The US Department of Energy’s (DOE) approach toward clean hydrogen has transitioned from an ill-defined idea to an officially stated policy. The DOE now has several initiatives designed to bring together stakeholders to help drive down the cost of advanced hydrogen production, transport, storage, and use across multiple sectors in the economy. The unprecedented positive federal support for the hydrogen economy is having sweeping ripple effects across the energy, utility, industrial, and technology sectors.
Energy Earthshots Background
In June 2021, the DOE kicked off its Energy Earthshots initiative with Hydrogen Shot, a program with the goal of reducing the cost of clean hydrogen by about US$5 per kg to US$1 per kg within the next decade. Hydrogen Shot is part of the broader DOE goal to create a 100% electric grid by 2035 and to have net-zero US emissions by 2050.
For these goals to become a reality, the DOE is helping reduce the cost of renewable energy, as well as provide federal support and credits to spark innovation. “The Energy Earthshots are an all-hands-on-deck call for innovation, collaboration, and acceleration of our clean energy economy by tackling the toughest remaining barriers to quickly deploy emerging clean energy technologies at scale,” said DOE Secretary Granholm when the project was first announced. “First up is Hydrogen Shot, which sets an ambitious yet achievable cost target to accelerate innovations and spur demand of clean hydrogen. Clean hydrogen is a game changer. It will help decarbonize high-polluting heavy-duty and industrial sectors, while delivering good-paying clean energy jobs and realizing a net-zero economy by 2050.”
The goal of Energy Earthshots was to develop programs across the DOE’s science, applied energy offices, and Advanced Research Projects Agency-Energy (ARPA-E) to address tough technological challenges and cost hurdles, and rapidly advance solutions to help achieve climate and economic competitiveness goals. Even more important than Energy Earthshots were topics discussed at the DOE’s Hydrogen Program Annual Merit Review and Peer Evaluation Meeting. During this time, the DOE’s Hydrogen Program conducted a feasibility study and risk assessment for potential hydrogen hubs based on existing infrastructure, creating jobs, benefiting disadvantaged communities, reducing the cost of hydrogen, lowering carbon emissions, allowing access for end users, and propelling science and innovation. The DOE then issued a Request for Information in viable hydrogen demonstrations.
How Energy Earthshots Set The Stage For Further Funding
In many ways, the efforts by Hydrogen Shot, as well as the Request for Information issued by the DOE’s Hydrogen Program, was a precursor to the DOE’s now much larger hydrogen initiatives. In June 2022, one year after the launch of the Energy Earthshots program, the DOE’s hydrogen initiatives took a leap forward with the passing of the Bipartisan Infrastructure Law’s US$8 billion program to develop regional clean hydrogen hubs across America.
One of the main coalitions formed as a result of this funding is the Southeast Hydrogen Hub, which includes major utility companies Dominion Energy (Dominion), Duke Energy (Duke), Louisville Gas & Electric Company, Kentucky Utilities Company, Southern Company, Tennessee Valley Authority, and Battelle. The coalition is seeking US$1.25 billion of the US$8 billion in available funding which it says it will match with private funding. The coalition is expected to grow as several industries across Alabama, Georgia, Kentucky, North Carolina, South Carolina, Tennessee, and other Southeastern states become interested in exploring and implementing hydrogen as an energy source.
Advancing The Southeast Hydrogen Hub
The next step for the Southeast Hydrogen Hub is to organize and secure funding. In November 2022, the coalition submitted an initial concept paper that was answered with a notification of encouragement by the DOE on December 27, 2022. In late January 2023, the coalition was notified that it was one of 33 concept papers that was encouraged to advance to the application stage. The DOE said it received 79 concept papers in total. Formal proposals are due to the DOE in April, with decisions expected in the fall.
The coalition’s concept paper was straightforward and in line with publicly stated goals of both the DOE and the Bipartisan Infrastructure Law. The paper outlined ways that the coalition would grow clean hydrogen production, transport, and storage and then use that hydrogen to lower the carbon footprint of regional utilities. The coalition aims to develop a unified hydrogen ecosystem in the region so multiple industries are benefiting from the hydrogen investment. The coalition’s success is dependent on DOE funding as well as coordination between major players. Given that the goal to create a 100% electric grid is only 12 years away, it makes sense that utilities are spearheading the Southeast Hydrogen Hub efforts.
