PEM electrolyser system built by ITM Power. (Source: Reuters)

U.S. original equipment manufacturer (OEM) Plug Power has received a conditional commitment for an up to $1.66 billion loan guarantee from the Department of Energy’s (DOE) Loan Programs Office (LPO) for the development of six clean hydrogen production facilities, the company said.

The facilities will be built across the United States and will supply major companies to be used in the material handling, transportation, and industrial sectors, it said.

“We appreciate the partnership with the DOE Loan Programs Office and are pleased to have worked through an intensive due diligence process. The loan guarantee will prove instrumental to grow and scale not only Plug’s green hydrogen plant network, but the clean hydrogen industry in the United States,” Plug Power CEO Andy Marsh said in the statement.

Plug’s current low-emission hydrogen production network has a liquid hydrogen production capacity of around 25 tons a day.

The company’s production facilities use the company’s own proton exchange membrane (PEM) electrolyzer stacks, manufactured at a state-of-the-art gigafactory in Rochester, NY, and Plug’s liquification and hydrogen storage systems engineered at its facility in Houston, it said.

A conditional commitment is a loan offer approved by the Secretary of Energy to a project on the terms and conditions set forth between the DOE and the applicant.

Certain technical, legal, environmental, and financial conditions, including the negotiation of definitive financing documents, must be satisfied before funding of the loan guarantee, Plug said.

Electrolyzer projects jump

Global hydrogen electrolyzer projects in development reached 1.2 TW in the second quarter, 2024, rising 55.2 GW from six months earlier, according to Aurora Energy Research’s global electrolyzer database.

Projects show global momentum, though Europe remains a hotspot accounting for 32% of capacity share, followed by Oceania at 21%, the research group said.

Within Europe, Germany leads in electrolyzer project development, with about 9 GW in advanced stages, followed by the Netherlands and Britain.

Some 90% of all the projects are considered early stage, with around 130-140 GW at advanced stage developments, it said.

About 12% (or around 15 GW) of the global operational, or under-construction, capacity involve final investment decisions (FIDs), Aurora said.

For exclusive hydrogen insights, sign up to our newsletter.

Installed electrolyzer capacity in Europe is expected to reach 35 GW by 2030, falling short of the European Commission’s Net Zero Industry Act and REpowerEU by 76%, due to high electrolyzer CAPEX, rising cost of capital, and uncertainty in offtake agreements, the study said.

Hydrogen production costs vary across the European continent, from 4-20 euros a kilo ($4.3-$21.6), it said.

“The positive impact of clearer policy frameworks and support schemes is evident in electrolyzer projects globally, with new projects as well as some of the existing ones reaching a Final Investment Decision (FID),” said Dilara Caglayan, Research Lead at Aurora Energy Research.

“However, further cooperation still remains a prerequisite for the realization of national targets and the successful rollout of a future hydrogen market.”

Hydrogen key for US emissions reductions

Low carbon intensity (LCI) hydrogen could account for 8% of the U.S.’s emissions reductions, primarily in hard-to-abate applications in the industrial, transportation, and power sectors, The National Petroleum Council said in a report released in April.

The report, which developed 19 key findings and 23 key recommendations, was compiled with information from 200 participants from 100 organizations from across the industrial landscape.

The report found that costs to achieve net zero amount to around 3% of GDP by 2050, though this could increase by an additional 0.5-1.0% of GDP without LCI hydrogen.

Current policies and anticipated cost reductions for LCI hydrogen could increase total hydrogen demand by nearly double by 2050, however current policies and anticipated economics are not sufficient to catalyze demand growth of nearly seven times required by 2050 to reach LCI hydrogen deployment at scale, it said.

“Achieving this goal will require significant and immediate action to support the growth and scale-up of all aspects of the hydrogen market: supply, infrastructure, and demand,” the report said.

Three U.S. regions will lead LCI hydrogen market development in the country, led by the Gulf Coast, due to natural gas and renewable energy resources and access to infrastructure, the West, with policies for mobility applications, and the Great Lakes, due to high wind capacity and Appalachia natural gas access.

The report recommended legislative action to implement a long-term, economy-wide transparent price on carbon, a political hot potato in the United States.

Without, or as a bridge to, carbon pricing, the report recommended advancing both demand and production side incentives, including low-carbon intensity standards in the industrial and transportation sectors, and adjustments to the 45V production tax credits.

“The LCI hydrogen production mix will be driven by speed to scale, reduced delivery cost, and the carbon intensity of various hydrogen pathways,” the report said.

By Reuters Events Hydrogen