- A green hydrogen project tied to a novel steelmaking initiative in Mississippi faces delays as headwinds batter the emerging market for cleanly produced hydrogen.
- Clean hydrogen is key to slashing planet-warming emissions from certain industrial sectors, including steelmaking and aviation.
A green hydrogen project tied to a novel steelmaking initiative in Mississippi faces delays as headwinds batter the emerging market for cleanly produced hydrogen.
Hy Stor Energy has proposed building gigawatts’ worth of wind, solar, and geothermal capacity in southern Mississippi to produce “zero-carbon renewable” hydrogen, which it will then store in underground salt caverns. Earlier this year, Jackson signed an exclusive letter of intent to supply fuel to the steelmaker SSAB, which is developing a green steel facility in the state’s Perry County.
Late last month, however, Hy Stor slowed down part of the project, abruptly canceling a preliminary supply deal with Nel, a Norwegian electrolyzer manufacturer. Electrolyzers are an essential component of making hydrogen from renewables, using electric currents to split water into its constituent parts of H2 and oxygen—in sharp contrast to the carbon-intensive methods used to produce most industrial hydrogen today.
Hy Stor signed an agreement with Nel in April to reserve more than 1 gigawatt of alkaline electrolyzer capacity for the Mississippi Clean Hydrogen Hub. However, on September 30, in a stock exchange filing, Nel reported that Hy Stor had terminated the deal.
“The green hydrogen market has faced a series of headwinds that have resulted in it taking longer than anticipated to bring our lead project to fruition,” said Eric Reidel, a managing director for Connor, Clark & Lunn Infrastructure, Hy Stor’s controlling shareholder.
“Because of this, it did not make sense for us to make the upcoming capacity reservation payments that would have been due under the Nel agreement,” Reidel said. “Despite the difficult market environment, we remain optimistic about the long-term potential of Hy Stor’s unique base of assets,” including its portfolio of salt domes and land rights in the Gulf Coast.
He added, “Revised timelines for the hydrogen hub are unavailable.”
Clean hydrogen is key to slashing planet-warming emissions from certain industrial sectors, including steelmaking and aviation. However, creating hydrogen from renewables remains prohibitively expensive for many producers and would-be consumers. And while production costs are predicted to decline, the costs of storing and distributing hydrogen are expected to remain a major barrier for years, according to a recent study by Harvard University researchers.
“Our results challenge a growing idea that hydrogen will be the ‘Swiss army knife of decarbonisation’ and suggest that the opportunities for hydrogen may be narrower than previously thought,” Roxana Shafiee, the study’s lead author, said.
It also doesn’t help that a key pillar of the US clean hydrogen policy — tax credits created by the Inflation Reduction Act — is still in limbo. The rules for deciding what projects qualify for 45V tax incentives aren’t finalised and likely won’t be until after the November election. Meanwhile, developers are postponing multibillion-dollar investments in clean hydrogen projects without such certainty.