US DOE Clean Energy Spending Momentum
Key Points: In early June, the U.S. Department of Energy announced programs to progress potentially $9+ Billion in clean energy spending: $8B from the Bipartisan Infrastructure Law for regional H2 hubs, a $0.5B loan guarantee for storage in Utah and Defense Production Act authorization that is targeting clean energy/energy efficiency production capacity.
Regional H2 Hubs: announcement that the bidding process is to begin this Fall. The Bipartisan Infrastructure Law authorized $8 Billion (B) in spending over the next five years for at least four regional H2 hubs — networks of clean hydrogen producers, consumers and connecting infrastructure. In early June, the Department of Energy (DoE) announced a Notice of Intent to issue the related Funding Opportunity Announcement; that FOA is expected by October 2022. Industry analysts have stressed the view that hub selection will be heavily dependent on confidence in customers and transportability. States are positioning for the bidding process. For example, Wyoming signed an agreement earlier this year with Utah, New Mexico and Colorado to propose a H2 hub region (with one customer the Intermountain Power Agency as discussed below).
Loan Guarantee for clean energy storage. The DoE announced closure of a $504 Million loan guarantee for the Advanced Clean Energy Storage project in Delta, Utah (this follows conditional approval announced in April). The 220 MW project is to take excess renewable energy-based electrical capacity and produce green hydrogen (via alkaline electrolysis) to be stored in salt caverns (9 Million barrels of capacity) for use during the year when needed. The hydrogen is to be used by the Intermountain Power Agency’s IPP Renewed Project, which is replacing a coal fired power plant with a hybrid Combined Cycle Gas Turbine capable of operating on hydrogen fuel (up to 30% upon startup in 2025e and transitioning to 100% by 2045). After this loan guarantee, the DoE has $2.5B in remaining loan guarantee authority in its Innovative Clean Energy project program.
Defense Production Act for clean energy production capacity. Finally, the DoE also announced in early June it had been given authorization to use the Defense Production Act to accelerate production of five technologies: (1) solar; (2) transformers and electric grid components; (3) heat pumps; (4) insulation; and (5) electrolyzers, fuel cells, and platinum group metals. The DoE’s announcement suggests that it is engaging with industry, labor and community representatives to develop specific investment/spending plans. DPA commitments can take the form of capital investment (support) or advanced purchase commitments by the government, which can be redistributed to the private sector or households, etc.