.
“If we really intend to reduce our use of natural gas, it makes sense to take the workforce now focused on natural gas and gradually transition to hydrogen service,” Freedman said. “For me, it’s the logical transition.”
Preece, however, is not convinced that every future hub will have natural gas experience. There are so many potential technologies for making, using and transporting hydrogen — many of which are still ideas in research labs — that it’s unclear which concepts will ultimately win out.
Rather than focusing on the odds of an individual hub succeeding, Preece said, “I think the portfolio that the DOE chooses at the start could probably be quite diverse, to make sure that the risks associated with that kind of transition are distributed.”
There’s also the question, Preece said, of how the DOE will implement its expressed interest in equity and environmental justice, and how to ensure that the $8 billion has the greatest impact in an area where some potential hubs are already well on their way to becoming a reality. Houston, Perlman said, “is already a hydrogen hub.” Federal funding could hasten the transition there, but Perlman believes it will happen whether Houston is selected or not.
But for smaller communities in Wyoming, the future is more precarious. Failure to achieve hub designation, Murrell said, “would slow our progress, our transition, and manifest itself in terms of the communities in Wyoming that would suffer.”