The first official Department of Energy (DOE) loan guarantee for a new clean energy technology project since 2014 will go to the Advanced Clean Energy Storage 1 project in Utah, one of the largest energy projects renewable hydrogen in the world.
On June 8, the DOE announced that it had closed the $504.4 million loan guarantee for the first phase of the Advanced Clean Energy Storage project. The massive venture of ACES Delta, a joint venture comprising Magnum Development, Mitsubishi Power and Haddington Ventures, aims to create a new path for decarbonizing the western US grid. The agency proposed the project a conditional loan guarantee commitment in Aprilsubject to several factors, including obtaining permits and funding for the $1 billion project.
The ACES Delta project envisions producing up to 100 metric tons per day of hydrogen from water and renewable energy sources using a 220 MW alkaline electrolyser bench manufactured by Norwegian company HydrogenPro – one of the largest such deployments to date. ACES Delta will store this hydrogen in two gigantic solution-mined caverns located in the only salt dome in the western United States, each capable of storing up to 150 GWh of energy.
“To put this into perspective, we project that there will be approximately 150 GWh of utility-scale battery storage across the nation’s power grid by 2030,” noted Jigar Shah, director of the DOE’s Lending Programs Office (LPO), in a call with reporters Wednesday.
The storage facility will provide long-term seasonal energy storage for the Intermountain Power Agency (IPA) Intermountain Power Plant (IPP) near Delta, Utah, a coal-fired power plant that needs to be re-engined with two advanced M501JAC powertrains from Mitsubishi Power as an 840 MW combined cycle power plant by 2025.
A major boost for hydrogen production and storage
The closing of the loan guarantee makes the ACES Delta Project the “world’s first and largest integrated clean hydrogen production and storage center to achieve full financial close,” said Michael Ducker, senior vice president of Hydrogen Infrastructure for Mitsubishi Power Americas and president of Advanced Clean Energy Storage I.
“Just to put three things into perspective on the scale, magnitude and importance of this project: First, the entire global installed base of electrolyzers at the end of 2020 was 250 MW,” said Ducker. “This project alone will nearly double global capacity, with 220 MW installed at our site. Second, hydrogen has been stored in salt caverns around the world for decades, serving multiple industries, with global volumes just under 15 million equivalent barrels,” he noted. “This project will have storage volumes of 9 million barrels. This represents an increase of almost 65% in global storage capacity for any type of hydrogen, and it will be the largest hydrogen storage site in the world. »
And third, while renewable energy penetration in the West is currently only 30% of the generation mix, “each of our Advanced Clean Energy Storage hydrogen hub caverns can store 150 GWh of clean, reliable energy, capable of efficiently storing months of renewable energy overproduction in the western United States and helping to shift that clean energy overproduction into seasons when energy deficits otherwise prevail,” he said. “While we are targeting 100% clean energy, this growing need for seasonal change is only going to continue,” he said. “So this project helps solve this ever-changing challenge. grid outages and inefficiencies and ultimately help the region meet its clean energy goals more reliably and cost-effectively.
Ducker noted ACES Delta had obtained all the major contractsincluding for picking by APIs, engineering, procurement and construction (EPC) contractors, as well as major equipment suppliers and operations and maintenance (O&M) contractors. Engineering giant Black & Veatch is expected to provide EPC services, while Mitsubishi Power will provide integration of all hydrogen equipment, including 220 MW of electrolysers, gas separators, rectifiers, medium transformers voltage and the distributed control system. NAES Corp., an O&M services company, will initially provide O&M services for the plant and oversee the projected current plant-related team of 20 people. WSP, another engineering giant, will provide EPC management services for the development of the two large salt cavern storage facilities, drawing on decades of experience in developing more than 200 salt caverns at worldwide.
Granholm: ‘It’s a big deal’
In a call with reporters on Wednesday, Energy Secretary Jennifer Granholm welcomed the efforts of the LPO to finalize the loan guarantee. “This is a big deal for the clean hydrogen space,” she noted. “Hydrogen has enormous potential for energy storage, it has enormous potential as a transport fuel transfer, as a 24/7 distributable clean energy source and as a way to decarbonize heavy industry. [The ACES Delta] The project will help reduce market risk and evolve the US hydrogen economy. This is a big deal for Utah where the facility is going to be located,” she said.
Granholm’s remarks come just days after the DOE published a Notice of Intent (NOI) to leverage $8 billion in Infrastructure Investment and Jobs Act (IIJA) funding to develop regional clean hydrogen hubs (H2Hubs), an initiative that is not tied to the guarantee process loan from the LPO.
The DOE describes H2Hubs as “a network of clean hydrogen producers, potential clean hydrogen consumers, and nearby connecting infrastructure.” The DOE envisions the H2Hubs “will form the foundation of a national clean hydrogen network that will significantly contribute to decarbonizing multiple sectors of the economy while enabling regional and community benefits.” This will be a key part of the National Clean Hydrogen Strategy and Roadmap, which is also required under the IIJA.
Last week, the DOE’s Office of Clean Energy Demonstrations (OCED) announced that it plans to publish a Phase 1 H2Hubs (FOA) Funding Opportunity Announcement within the September/October 2022 timeframe. OCED plans to award several scholarships for financial aid in the form of cooperative agreements. The estimated performance period for each Phase 1 award will be approximately 12-18 months, with a total performance period of 8-12 years for all four phases,” he said.
The DOE, meanwhile, continues to spearhead the goals established under its [email protected] initiative. In 2021, as part of this measure, the DOE launched the hydrogen shot, which involves reducing the cost of producing clean hydrogen to “$1 per kilogram of clean hydrogen in a decade”. The IIJA, in particular, sets clean hydrogen production cost targets for electrolysers at less than $2 per kilogram by 2026.
LPO back in business
The closing of the loan guarantee is also “a big deal for America because it’s a sign that LPO is finally officially back for business,” Granholm said.
LPO activity has accelerated significantly over the past 15 months, growing “from a largely inactive office to a hub of activity with 77 active applications seeking over $77 billion in loans,” it said. Shah told reporters. “The team has grown from less than 100 people to over 150 highly experienced and mission-focused professionals.” The focus of the LPO has also broadened, he suggested. “The goal of our efforts is not just to produce. The goal of our efforts is not just to provide short-term stimulus, but to create an institution that entrepreneurs and energy leaders can rely on to help commercialize their technologies and build robust industries right here in the States. United,” he said.
So far, however, LPO has only made a handful of offers. The ACES Delta project in April became the third conditional loan guarantee offered by the DOE under the Biden administration. LPO in December offered $1 billion conditional loan guarantee to Monolith, a company established in 2012 that has developed a methane pyrolysis process to convert natural gas into hydrogen and high-purity carbon black using renewable energy. And on April 18, LPO offered to conditionally loan up to $107 million to Syrah Technologies to expand its capacity to produce critical materials for lithium-ion batteries at the Syrah Vidalia plant in Louisiana.
The latest set of DOE loan guarantees went to participants in Vogtle’s ongoing nuclear expansion in Georgia. Between 2014 and 2019, the DOE issued up to $12 billion in loan guarantees for Georgia Power Co., Oglethorpe Power Corp. and three subsidiaries of the Municipal Electric Authority of Georgia (MEAG Power) to support the construction of two AP1000 nuclear reactors in Vogtle Units 3 and 4.