Power & Pipes

FERC, CFTC, and State Energy Law Developments

On September 22, the US Department of Energy’s (DOE) Office of Clean Energy Demonstrations issued a Funding Opportunity Announcement (FOA) to solicit applications for funding to establish regional clean hydrogen hubs (H2Hub) across the United States to improve clean hydrogen production, processing, delivery, storage, and end use. These H2Hubs are expected to form the foundation of a national clean hydrogen network of clean hydrogen producers, clean hydrogen consumers, and connective infrastructure located in close proximity to accelerate the use of hydrogen as a clean energy carrier and achieve large-scale, commercially viable hydrogen ecosystems.

The Infrastructure Investment and Jobs Act, also known as the Bipartisan Infrastructure Law, appropriated $8 billion in funding to support the development of the H2Hubs. The Bipartisan Infrastructure Law requires that to the maximum extent possible, DOE select proposals that cover the following characteristics:

  • Feedstock Diversity: At least one H2Hub must demonstrate the production of clean hydrogen from fossil fuels, one H2Hub from renewable energy, and one H2Hub from nuclear energy.
  • End-Use Diversity: At least one H2Hub must demonstrate the end-use of clean hydrogen in the electric power generation sector, one in the industrial sector, one in the residential and commercial heating sector, and one in the transportation sector.
  • Geographic Diversity: Each H2Hub will be located in a different region of the United States and leverage energy resources abundant to that region, including at least two H2Hubs in regions with abundant natural gas resources.
  • Employment: DOE will give priority to H2Hubs that are likely to create opportunities for skilled training and long-term employment to the greatest number of residents in the region.

Through this initial funding opportunity, DOE envisions selecting six to 10 H2Hubs for a combined total of up to $6–7 billion in federal funding. DOE may issue a second FOA to solicit additional H2Hubs beyond those selected in this launch.

DOE defined the following four-phase structure for the H2Hubs:

  • Phase 1 – Detailed Project Planning: This phase will encompass initial planning and analysis activities to ensure that the overall H2Hub plan is technologically, financially, and legally viable, with input from relevant local and community stakeholders.
  • Phase 2 – Project Development, Permitting, and Financing: In this phase, H2Hubs will finalize their engineering designs, project development plans, commercial agreements, financial structure, permitting and approval activities, offtake agreements, and community engagement activities necessary to begin installation, integration, and construction activities in Phase 3.
  • Phase 3 – Installation, Integration, and Construction: This phase will focus on implementation.
  • Phase 4 – Ramp-Up and Sustained Operations: This phase will focus on integrated system performance and ramp-up and will include substantial financial, socio-economic, environmental, and operational data collection and reporting to DOE. By the end of this phase, the H2Hub will have demonstrated full commercial-scale design operations over an extended period.

The FOA is soliciting plans for all four phases, but DOE will only initially commit to funding Phase 1 activities. Additional funding for subsequent phases will require successful completion of a Go/No-Go review at the end of each phase. Specific Go/No-Go criteria will be negotiated with each selected H2Hub project for transitions between each phase and may be negotiated within phases. If DOE determines that a H2Hub is making insufficient progress, additional scrutiny and oversight may be employed and corrective measures negotiated. DOE notes that a H2Hub project (or a portion of a H2Hub) may be discontinued at any of the Go/No-Go decision points if the Go/No-Go criteria, project, or program requirements are not met. Projects that are funded through all four phases are expected to reach technical and financial commercial viability and to operate beyond the financial assistance project period (i.e., well beyond DOE funding).

Concept papers are due on November 7, 2022, which will be followed by DOE notification encouraging or discouraging the submission of full applications in December 2022. Only applicants who have submitted an eligible concept paper are eligible to submit a full application. The acceptance of a concept paper or notification encouraging the submission of a full application does not authorize an applicant to commence performance of a project. Full applications are due on April 7, 2023, and DOE is expected to announce selected projects by the fall of 2023. If an application is selected, it will proceed to the award negotiation process, but selection does not amount to a commitment by DOE to issue an award.