Melanie Davidson is a hydrogen policy and markets expert. Most recently she led clean fuels strategy at San Diego Gas & Electric. She is former board member of the California Hydrogen Business Council and was a founding staff member of the Green Hydrogen Coalition. Recently, over $2 billion of federal funding for the U.S. Department of Energy California and Pacific Northwest Hydrogen Hubs was terminated. These Hubs were premised on the use of “renewable, electrolytic hydrogen” — meaning hydrogen generated by using renewable electricity to power water-splitting electrolyzers. The resultant hydrogen would have replaced fossil fuels for heavy duty transportation, port operations, and power generation. The idea of a fully renewable, water-based, hydrogen economy for the West was an exciting one — both in its altruism and the premise, backed by the DOE’s 2021 “Hydrogen Shot.” The idea was for cheap, abundant solar and rapidly declining electrolyzer cost curves to generate hydrogen from water with zero emissions — for $1/kg by 2030, no less. However, cuts in Hub funding, together with a 2027 sunset date for projects to qualify for the hydrogen production tax credit, are just two more blows to the many pre-existing economic challenges facing a renewable hydrogen future. At least in California, those challenges include rising (not falling) capital costs for electrolyzers and electrical equipment, high interest rates, a scarcity of water rights, and high costs of grid electricity, qualifying renewable energy credits, and land. The renewable Hubs were anchored on the idea that by leveraging otherwise curtailed solar (terrawatt-hours worth annually), we could generate cheap, abundant, seasonally stored renewable electrolytic hydrogen at distributed locations, then convert the hydrogen back to the grid via fuel cells as needed. It’s an elegant idea, but it doesn’t pencil. The capital costs of those electrolyzers, compressors, liquefiers, hydrogen storage vessels and fuel
