Doubts over the realisation of the $5bn Hydrogen Heartland Hub (H2HH) in the US' Upper Midwest region are growing as another key project developer looks to revise its original investment plans.
Minnesota-based utility Xcel Energy told Argus it is looking to adjust its original plans because of changes to costs and regulation over the last two years. Xcel is working with the US Department of Energy (DOE) to evaluate alternatives, it said.
Delays appear likely and it is not certain what form the projects may eventually take.
"Much has changed since we shared our hydrogen vision two years ago, and recent federal rules, market developments and stakeholder preferences have shifted," Xcel Energy said.
"Our proposed projects in the Heartland Hub are still in early-stage development, but the cost forecasts, policy developments and the regulatory uncertainty make aggressive development unlikely," it added.
Xcel had planned to invest $1.5bn-2.5bn in two of three plants in the Heartlands Hub (HH2H) that was already set back by the cancellation of its other project — a $2.2bn joint venture — earlier this month. That departure had left Xcel as the hub's main private-sector developer.
Questions over the hub's future come despite the DOE offering $925mn towards HH2H as part of the US' $7bn hydrogen hub funding programme (see map).
As part of the hub, Xcel had announced a project in South Dakota to make hydrogen from wind power for supply to Minnesota's One Earth Renewables that would use the supply to produce "carbon neutral" fertilisers. The firm had also announced a separate project in Minnesota slated to use a mix of nuclear, solar, and wind to make hydrogen for blending into natural gas distribution systems and power generation. But plans for the projects appear to have been far from concrete. "Detailed project design will begin until after HH2H and DOE finish award negotiations ," Xcel said last year.
The DOE was to contribute $565mn to Xcel's projects, the company had said last year. It is unclear what may happen to these funds and the full $925mn awarded to HH2H if Xcel changes its plans. DOE was not immediately available to comment on how project changes may affect hub funding.
The Heartland Hub — led by the University of North Dakota's Energy and Environment Research Center — is "collaborating with the DOE to finalize the HH2H contract and anticipates Phase 1 work commencing in late summer 2024," the Center told Argus.
It maintains an "optimistic outlook on the broad opportunities" of hydrogen technology and "maintains solid relationships with a diverse spectrum of stakeholders" that extends "well beyond the initial cornerstone partners" of HH2H, it said.
The US has awarded around $30mn each to three hubs so far this summer — in California, in the Pacific Northwest, and in Appalachia — to start ‘phase 1' planning activities.
