Green Hydrogen Plans Evaporate; Projects Fold, PlugShare Deeply In Debt, AI Driving Demand For Cheapest Possible Energy [View all]

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The late 2010s were a euphoric time for clean energy developers. Renewables construction shot forward despite President Donald Trump’s 2016 campaign vows to bring back coal. Low interest rates paired nicely with the low but predictable returns that renewables projects could generate. Entrepreneurs imagined ways to capitalize on the imminent abundance of clean electricity by converting it into hydrogen. The Covid-19 pandemic slowed the pace of activity, but then the Biden administration passed the 2021 infrastructure law, which designated $7 billion for a series of ​“hydrogen hubs” around the country. The administration chased that with the Inflation Reduction Act, which included a lucrative credit for the production of clean hydrogen, up to $3 per kilogram. A new multibillion-dollar industry was in the offing, and visionaries prepared to make their moves, as soon as the Internal Revenue Service published its guidance on how to claim that credit.

Then they waited. And waited. “At $3 per kilogram, if your plant did not qualify for that and your neighbor’s plant did, then you’re out of business,” said Brenor Brophy, who ran development for Plug Power’s hydrogen production business in the early 2020s (he is no longer with the company). But there was no airtight way of ensuring one’s project would qualify until the final rule came out. “The Treasury Department sat on that for two and a half years,” which was worse for the industry than if the credit were never created, Brophy added.

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Similarly, in that bright period before Biden-era inflation set in, hydrogen boosters saw a clear path to achieving cost declines akin to what solar and batteries had achieved. Legacy dirty hydrogen could be made for about $1 per kilogram; the green stuff cost several dollars more. But a technological learning curve could close that gap, the thinking went, and sway large industrial buyers. In 2021, the Biden Department of Energy set a goal to get green hydrogen costs down to $1 per kilogram within a decade. Unfortunately, the cost declines that experts expected in the early 2020s never materialized. A late-2024 DOE report on clean hydrogen commercialization noted that costs had gone up, not down, by $2 to $3 per kilogram since its March 2023 analysis. The report cites higher real-world installation costs, rising interest rates, and escalating prices for clean power to meet the IRS requirements for the tax credit.

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Electrolysis devours electricity, which is fine in a world of cheap and abundant power. But, suddenly, any fledgling hydrogen project has to compete with much better-funded rivals in electric gluttony: AI computing hubs. The business calculus of clean hydrogen necessitated driving down energy costs as much as possible to compete with cheap dirty hydrogen. For green hydrogen ventures to succeed, they would need to render their product a cheap commodity. AI customers, on the other hand, are flush with cash and willing to pay top dollar to anyone who could deliver them gobs of power as soon as possible.

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https://www.canarymedia.com/articles/hydrogen/green-industry-trump-tax-credits