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Hydrogen pilot projects advance, evolve at gas utilities

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North American gas distribution companies are carrying out hydrogen pilot projects and positioning their infrastructure as a carrier for the fuel.
Source: Plug Power

Gas utilities continue to advance hydrogen pilot projects as the industry focuses on long-term solutions for decarbonizing pipeline networks.

Local distribution companies offered updates on their programs during a packed day of quarterly earnings conference calls Aug. 5. The commentary illustrated how utility operators around the country are tailoring their early phase efforts to meet state climate goals, leverage existing assets, and respond to industrial demand for the low- or zero-carbon hydrogen supplies.

Pilots in New Jersey move forward

New Jersey Resources Corp., or NJR, announced that construction has begun at the company's first green hydrogen project, located in Howell, N.J. The power-to-gas project will use electricity from an adjacent solar facility to power electrolyzers, which split water into hydrogen and oxygen. NJR will then blend the green hydrogen into its gas distribution system. When the project goes into service in the fall, NJR will be the first East Coast gas utility to directly inject green hydrogen into its system, according to NJR President and CEO Stephen Westhoven.

"This will create awareness with our regulators and policymakers to build expertise to allow us to scale as the market continues to develop," Westhoven said on the company's quarterly earnings conference call. "This is really important to the decarbonization strategy for the fuel that we deliver to our customers, and really, to prove out not only that we're able to do it, but we should be able to decarbonize and do it cheaply and effectively in the future."

During its November 2020 analyst day, NJR reported plans to spend $23 million to $24 million for renewable natural gas and renewable hydrogen projects in 2021 and $19 million to $20 million for investments in 2022. The capital spending plans come as NJR seeks to align its business with New Jersey climate policy.

Also on Aug. 5, South Jersey Industries Inc. signaled it would move forward with its green hydrogen pilot project with Atlantic Shores Offshore Wind LLC. The New Jersey Board of Public Utilities, or BPU, on June 30 awarded Atlantic Shores a contract to develop 1,510 MW of offshore wind energy, part of the largest-ever combined U.S. offshore wind award, totaling 2,658 MW.

The award enables SJI and Atlantic Shores to execute an agreement to pilot green hydrogen production using excess electric power from the offshore wind development. In granting the award, the BPU cited the pilot project as an additional benefit of the contract.

"Our partnership with Atlantic Shores on a green hydrogen pilot project will be essential to unlocking additional decarbonization energy sources for New Jersey and diversifying our renewable energy mix," SJI President, CEO and director Michael Renna said.

Chesapeake Utilities pursuing combined heat and power project

Progress is continuing at Chesapeake Utilities Corp.'s first hydrogen pilot project at its Eight Flags Energy LLC combined heat and power plant on Amelia Island, Fla., Chesapeake President and CEO Jeff Householder said.

Chesapeake is now working with Solar Turbines Inc., the turbine provider at Eight Flags, to install and test equipment that will allow the facility to burn a 4% hydrogen mix, Householder said. The company has identified a nonrenewable hydrogen source that it will use for initial testing over the next few months. Once the project is fully operational, Chesapeake plans to pivot to green hydrogen.

Meanwhile, work is underway at Chesapeake's Marlin Gas Services LLC subsidiary to retrofit three large-gauge steel tankers to transport hydrogen. The company also continues to work with several industrial customers to explore using hydrogen blends at their facilities. Chesapeake forecast that the hydrogen projects, along with several renewable natural gas initiatives, could contribute an additional $1 million to 2022 gross margin, which is anticipated to grow to $69.5 million in total that year.

Together, the initiatives move Chesapeake toward considering blending hydrogen into its pipeline systems, Householder said. "We're at the beginning stages of gaining a full understanding of the attributes of hydrogen, particularly in the areas of safety, operations impact, measurement, availability and the effects on downstream customer equipment."

Northwest Natural considers hydrogen blending

Executives at Pacific Northwest utility operator Northwest Natural Holding Co. said they are considering a significant change to their first hydrogen pilot project. The company initially planned to off-take green hydrogen from an electrolyzer and combine the supplies with waste carbon dioxide through a process called methanation. The product, synthetic natural gas, is interchangeable with standard fossil fuel gas.

The company is now looking at blending the hydrogen produced through the pilot into the gas grid, according to Kim Heiting, Northwest Natural's senior vice president of operations and chief marketing officer. Northwest Natural is considering the change "because we're starting to get some inquiries from industrial customers really interested in blending," Heiting said.

Northwest Natural is already blending 5% hydrogen into the gas stream at its training facility in Sherwood, Ore., Heiting noted. The company's project partner, the Eugene Water & Electric Board, is in the process of acquiring land for the project.

Northwest Natural President and CEO David Anderson said it was encouraging that the U.S. Senate's massive, bipartisan infrastructure bill contains hydrogen provisions. The legislation would update and expand the U.S. Energy Department's hydrogen program, refocus the agency on producing low- or zero-carbon supplies, and invest billions in developing regional hydrogen hubs and electrolyzer technology.

"We'll see where that goes, but that appears to be a big piece of" the legislation, Anderson said. "I think that will help spur the hydrogen development in this country."