DOE announces demand-side hydrogen plans

The U.S. Department of Energy (DOE) Office of Clean Energy Demonstrations (OCED) said it will work with a consortium to help accelerate commercial adoption of hydrogen.

The move is designed to support Regional Clean Hydrogen Hubs (H2Hubs) that were announced last fall. The consortium—which consists of the EFI Foundation (EFIF), a leader in clean hydrogen economy development, in partnership with the commodity markets information experts S&P Global (S&P) and the financial exchange operator Intercontinental Exchange (ICE)—will design and implement demand-side support mechanisms for unlocking the market potential of the H2Hubs, the DOE said.

Over the next six to nine months, DOE will work with the consortium and the H2Hubs to design demand-side support measures that will facilitate purchases of clean hydrogen produced by H2Hub-affiliated projects. The team will also develop an operational plan for how to administer these mechanisms once finalized.­­­

The DOE said developing a hydrogen demand-side initiative is critical to enhancing the early commercial viability of the H2Hubs, as demand formation for new energy sources often lags the creation of new reliable supply. Demand-side support and other “demand pull” measures bridge the gap between producers, who need medium- to long-term offtake certainty for a significant portion of their projected output to secure financing to build a project, and buyers, who often prefer to buy on a short-term basis for energy inputs that are beginning to be produced at scale, like clean hydrogen. “Demand pull” measures have been a valuable tool in the scale-up of renewable energy technologies like wind and solar.

According to the DOE, EFIF, S&P, and ICE will leverage their expertise in clean hydrogen, project finance, and commercial contracting to support design of measures to increase hydrogen demand certainty. The consortium will help craft demand-side support agreements for clean hydrogen projects affiliated with the H2Hubs to unlock final investment decisions and catalyze the formation of a mature clean hydrogen market. Ultimately, the demand-side initiative will support the growth and sustainability of the H2Hubs program by providing improved offtake certainty to help hydrogen producers attract private sector investment and end-use buyers. It will also lay the foundation for broader private sector scale-up and use of the clean hydrogen market by providing price transparency and standardized contracts for the projects it supports.