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Global energy giants form $4 billion green hydrogen project
2022-12-30
Global energy giant AES and Air Products, an industrial gas company, are taking a huge leap forward in their renewable energy ambitions with a $4 billion green hydrogen project set to commence operations in Wilbarger County, Texas. Powered by 1.4 GW of wind and solar power plants, the project will have the capacity to generate over 200 metric tons per day of clean hydrogen.
The two companies have signed firm contracts as opposed to non-binding memorandums of understanding. AES and Air Products have agreed to equally own the renewable energy assets and electrolyzer technology, with Air Products handling the marketing and sales of the green hydrogen for 30 years. Start-up is anticipated for 2027 at the latest.
As stated by Seifi Ghasemi, Air Products CEO, the project will offer numerous benefits to Texas such as tax and job security. It is also hoped that this latest venture will help meet the rising demand for zero-carbon fuels seen in the mobility, shipping and other industrial sectors.
The Inflation Reduction Act has helped make green hydrogen more appealing with its provision of a $3 per kilogram production credit for zero emission projects. This incentive gives clean energy an edge on fossil fuel derived hydrogen which can cost up to $10 per kg. The Biden administration plans to reduce costs further by 80% ($1/kg) over the next decade.
Green hydrogen currently accounts for a minuscule portion of total global output; almost all produced using natural gas reforming and coal gasification. In 2020, the capacity of electrolyzers (used for green hydrogen production) was estimated to be just 300 MW. With initiatives such as this one, we can expect to see more renewable energy projects enter the fray over time.
Global energy giant AES and Air Products, an industrial gas company, are taking a huge leap forward in their renewable energy ambitions with a $4 billion green hydrogen project set to commence operations in Wilbarger County, Texas. Powered by 1.4 GW of wind and solar power plants, the project will have the capacity to generate over 200 metric tons per day of clean hydrogen.
The two companies have signed firm contracts as opposed to non-binding memorandums of understanding. AES and Air Products have agreed to equally own the renewable energy assets and electrolyzer technology, with Air Products handling the marketing and sales of the green hydrogen for 30 years. Start-up is anticipated for 2027 at the latest.
As stated by Seifi Ghasemi, Air Products CEO, the project will offer numerous benefits to Texas such as tax and job security. It is also hoped that this latest venture will help meet the rising demand for zero-carbon fuels seen in the mobility, shipping and other industrial sectors.
The Inflation Reduction Act has helped make green hydrogen more appealing with its provision of a $3 per kilogram production credit for zero emission projects. This incentive gives clean energy an edge on fossil fuel derived hydrogen which can cost up to $10 per kg. The Biden administration plans to reduce costs further by 80% ($1/kg) over the next decade.
Green hydrogen currently accounts for a minuscule portion of total global output; almost all produced using natural gas reforming and coal gasification. In 2020, the capacity of electrolyzers (used for green hydrogen production) was estimated to be just 300 MW. With initiatives such as this one, we can expect to see more renewable energy projects enter the fray over time.