New Mexico is still in the running for federal funding to help build a regional hydrogen hub

New Mexico is still in the running for federal funding to help build a regional hydrogen hub Main Photo

30 Dec 2022

News Categories, Press Release

New Mexico and three neighboring states remain in the race to win federal funding for a regional hydrogen hub after receiving a favorable assessment of their initial proposal.

The U.S. Department of Energy issued its first responses Dec. 22 regarding proposals, or “concept papers,” that states submitted in early November to compete for a slice of $7 billion in new federal money to build hydrogen hubs around the country. Of 79 project proposals submitted, the DOE “encouraged” 33 of them to continue pursuing their applications. The other 46 prospective applicants were “discouraged” from preparing a full funding proposal.

New Mexico – together with Colorado, Utah and Wyoming – are among 33 project developers now “encouraged” to continue with their “Western Inter-State Hydrogen Hub” initiative, which the four states formed as a joint partnership in February. WISHH members will now develop a detailed application about their collective plans for submission to the DOE in April, which could lead to up to $1.25 billion in federal funding for the initiative. The first grant awards will be announced next summer, said state Environment Department Secretary James Kenney, who is working with the Economic Development and Energy, Minerals and Natural Resources department heads to advance the WISHH proposal in cooperation with officials from the other states.

“We now have 32 competitors,” Kenney said. “If they further downsize the list, I think we’ll still be in the mix, because I believe we have an excellent and compelling application for funding.”

The participating WISHH states released their concept paper – albeit with redactions regarding some individual project details and companies involved – in mid-November. Overall, the proposal outlines eight specific “anchor” projects for producing and using hydrogen in the four-state region, with three located in New Mexico and a fourth cross- border project that would include the state’s northwestern region.

Among the New Mexico-based projects are:

  • a plan by Tallgrass Energy to convert the coal-fired Escalante Generating Station near Grants, which shut down in 2020, into a hydrogen production and generating plant;
  • a project by Libertad Power LLC to build a hydrogen production facility near Farmington to supply fuel for a new “Southwest Clean Freight Corridor” that would include a vast distribution network running from the Port of Los Angeles to Central Texas for hydrogen-based trucks to fill up as needed; and
  • a plan by Navajo Agricultural Production Industries to convert farming operations to hydrogen fuel.

Together, the eight anchor projects would produce at least 1,000 metric tons of hydrogen per day once operational. That would supply a wide variety of end uses, including everything from electric generation and clean transportation to powering up hard-to-decarbonize industrial sectors like steel production.

The initiative also calls for broad hydrogen-related infrastructure development, such as new dedicated hydrogen pipelines and underground and surface-based storage facilities. The WISHH partners are also working with more than 100 companies that expressed interest in establishing hydrogen-related product and service businesses throughout the four states.

“We think of it like building a mall, where the anchor tenants are like a Macy’s,” Kenney said. “The anchors help to attract many additional companies interested in building out the mall to create a broad, sustainable hydrogen economy.”

It’s not yet clear if federal funding will be specifically earmarked for projects included in DOE-approved proposals, or if awardees can choose how to distribute money from grants.

“We hope we’ll be allowed to allocate money based on our knowledge of our own needs and local economies,” Kenney said.

The federal funding – included in the bipartisan infrastructure law approved last year – will attract many billions more in private investment, since all grants require matching funds. The 33 firms now on DOE’s “encouraged” list have requested a total of $33.5 billion. That’s far more than the $7 billion available, but taken together, it represents $96 billion in private investment when counting matching funds and additional project costs, according to DOE.

All federal grants come with strict guidelines, such as demonstrating sustainable environmental and community benefits, including workforce training and investment in underserved communities.

In DOE’s initial recommendations, the agency indicated that the WISHH proposal encompasses all required elements, said Environment Department spokesman Matthew Maez.

“Our plan addressed all of the critical components needed to establish a regional hydrogen hub,” Maez told the Journal. “That demonstrates the real strength of our concept paper.”

If WISHH wins federal funding, it will help many projects already in the works to move forward, such as the Southwest Clean Freight Corridor, said Libertad Power managing partner Joe Merlino.

“We’re very pleased with the progress so far under the WISHH initiative and New Mexico’s involvement in it,” Merlino said. “Gov. Michelle Lujan Grisham and Cabinet secretaries like Kenney have shown real leadership in moving this forward.”