In spite of the federal policy apprehension, which is stunting the growth prospects, the US clean hydrogen sector leaders see a bright spot, which is Texas.
It is well to be noted that the tariffs imposed by President Donald Trump are affecting the sector, and so are the murky fates when it comes to federal tax credits and also the $7 billion hydrogen hub program. This kind of incentive is seen as very crucial when it comes to US green hydrogen producers.
As per BloombergNEF, the average cost to produce the gas by way of using renewable electricity and water is somewhere around $8 to $9 per kilogram, which is unsubsidized.
This is around four times more than making use of fossil fuels. Payal Kaur, the analyst from BNEF Hydrogen, remarked that more federal funding is required in order to make clean hydrogen cost competitive. Although the fact is that they are probably not going to get more support from the new US administration.
However, the heads of major industry players are looking out for an opportunity in order to bring down the production cost when it comes to clean fuel by way of tapping cheap renewable energy in the state of Texas.
Plug Power Inc., which is one of the US green hydrogen producers and equipment maker, is one of the companies that is planning to build within the state. They have a liquid hydrogen production plant in the works, which is just a few hours west of Dallas, and according to the company, it is going to create hundreds of jobs.
The chief executive officer of the company, Andy Marsh, said that politics happens to be local, and people care more about the jobs. He also went on to say that the characterization of the US green hydrogen industry as dead is not at all fair.
When Plug’s Texas facility is complete, it will go on to produce 45 tons of hydrogen every day, which is double the company’s present capacity. The plant, which is powered by an adjacent wind farm, is going to be funded in parts through a loan guarantee of $1.66 billion coming from the loan programmes office of the energy department.
Verdagy Inc., which is an electrolyzer maker, also happens to be building a clean hydrogen plant, which is near the Gulf Coast in the state of Texas. It will be initially able to produce almost 9000 tons every year. As per its president, Rahul Bammi. It is well to be noted that the company has already gone on to secure offtake agreements.
Teaming the electrolyses powered by renewable energy, which is cheap, and running them almost around the clock indeed makes it possible to bring the cost down, says Bammi.
Notably, Verdagy runs its Texas plant at a capacity of 80%, and the company is also stimulating that plant in California. As per Bammi, they know that they can get that 80%, and it’s not a theoretical construct. This is helping Verdagy bring the green hydrogen cost much lower to $3 per kilogram, and as per Bammi, the company is projected to get the cost down to $2 per kilogram in the next two or three years.
This kind of price is far below the Estimates by BNEF, which were released last year. As per them, the global cost of green hydrogen ranges anywhere between almost $4 to $12 every kilogram.
The group has gone on to find that the hydrogen that is produced in Texas is going to be among the cheapest across the US, although it also projects that the per-kilogram cost by the end of the decade is going to be almost $5.