Nearly every major utility is investing in solar, wind, hydrogen, and/or renewable natural gas (RNG) to decarbonize the grid. In this vein, there is a joint interest by utilities to work together to secure funding instead of competing against each other.
Stated Goals And Efforts By Major Utilities
Duke, Southern Company, and Dominion are three of the top five largest US utilities by market capitalization. All three companies are major players in the Southeast Hydrogen Hub and are advancing the hydrogen economy in other ways as well.
Duke Energy
In its October 2022 Energy Transition Update, Duke Senior Vice President of Enterprise Strategy and Planning Swati Daji noted that natural gas and hydrogen will play a growing role in reducing Duke’s Scope 1 carbon emissions by 80% by 2040, by 50% by 2030, and reducing Scope 2 and Scope 3 emissions by 50% by 2035. Duke is retiring its coal plants by 2035 and replacing them with 30 GW of renewable energy. “Natural gas has been primary enabler of coal retirement and it will continue to be part of transition as a bridge fuel,” said Daji during the presentation. “These plants provide future flexibility to decarbonize as hydrogen and biofuels become viable, particularly for peak capacity needs.”
Like most utilities, hydrogen is a natural fit for Duke given its expansive natural gas assets and the ability to blend hydrogen with natural gas. “Hydrogen and biofuel, we like these alternate fuels because they can use our natural gas infrastructure,” said Daji during Duke’s October 2022 Energy Transition presentation. “Even today, natural gas-fired capacity can operate on 20% to 30% hydrogen blends. We anticipate replacing traditional gas as it becomes a smaller portion of our generation mix. In Florida, we are developing and testing a pilot that sources 100% green hydrogen produced from a solar project. Working alongside industry coalition and regional stakeholders, we are exploring opportunities in the Carolinas to advance hydrogen production, storage, and use. This will not only support decarbonization of the energy sector but will also have significant economic development for the region. Our approach to energy storage is to expand our pumped storage hydrogen capabilities and actively deploy current battery technology.”
Duke plans to introduce widespread hydrogen blending in the 2030s, with greater blend percentages going into the 2040 timeframe.
Southern Company
Southern Company expects to have just eight of its 66 coal plants in service by the end of 2028. It sees value in natural gas as a reliable and affordable energy source even in a carbon-constrained world. Southern Company called out its natural gas customers in colder climates as particularly dependent on natural gas even as renewable energy takes a larger portion of the energy mix. The company is investing in nuclear, solar, wind, storage, hydroelectric facilities, and hydrogen and expects to achieve net-zero greenhouse gas emissions across electric and natural gas operations by 2050.
Dominion Energy
Dominion has a stated goal to achieve net-zero greenhouse gas emissions across Scopes 1, 2, and 3 for all electric and natural gas operations by 2050. In its climate presentations, it has referred to hydrogen as the “swiss army knife of clean energy” due to its applications for electricity, renewable storage, heating, transportation, manufacturing, and cooking.
Dominion has been testing 5% hydrogen blending in its existing infrastructure. In 2021, it completed the first phase of its Utah hydrogen blending pilot project. In summer 2022, it completed similar pilot projects with 5% blending at training facilities in North Carolina and Ohio. In 2023, Dominion announced it plans to begin serving customers with a hydrogen blended system in Delta, Utah.
In its November 2022 ESG Update presentation, Dominion identified hydrogen, RNG, advanced small modular reactors for nuclear energy, energy storage, and appliance efficiency as five key technologies that would ramp investment from 2036 to 2050 as it closes in on its net-zero by 2050 goal. Also, in the presentation, the company said that it had one RNG project in service, three in commissioning, 11 under construction, and five more projects that will start construction soon. Dominion said that legislative and regulated support for hydrogen and RNG were essential for its long-term strategy to succeed.
In addition to its hydrogen testing as a fuel mix, Dominion said that it is also researching the potential to use hydrogen as a power generation fuel source.
