Houston coalitions leverage region's hydrogen potential in bids for $8B in federal funding

Two Houston consortiums have confirmed that they submitted bids for funding of $8 billion for clean hydrogen hubs in the region to the federal government.

According to the Department of Energy the money will be used to fund six to ten so-called H2Hubs that are intended to increase the commercial production of hydrogen. The funding comes from the Bipartisan Infrastructure Act of 2021.

A consortium led by Center for Houston's Future and University of Texas at Austin, as well as nonprofit GTI Energy, submitted the bid for the HyVelocity hub. The LIGH2T hub bid was submitted by the other group led by Southern States Energy Board, which includes the University of Houston as one of its academic partners.

Ramanan Krishnamoorti is the vice president for energy and innovation at UH. He told the Houston Business Journal that the two bids from Houston should not be viewed as a competition.

Krishnamoorti stated that neither of them knew if they were right or wrong. They welcomed anyone to join in their conversations. It is just another viewpoint.

Bret Perlman said that the two consortiums had discussed combining bids, but decided to submit them separately. Perlman said that the DOE could review the bids and determine if they should be combined.

Perlman stated, 'There are many good ideas and we would like to see them all come to fruition.' How can we move forward with all the hard work done?

In the Department of Energy funding notice, it is requested that proposals include four stages of data collection, research, analysis and design. Perlman stated that the ultimate goal is to go beyond government funding and to a marketplace.

Perlman stated that a wide range of companies have joined the hub application process, and have created an ecosystem. I think that the most important part of this project is to develop the hydrogen market, and not just apply for federal grants. Grants are important because they act as a springboard to begin building the market.

Perlman as well as Krishnamoorti both praised the government for its emphasis on the rapid development of clean hydrogen. In addition to the Bipartisan Inflation Reduction Act of 2022 and the Bipartisan Infrastructure Act, the 2023 Omnibus Appropriations Bill, passed in December, provided funding for research and development on several production pathways including low-carbon hydrogen and fuels derived by hydrogen.

The color of hydrogen is determined by the method used to create the gas. Green hydrogen is made by using renewable electricity in order to split water and produce hydrogen and oxygen. Virginia-based AES Corporation (NYSE AES) plans to launch a $4 billion green hydrogen project in North Texas by 2017. Blue hydrogen, on the other hand, is made from natural gas. However, the byproduct carbon dioxide is captured and not released into the air. One upcoming project is the ammonia plant planned by Canada's Enbridge Inc. (NYSE: ENB), near Corpus Christi.

According to a report by the Center for Houston’s Future and Greater Houston Partnership, a report published in May 2022 states that Houston could be the 'epicenter of a clean hydrogen hub across Texas and U.S. Gulf Coast'. A report from the Center for Houston's Future and Greater Houston Partnership in May 2022 outlines several advantages of the region, including access to clean energy, an existing production network and pipelines as well as low-cost gas and geological formations which make it easier to store carbon dioxide and hydrogen.

The report states that government commitments, direct incentive and regulatory frameworks can help reduce costs associated with hydrogen production and increase the demand.

Krishnamoorti believes that the DOE funding of H2Hubs is important to establish infrastructure. Governments will not want subsidizing hydrogen development in a few short years, he said.

Krishnamoorti stated that the government would heavily subsidise the first kilograms of hydrogen. "But by the time we reach the third kilogram, [the government] will want to stop subsidizing it, and we'll be producing enough to become self-sufficient."

H2Hub funding bids have come from all over the United States. Multiple bids were submitted in Appalachia and the Pacific Northwest. New Mexico, Colorado Wyoming and Utah jointly submitted a bid to represent projects in these states.

Perlman stated that the HyVelocity Consortium had been in touch with hydrogen entities across the country to investigate the directions of their bids and potential partnerships.

Perlman added that he was also in discussions with hubs around the country about how to work together. We're also having discussions with California hubs and we've already had these discussions in the Northeast. At the end of day, what we really want to create is a marketplace.