Solving hydrogen ‘math problem’ means de-risking tech, cheaper power: Mitsubishi Power

Success in the US hydrogen industry means "playing the long game," focusing on exports in the short term and developing multiple technologies to find which ones make the most economic sense, Mitsubishi Power Americas CEO Bill Newsom said in an interview with S&P Global Commodity Insights.

Newsom called the building of a clean hydrogen industry a "math problem." The short-term challenge is the cost of clean hydrogen and its production, and one solution is de-risking tech to bring down the cost curve, he said.

"Obviously the cost of hydrogen is still challenged economically, so it does make it hard to bring a lot of projects to scale today," Newsom said. "For example, high-pressure alkaline electrolyzers, we think the cost needs to come down by about 80% over the next decade."

The company has spent "hundreds of millions of dollars" to develop various hydrogen production technologies, while also investing in storage tech, 100% hydrogen-powered turbines and demonstrations of hydrogen blending at a commercial power plant, Newsom said.

"We are committed to developing technology," Newsom said. "I cannot tell you today we're going to bring all four of these hydrogen production technologies commercially to the market, but we are going to test, develop and verify and determine the efficiency, the cost, the effectiveness of all four of these technologies, and then bring to market the ones that we think make sense ... and that could be a different answer in different parts of the world."

Mitsubishi Power was selected by the US Department of Energy to participate in two of the seven clean hydrogen hubs, which will help contribute to much-needed scale, he said.

Another aspect driving up green hydrogen costs is the cost of renewable electrons, Newsom said.

"One of the largest costs for green hydrogen is what the cost of the renewable electrons are," Newsom said. "So out west, we've got a lot of curtailed renewables. If we can bring in low-cost green electrons when they're curtailed, that's number one to help control the cost."

"Additionality makes it challenging to do that, because that means you have to build a new dedicated solar wind farm just for that conversion, and I don't think that makes economic sense," he added.

Mitsubishi Power will leverage curtailed renewable energy in its Advanced Clean Energy Storage project in Delta, Utah, which will "go commercial" sometime in 2025, Newsom said.

Another aspect that drives up costs in a hydrogen production project is the cost storage, Newsom said. The company's Takasago "hydrogen park" has above-ground hydrogen storage, which can be "hard to have large volumes and the cost is high," Newsom said.

Newsom pointed again to ACES Delta's use of underground salt caverns as a cost-saver, saying salt caverns provide "the lowest cost of long-term storage at high volumes for hydrogen."

In terms of finding demand in the short term, green hydrogen export for US projects "has a lot of merit" and Mitsubishi Power is looking at the economics of projects to support other nations' decarbonization goals, Newsom said.

"Countries like Japan don't have the natural resources, nor the offshore ability for large wind or PV solar," he said. "So, the Japanese government is looking at ... bringing in green ammonia as a way to help decarbonize the country."

Companies in Europe like TotalEnergies need "enormous amounts of green ammonia and green hydrogen" to meet their commitments to decarbonize heavy industry and refining, he added.

Hydrogen production tax credits in the US would help de-risk technologies and bring production to scale, Newsom said. However, the "Section 45V" hydrogen production tax credit is currently in limbo as the final rules have not yet been released.

Production tax credits are "hard to take away," Newsom said in response to uncertainty about the Trump administration's intentions for the Inflation Reduction Act. "They haven't been taken away in the past, I don't see them being taken away going forward," he said. "So, it remains to be seen."

Newsom noted that electricity demand growth is "real" and it is "exponential," and that clean energy industry "hyper-scalers" will hold utilities and energy providers accountable for a path to affordable clean energy.

"The electric grid is growing at 3% year over year, with demand growth at 6% in certain areas," Newsom said. "That is providing economic growth in many states that are starving for economic growth, and so I think that's going to help the new administration, and they're going to do everything they can to help support that economic growth."