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The biggest green hydrogen hub in the US could be coming soon to Mississippi

Hy Stor Energy wants to use renewables to produce hydrogen in the oil and gas industry’s heartland.
By Jeff St. John

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(Fabian Sommer/Picture Alliance via Getty Images)

The United States could see its biggest green hydrogen hub by far up and running in Mississippi by 2025 — if a team of former natural-gas storage developers and a major Canadian energy infrastructure developer can pull off their plans.

On Tuesday, Hy Stor Energy announced that it intends to build a green hydrogen production and storage complex that could match the large size of such projects being constructed in Europe. By 2025, the first phase of the project could be making 110,000 metric tons of green hydrogen per year and storing more than 70,000 metric tons of it in underground salt caverns.

That’s more than 10 times the 5,500-metric-ton storage capacity of the next-largest green hydrogen project announced in the U.S. to date, the Advanced Clean Energy Storage project in Utah, which is expected to come online in 2025 and cost more than $1 billion to build.

Hy Stor Energy CEO Laura L. Luce declined to specify how much her company’s hydrogen hub is expected to cost. But she did say in an interview that Hy Stor’s financing partner, Canada-based Connor, Clark & Lunn Infrastructure, has more than $90 billion under management and is absolutely engaged and committed to equity as extensive as is required.”

Hy Stor’s engineering, procurement and construction partner, Geostock Sandia, has a 50-year track record of building underground storage projects around the world, including hydrogen projects in Europe, she added.

As for Hy Stor, Luce and her team have experience developing underground storage facilities for natural gas — more than $3 billion worth of such facilities that store about 100 billion cubic feet of gas across the country, she said. Luce’s career in natural-gas storage includes leading roles with energy and utility company Sempra Energy and with NGS Energy, a developer backed by billionaire energy trader John Arnold’s Centaurus Advisors hedge fund.

Now she’s turning her attention to storing green hydrogen, which is hydrogen produced using clean power. It will be kept in underground salt domes in Mississippi. Hy Stor has rights to develop several such underground sites, similar to ones that have been storing hydrogen for decades in Europe and Texas, Luce said. 

The U.S. already generates about 11.4 million metric tons of hydrogen per year, mostly for use in fossil fuel refining and fertilizer and chemicals production, with much of the infrastructure to handle it in the U.S. Gulf Coast region. But almost all of it is gray hydrogen” made from natural gas in plants using a process that emits carbon dioxide. 

Some fossil fuel and industrial gas companies have proposed adding carbon capture and storage systems to these plants to reduce or eliminate the CO2 emissions, which would then result in what’s called blue hydrogen. But clean energy and climate activists fear the blue-hydrogen path could prolong the use of natural gas, itself a potent greenhouse gas when released into the atmosphere.

Green hydrogen, made by using renewable electricity to power electrolyzers to split water molecules into hydrogen and oxygen, would be a zero-carbon alternative. It could replace fossil fuels in hard-to-decarbonize sectors such as steel and cement manufacturing, shipping and aviation. 

Green hydrogen as long-duration storage for zero-carbon power grids

Green hydrogen could also fuel power plants that now burn natural gas, potentially making it a vital resource for helping power grids reach 100 percent zero-carbon energy. 

Wind and solar power are now cheaper than natural-gas-fired electricity, and lithium-ion batteries can store the clean electricity those power sources produce for hours at a time. But longer-duration storage is needed, so utilities and grid planners have a secure, reliable means of producing electricity in the rare but unpredictable times when wind, solar and batteries can’t provide enough power to meet electricity demand.

That’s the core target market for Hy Stor’s project, Luce said. How can we ensure there are enough days of energy stored to bring reliability to the grid?” Hydrogen stored in underground caverns could offer days or weeks of backup fuel for these purposes.

Hy Stor plans to build its own renewable energy projects at or near its storage sites to ensure that the electricity powering its electrolyzers is 100 percent carbon-free, she added. That’s a different approach than using low-cost wind and solar power when it’s being generated in excess of power grid demand, which is a core premise of many of the longer-term plans for green hydrogen manufacturing that are now in the works.

A lot of the hydrogen conversations are about taking excess renewables off the grid,” Luce said. “[But] if you look toward when that might happen, it’s far off in the future.” Relying on that strategy also runs the risk that there won’t be enough excess wind and solar power available year-round to pay off the cost of building the electrolyzers and supporting hydrogen storage and transportation infrastructure.

Committing clean energy to hydrogen production will provide the greatest efficiencies from your solar facilities and your electrolyzers,” she said. Using electricity to produce hydrogen to later generate electricity is a relatively inefficient process; more than half of the energy content of the original electricity is lost along the way. This makes tightly managing the costs and efficiencies of the process all the more important.

