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Gas utilities take step toward hydrogen future with DOE hub selections


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Gas utilities take step toward hydrogen future with DOE hub selections

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Gas utilities have been piloting hydrogen blending in distribution systems and training facilities in anticipation of more supportive policies for low-carbon hydrogen.
Source: CenterPoint Energy Inc.

The US Energy Department's selection of seven regional hydrogen hubs bolstered the opportunity for a number of US gas utilities to leverage the low-carbon fuel to decarbonize their infrastructure.

More than a dozen gas utility operators were partners or potential beneficiaries of the $7 billion in DOE hydrogen hub funding. Should the hubs come to fruition, they would provide a source of low- and zero-carbon hydrogen for potential offtake, and they would open opportunities to transport the fuel through existing gas grids.

Gas utilities still face regulatory hurdles and opposition from environmentalists when it comes to blending hydrogen in gas lines. Additionally, the industry must prove that gas infrastructure can safely transport hydrogen, prompting the utilities to launch a growing number of hydrogen blending pilot projects.

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Many of the hubs are also focused on decarbonizing hard-to-electrify industrial processes, heavy-duty transportation and power generation. Still, the American Gas Association (AGA), which represents investor-owned gas utilities, called the DOE announcement a "monumental step."

"Thanks to investments like this, I have full confidence that our infrastructure will continue to provide the lowest-emissions and most affordable energy available for home, commercial and industrial use far into the future," AGA President and CEO Karen Harbert said in an Oct. 13 news release.

Hub partners piloting hydrogen blending

Among the gas utility operators participating in the Appalachian Regional Clean Hydrogen (ARCH2) hub in West Virginia, southeast Ohio and southwest Pennsylvania, several have launched hydrogen blending endeavors.

NiSource Inc. subsidiary Columbia Gas of Pennsylvania Inc. and Dominion Energy Inc. subsidiary The East Ohio Gas Co., which does business as Dominion Energy Ohio, are both piloting hydrogen blending at training facilities in the region. Enbridge Inc., which agreed to buy Dominion Energy Ohio in September, has been blending hydrogen into an existing Ontario gas grid since 2021. Essential Utilities Inc. subsidiary Peoples Natural Gas Co. LLC has partnered with the University of Pittsburgh to study hydrogen transportation in gas systems.

"Hydrogen is an abundant, reliable, zero-carbon fuel source and we are excited to explore this source as a diverse, clean energy option to provide direct benefits for all customers and as an alternative source for electric generation," NiSource Chief Commercial Officer and Executive Vice President of Strategy and Risk Michael Luhrs said in an Oct. 16 news release.

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Along with Ameren Illinois Co. and Southern Co. subsidiary Northern Illinois Gas Co., NiSource supported another winning hub application, the Midwest Alliance for Clean Hydrogen, which spans Illinois, Indiana and Michigan. The company intends to repower one of its Northern Indiana Public Service Co. LLC power plants to burn both gas and hydrogen, NiSource President and CEO Lloyd Yates recently told S&P Global Commodity Insights.

The DOE also selected the Pacific Northwest Hydrogen Hub, which counted Puget Sound Energy Inc. among its partners. The company has previously piloted hydrogen blending, while fellow Pacific Northwest gas distributor Northwest Natural Holding Co. has pursued a range of hydrogen endeavors.

Hubs intersect with hydrogen policy

PG&E Corp. and Southern California Gas Co. are partners in the Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES) hub in California, where gas distributors have received positive signs from utility regulators regarding hydrogen.

The California Public Utilities Commission in December 2022 directed the state's investor-owned gas utilities to operate hydrogen blending pilot projects. The same month, commissioners approved SoCalGas's application to track feasibility costs for the Angeles Link and told the company to integrate the proposed green hydrogen transmission pipeline into Los Angeles into the ARCHES application.

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"Our company's mission is to build the cleanest, safest and most innovative energy infrastructure company in America, and SoCalGas's Angeles Link project could deliver clean renewable hydrogen in an amount equivalent to almost 25% of the natural gas SoCalGas delivers today," SoCalGas President Maryam Brown said in a news release.

The approval of the Heartland Hydrogen Hub in Minnesota, North Dakota and South Dakota could help utilities take advantage of Minnesota's Natural Gas Innovation Act, which allows utilities to seek cost recovery for displacing standard gas with low- and zero-carbon fuels in distribution systems.

Xcel Energy Inc., one of the hub's chief sponsors, intends to file a natural gas innovation plan under the law. Fellow gas distributor Centerpoint Energy Minnesota Gas proposed two hydrogen projects when it filed a plan in June.

Following the DOE hub announcement, Xcel said clean fuels are key to its vision of achieving net-zero emissions from gas distribution by 2050. "The company plans to use its existing and future nuclear, solar and wind resources in the Upper Midwest to produce hydrogen to blend into power generation, existing natural gas distribution systems and other agricultural and industrial applications," the company said in a news release.

Unclear policy signals

Policy signals have been somewhat mixed in other parts of the country that received DOE funding, including in Pennsylvania, Delaware and New Jersey, the region underpinning the Mid-Atlantic Clean Hydrogen Hub. The hub has counted Public Service Enterprise Group Inc. (PSEG) and Chesapeake Utilities Corp. as sponsors.

The New Jersey Board of Public Utilities approved cost recovery for New Jersey Resources Corp.'s hydrogen blending pilot project in 2021. But after New Jersey Gov. Phil Murphy ordered a review of gas utilities' future in the state in February, the board delayed a decision on PSEG subsidiary Public Service Electric and Gas Co.'s proposal to launch a similar project.

"We look forward to working with the hub to develop clean hydrogen infrastructure in New Jersey, which will be an important opportunity to drive job creation and economic development in the state as it pursues a clean energy future," PSEG said in a news release.

The DOE only awarded funding to one southern US application, the HyVelocity H2Hub in Texas, which counted Avangrid Inc., CenterPoint Energy Inc. and SoCalGas parent Sempra among its supporting partners. Commodity Insights is a supporting partner of the hub.

Among the applications that did not receive DOE funding was a Southeast hub proposed by Dominion Energy, Duke Energy Corp., Southern Co., the Tennessee Valley Authority and PPL Corp.

"Duke Energy will continue to seek opportunities to partner with DOE, peer utilities and other stakeholders to advance clean hydrogen in ways that will benefit our customers and our communities," the company told local news outlets.

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