Home New loan DOE completes $504 million loan guarantee for Utah hydrogen storage project with 150 GWh seasonal capacity

DOE completes $504 million loan guarantee for Utah hydrogen storage project with 150 GWh seasonal capacity


Diving Brief:

  • The US Department of Energy said wednesday it secured a $504.4 million loan guarantee for a “green” hydrogen storage project in Utah that will initially store up to 150 GWh of hydrogen, providing “seasonal” energy storage ” in the West.

  • The loan guarantee with ACES Delta, a joint venture between Mitsubishi Power Americas and Magnum Development, marks the first clean energy loan guarantee issued by the DOE since 2011 and the first for a hydrogen project. “My mantra as Secretary of Energy is deploy, deploy, deploy,” Jennifer Granholm said Wednesday.

  • The Advanced Clean Energy Storage The project could be a model for other hydrogen storage projects, according to Jigar Shah, director of the DOE’s Lending Programs Office, or LPO. “This project, in our view, can be replicated, and that is what [LPO] trying to do … to get involved in deals that aren’t just one-off deals,” Shah said in an interview on Thursday.

Overview of the dive:

In the near term, the ACES project in Delta, Utah will be used to supply hydrogen to an 840 MW natural gas-fired power plant that is being built to replace the intermountain coal-fired power project. 1,800 MW by 2025.

Initially, the new plant, owned by the Intermountain Power Agency, a utility consortium that includes the Los Angeles Department of Water and Electricity, will run on 30 percent hydrogen. The power plant is expected to run on hydrogen only by 2045, although Mitsubishi Power will try to accelerate that schedule, according to a report in mid-February. presentation on the power plant project.

Using 220 MW of electrolysers, the ACES project aims to convert excess renewable energy to be supplied by power plant owners into hydrogen, which will be stored in two salt caverns.

The project will be able to store months of excess solar and wind generation in the western United States and help shift that electricity to seasons when there would otherwise be energy shortages, said Michael Ducker, vice -senior president of Hydrogen Infrastructure for Mitsubishi Power Americas and president of Advanced Clean Energy Storage I, the company behind the project.

The Intermountain Power Project plant sits in the midst of the West’s growing energy imbalance market, which has supported the sale of excess renewable energy that would otherwise have been reduced. Electricity from the existing plant is delivered to California via a 488 mile line at 500 kV. Also a The 345 kV line extends 50 miles to near Mona, Utah, and a 230 kV segment extends approximately 145 miles in Nevada.

“This particular [power] the plant is very well positioned, just inside the western network,” Shah said. “You have a transmission line from an 1,800 MW coal plant to Los Angeles. When you think about how electricity can flow and where the existing electrical infrastructure is located, this plant is certainly well suited on those fronts. »

The project will be able to store 150 GWh of hydrogen, roughly the same amount of battery storage the DOE expects on the U.S. grid in 2030, according to Shah.

“This level of storage is consistent with the amount of seasonal storage that National Renewable Energy Laboratory research has found necessary to decarbonize electric utilities in the western United States by 2035,” Shah said Wednesday. .

The loan guarantee for the project reflects the LPO’s core mission “as it will help commercialize long-term storage by enabling these technologies to cross the bridge to bankability,” Shah said.

The Biden administration is revitalizing the LPO, which last issued a loan guarantee in 2014 for the Vogtle nuclear project in Georgia.

“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 here in the States. States,” Shah said, noting that the ACES project could anchor a future hydrogen hub.

“We look forward to what’s next, including several upcoming closures and exciting projects like this,” Shah said.

At the end of May, the LPO was examining 77 loan applications totaling 78.8 billion dollars, according to DOE. The department has about $40 billion in remaining lending capacity, Granholm said.

About a third of loan applications are “high quality” and can probably pass the loan office review process “fairly easily,” Shah said.

After more than a decade of LPO inactivity, “this is really the kind of proof that the market will appreciate that they’re back in business,” Norton Rose Fulbright partner Kenneth Hansen said Thursday, adding that the pending loan applications “significantly exceed the DOE’s loan capacity. It will be interesting to see how they allocate the scarce resource or Congress responds by giving them the authority to run this pipeline,” he said. declared.

Meanwhile, Haddington Ventures, a private equity firm that owns Magnum Development, on Thursday announcement a $650 million equity syndication program to help fund the ACES project. Investors in syndication – The Alberta Investment Management Corporation, GIC, Manulife Financial and the Ontario Teachers’ Pension Board can increase their combined investment to $1.5 billion.