The energy market structures don’t yet exist to offer long-duration energy storage assets enough certainty of paying off their costs over time. That presents a challenge for green hydrogen, as well as for the novel battery chemistries and kinetic and thermal storage systems being developed to play this role on carbon-free power grids. 

In that sense, Hy Stor is betting that the right policies and market structures will eventually fall into place. We think if you can get that reliability and resiliency of 24/7 clean energy, there’s a market there,” Luce said.

The potential success of green hydrogen storage hubs depends on both geology and proximity to power and pipeline infrastructure. The Utah site chosen for the Advanced Clean Energy Storage project combines underground salt caverns with a nearby coal-fired power plant that’s being converted to run on hydrogen. 

Hy Stor’s chosen site has the right geology thanks to its salt domes, and it’s close to potential customers. Gulf Coast utility Entergy, which is at the heart of the country’s biggest oil, gas and hydrogen complex, has made hydrogen a central part of its plans to reach net-zero carbon emissions by 2050.

Hy Stor also expects its location could open up its green hydrogen to markets beyond power generation, Luce said. It can be put onto thousands of miles of interstate highways; it can be put into a deep-water port; it can be moved on the Mississippi River; it can be put into natural-gas pipeline infrastructure,” she said. 

But potential markets for transporting green hydrogen in these ways are still in their infancy. 

Getting U.S. green hydrogen production up to scale

The U.S. lacks a national green hydrogen strategy to organize early investments so they can match green hydrogen production capacity with the infrastructure needed to put it to use across multiple industries. 

That’s in marked contrast to the European Union, which has a green hydrogen strategy that includes building 40 gigawatts of electrolyzers by 2030, and countries including South Korea and Japan that have plans to link hydrogen production with power generation, transportation and industrial processes. 

These countries all have hydrogen policies in place, which is why you’re seeing so much development there,” said Mona Dajani, global head of Pillsbury Law’s energy infrastructure practice team and an adviser to many large-scale hydrogen projects. Most are being built in countries with ample renewable energy — Germany, Denmark and Portugal are leaders on this front. The sites chosen typically combine refineries and chemical plants that can support large-scale production with infrastructure to transport the hydrogen to nearby sites for use in low-carbon steel or cement production or conversion into low-carbon aviation or ship fuel. 

In the U.S., the Gulf Coast region is a very popular location for hydrogen hubs” for similar reasons, she said. You want to be able to take advantage of strategic partnerships and locations.”

The U.S. Department of Energy has identified green hydrogen as a key technology to decarbonize sectors including steel manufacturing, clean ammonia, energy storage and heavy-duty trucks. The DOE’s Hydrogen Shot program launched in June is targeting technology and scale-of-production improvements to reduce today’s production costs for green hydrogen from about $5 per kilogram to $1 by 2030. The infrastructure bill passed by the Senate this summer would dedicate billions of dollars to expanding clean hydrogen infrastructure, but it’s currently tied up in protracted negotiations over a larger budget reconciliation bill.

Luce pointed to market data indicating that electrolyzers are on the cusp of real reductions in price.” NEL Hydrogen, a Norwegian electrolyzer manufacturer that’s targeting a $1.50-per-kilogram cost of production by 2025, is a supporter of the Hy Stor project. Matt Weaver, NEL Hydrogen’s North America business lead, called it a model for green hydrogen efforts” in a press release.

Hy Stor’s plan also has the backing of Mississippi Governor Tate Reeves (Republican) who wrote a letter to U.S. Energy Secretary Jennifer Granholm seeking federal support for the project. 

The DOE’s Loan Programs Office could be a source of loans or loan guarantees to help green hydrogen projects overcome initial financing barriers. It has already received applications for hundreds of millions of dollars of backing from the developers of Utah’s Advanced Clean Energy Storage project and Plug Power, a hydrogen fuel-cell maker that’s building hydrogen production facilities across the country. 

Luce said Hy Stor is in discussion with” the DOE but declined to say if the company had applied for support from the Loan Programs Office. 

Financing such a massive infrastructure project before the development of markets for its green hydrogen output is a little bit of a chicken-and-egg” problem, Luce conceded. It’s hard to determine what the market is when there’s no production at scale.” At the same time, hitting the cost targets that could allow green hydrogen to capture these nascent markets requires economies of scale like those Hy Stor is targeting, she said. It’s economics 101.”

Jeff St. John is director of news and special projects at Canary Media. He covers innovative grid technologies, rooftop solar and batteries, clean hydrogen, EV charging and more.