Hydrogen

DOE on path to deployment for hydrogen, advanced nuclear, long duration energy storage

DOE on path to deployment for hydrogen, advanced nuclear, long duration energy storage
(Source: U.S. Department of Energy.)

Total investment across the hydrogen, nuclear and long duration energy storage sectors must increase from approximately $40 billion now to $300 billion by 2030, with continued acceleration until 2050 in order to stay on track in reaching decarbonization targets.  

That’s according to a series of new reports released by the U.S. Department of Energy (DOE) through its Pathways to Commercial Liftoff, which is aimed at spurring public and private partnerships to accelerate clean energy deployment.

Both the federal Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA) provided DOE with billions of dollars to invest in and support the large-scale demonstration and deployment of clean energy technologies over the next decade. The investments are intended to drive commercialization and unlock trillions in private investment.

The department said the reports provide a tool for ongoing dialogue with the private sector on how certain technologies can reach full-scale deployment.

At a March 21 virtual press conference announcing the initiative and release of the reports, there was a sense of urgency toward the private sector from DOE officers.

“If you’re fast follower, we’re never going to get there,” said Vanessa Chan, DOE’s Chief Commercialization Officer. “So hopefully these reports will help you guys move. Because if you don’t move now, you’re going to miss the boat.”

The initial Liftoff reports focus on clean hydrogen, advanced nuclear and long-duration energy storage (LDES) due to their “anticipated role in the clean energy transition, to complement that of mature clean energy technologies.”

Each Liftoff report is designed to provide a shared understanding on each technology’s current state, including pathways and challenges. We are summarizing them because they are lengthy but have published the links to each full report below.

DOE said the insights and takeaways in the reports were developed through extensive stakeholder engagement and a combination of system-level modeling and project-level financial modeling. The department said they are intended to be a resource to inform decision making across industry, investors and the broader stakeholder community.

DOE said the reports will be updated as the commercialization outlook on each technology evolves.

Clean hydrogen

Clean Hydrogen is expected to play a particularly important role in cleaning up hard-to-decarbonize sectors like refining, chemicals and heavy-duty transport.

According to the DOE Liftoff reports, clean hydrogen production has the potential to scale from nearly zero today to close to 10 million metric tons per year (MMTpa) in 2030 across the power, industrial and transportation sectors. That number could jump to 50 MMTpa by 2050. DOE says this represents an investment opportunity of $85 billion – $215 billion through 2030.

DOE said the U.S. clean hydrogen market is poised to grow rapidly because of federal funding for regional hydrogen hubs, incentives for clean hydrogen production in the Inflation Reduction Act (IRA), the Hydrogen Earth Shot initiative and decarbonization goals across the public and private sectors.

The department said the clean hydrogen production tax credit (PTC) in the IRA pulls forward Total Cost of Ownership (TCO) breakeven points to within the next approximately 5 years for certain projects, such as those with access to high capacity factor renewables across industrial and transport applications.

While incentives from the climate legislation have boosted clean hydrogen production, the department noted “favorable supply-side dynamics will be insufficient to scale the market, unless current chicken-and-egg challenges between scaling midstream infrastructure and end-use applications are also addressed.”

DOE said hydrogen cluster projects, including adjacent production and offtake, and regional hydrogen hubs in the U.S. will provide important proof points to scaling clean hydrogen and expanding regional distribution networks.

The Department’s Regional Clean Hydrogen Hubs program specifically allocates up to $7 billion to establish six to 10 regional clean hydrogen hubs across the U.S.

“The government provides up to 50% of the cost of these [Hydrogen] hubs, which means that our $7 billion needs to catalyze at least $7 billion of co-investment from the private sector, and hopefully a great deal more,” said David Crane, Director of the Office of Clean Energy Demonstrations.

“The role of the DOE is not only to enable a private sector-led clean hydrogen build-out and commercial transition, it is to accelerate it,” he added.

Full report here

Advanced nuclear

According to modeling cited in the report, a 2050 net-zero pathway in the U.S. requires adding approximately 550–770 GW of additional clean, firm power.

DOE modeling indicates advanced nuclear is likely to account for at least 200 GW of these capacity additions, assuming expected overnight capital cost reductions and favorably comparing with other clean, firm options.

Deploying approximately 200 GW of nuclear capacity in the U.S. could require close to $700B in capital by 2050, with $35-40 billion required by 2030. Challenges with transmission expansion, interconnection, land-use intensity, and other factors limiting renewables buildout are likely to make nuclear an even more attractive option, DOE said.

“We need to accelerate deployment of near-term technologies, which require generating a committed orderbook of over 10 reactors of the same design by 2025,” said Jigar Shah, Director of the DOE Loan Programs Office. “And mind you, I said orderbook, not MOUs or letters of intent or great press releases.”

Shah said this acceleration might require intervention to manage completion risk, citing possibilities like overrun insurance, tiered grants or government ownership or offtake. He added that waiting until the mid-2030s to deploy advanced reactors at-scale would lead to missing targets or a significant supply chain overbuild.

Shah said project delivery for this first wave of reactors would need to incorporate lessons from the buildout of Plant Vogtle Units 3 and 4 in Georgia. That project, the first U.S. nuclear additions in three decades, has been fraught with cost overruns and construction delays.

Full report here

Long duration energy storage

Long duration energy storage (LDES) can improve local and regional resiliency in a world with an increasing number of extreme-weather events, while also reducing the cost and risks around grid expansion.

DOE said the U.S. grid may need approximately 225-460 GW of LDES capacity for net-zero systems, representing approximately $330 billion in total capital investment.

Despite the upfront cost, DOE said by 2050, pathways that invest in LDES save $10-20 billion in annual operating costs and avoided capital costs, compared to pathways that do not invest in LDES.

Long duration energy storage technologies are diverse, with systems storing energy for 10 to 160 hours of duration of dispatch. The Liftoff reports break it down into two market segments: Inter-day LDES (10-36 hours) and Multi-day LDES (36-160+ hours).

According to the reports, scaling LDES will require action in three areas: public and private investment to drive down cost and improve performance; market intervention and reform to compensate differentiated performance and services; and flexible and rapid supply chain formation to avoid deployment bottlenecks ahead of a potential surge in demand.

Full report here