Challenges Facing The Hydrogen Economy
The primary goal of programs like Hydrogen Shot and coalitions like the Southeast Hydrogen Hub is to reduce the costs of hydrogen to make it economically and environmentally competitive. As the hydrogen economy grows, hydrogen compression demand will increase. Developing lower cost compression will be essential for making the hydrogen economy a reality. The DOE has completed several helpful studies that discuss the importance of reducing hydrogen costs.
The National Renewable Energy Laboratory (at the request of the DOE) conducted an independent review of hydrogen compression, storage, and dispensing (CSD) for pipeline delivery of hydrogen and forecourt hydrogen production. The study found that CSD hydrogen costs for a pipeline scenario were about US$2.40 per kg. About 75% of those costs, or US$1.54 per kg, came from compression alone, while the other 25% of costs came from storage, dispensing, cooling, and other.
A separate study by the DOE involving cost and performance targets for hydrogen delivery and process technologies detailed the ways compression costs must come down to reduce delivery costs associated with distributed and centralized hydrogen production.
Technical targets for hydrogen delivery components forecasted a 25% reduction in total capital investment for transmission pipelines between the DOE’s 2020 target and its ultimate target and a 39% reduction in total capital investment for pipeline distribution from truck and service lines. The DOE’s ultimate target is based on 15% hydrogen market penetration. The DOE said that the specific scenario it examined assumes central production of hydrogen that serves a city with a population around 1 million and that the fueling station average dispensing rate is 1000 kg/day.
The cost reductions demanded from pipeline, terminal, and geologic storage compressors were far greater than pipeline transmission and distribution. The DOE is targeting a 50% reduction in uninstalled capital cost from pipeline, terminal, and geologic storage compressors between its 2020 target and its final target. It also expects to bring down the annual maintenance costs as a percentage of installed capital cost down from 6% in 2015 to 2% for the final target.
Perhaps the tallest order falls on small compressors, which the DOE expects to post boosted availability, higher compressor-specific energy, lower uninstalled capital costs, lower maintenance costs, and the ability to last for more than 10 years. However, the DOE did say that the compressor lifetime assumes that routine maintenance is performed on the compressor, such as replacement of seals and valves, at the service intervals specified by the manufacturer. It also said compressor longevity is dependent on operator know-how, proper operation, and maintenance.
In sum, compressors are expected to achieve higher performance at lower cost to make hydrogen production, transportation, and storage scalable.
Opportunities In Hydrogen Compression
The DOE has identified four main types of compression solutions that can help to reduce the costs of a full-scale hydrogen economy.
Reciprocating compressors use a motor with a linear drive to move a piston or a diaphragm back and forth. This motion compresses the hydrogen by reducing the volume it occupies. Reciprocating compressors are the most used compressor for applications that require a very high compression ratio.
Rotary compressors compress through the rotation of gears, lobes, screws, vanes, or rollers. Hydrogen compression is a challenging application for positive displacement compressors due to the tight tolerances needed to prevent leakage.
Ionic compressors are similar to reciprocating compressors but use ionic liquids in place of the piston. These compressors do not require bearings and seals, two of the common sources of failure in reciprocating compressors. Ionic compressors are available today at the capacities and pressures required at hydrogen fueling stations.
Centrifugal compressors are the compressor of choice for pipeline applications due to their high throughput and moderate compression ratio. Centrifugal compressors rotate a turbine at very high speeds to compress the gas. Hydrogen centrifugal compressors must operate at tip speeds three times faster than that of natural gas compressors to achieve the same compression ratio because of the low molecular weight of hydrogen.
(Data Source: US Department Of Energy)
Hydrogen Compression Solutions
There are several major original equipment manufacturers (OEMs) and service providers helping bridge the gap between the DOE’s expectations and reality.
Siemens Energy
Siemens Energy offers centrifugal/turbo and reciprocating hydrogen compression solutions. The company serves the entire integrated hydrogen value chain with components and equipment to support renewable power, grid connection, electrolysis, hydrogen compression and auxiliaries, synthesis processes, and hydrogen re-electrification.
Elliott Group
Elliott Group (Elliott) has been making hydrogen compressors for process applications in refineries, petrochemical plants, and energy storage. The company has a foothold in hydrocracker machines in refinery and petrochemical processes. Elliott’s new developments in hydrogen compression are in hydrogen recycling, pure hydrogen, net gas hydrogen, and hydrogen treater feed. Elliott recently introduced a carbon dioxide phase hybrid compressor pump solution for pipelines and carbon sequestration.
Mitsubishi Heavy Industries
Mitsubishi Heavy Industries announced a plan to deliver single- and multi-shaft multistage compressors by the middle of the 2020s to accommodate high-purity hydrogen.
Atlas Copco
Atlas Copco’s H2Y hydrogen compressor offers a containerized design for trailer filling and hydrogen refueling stations. The company also offers compressed natural gas solutions, compressors for hydrogen refueling stations and production sites, and compressors for carbon capture and sequestration.
Neuman & Esser Group
Neuman & Esser Group (NEA) has several hydrogen compression solutions, including its diaphragm compressors that can efficiently compress small to medium quantities of hydrogen to high and, if required, even extremely high pressures of more than 75,000 psi (5000 bar).
For small volume flows and high pressures, NEA offers TKH hydraulic-driven dry running piston compressors. According to NEA, TKH is able to reach very high pressures of up to 45,000 psi (3000 bar) and it also offers oil-, leakage-, and abrasion-free compression.
Burkhardt Compression
Like NEA, Burkhardt Compression (Burkhardt) has an extensive reciprocating compressor portfolio consisting mainly of diaphragm and piston compressor systems for upstream oil and gas, gas transport and storage, and solutions for the refinery, chemical, petrochemical, and industrial sector. Its 3C4S has a rate power of 430 hp (320 kW), while the 3LP250 piston compressor has a rated power of 936 hp (698 kW). Both piston compressors have high gas compression efficiency and oil-free high-pressure compression to meet high hydrogen purity. Meanwhile, the MD10-L diaphragm compressor has a rated power of 120 hp (89 kW) and provides leakage-free hydrogen compression.
Ariel
Ariel has a wide range of hydrogen compressors, ranging from 40 to 6700 hp (30 to 5000 kW) and discharge pressures up to 6000 psig (414 barg).
In June 2022, Ariel and Hoerbiger announced an agreement to provide non-lube compressor solutions capable of fulfilling the hydrogen compression requirements of the future hydrogen mobility market such as public transportation, large fleet vehicles, private trucking companies, trains, boats, and other high-volume, high-pressure, vehicle fueling applications. Under the agreement, Hoerbiger will provide packaged compressor solutions as a component to high-volume/high-pressure fueling facilities using any source of hydrogen.
The Long Road Ahead
The hydrogen economy has accelerated in the last three years because of ESG commitments and federal funding. The Southeast Hydrogen Hub is now nearing its deadline to submit its final proposal to the DOE. However, even if funding becomes secure by this fall, it will take much more than Federal support to advance the hydrogen economy.
A lot of advancements will be made by the owners, operators, utilities, and OEMs that are driving innovation in the hydrogen economy. But there is also the need for competent service and support from the companies, organizations, and people that are devoted to fostering safe and effective hydrogen best practices. The hydrogen economy requires total buy in. However, the dawn of a new hydrogen industry paired with growth from liquefied natural gas and RNG could lay the runway for multidecade growth in the energy sector.
In the coming months, we will likely see more proposals that seek to take a bite of that valuable US$8 billion hydrogen pie. The greatest risk isn’t the funding itself and where it is allocated, but whether these projects end up creating a lasting impact and long-term jobs. Industry-watchers would do well to monitor advancements in hydrogen technology, machinery, equipment, and systems, as well as if these advancements are being used in new projects to reduce costs.
At the end of the day, the success or failure of the hydrogen economy is all based on its economics. It took decades for renewable energy to be cost competitive with fossil fuels. Once hydrogen costs come down, the industry can thrive even without government subsidies. Now is the time to take advantage of the opportunities and funding available to accelerate the profitability of the hydrogen economy. Failure to do so could put the capital-intensive nature of the hydrogen economy in jeopardy and lead policy makers to pivot toward other options.
