Utilities continued to pursue the development of a clean hydrogen economy in the fourth quarter, though a major setback to federal hydrogen policy may present a hurdle for the industry's early adopters.

Utility executives detailed their progress advancing hydrogen pilot projects and outlined the fuel's role in their decarbonization strategies during conference calls held in the fourth quarter. The commentary highlighted several key avenues: the potential to develop a U.S.-Canadian hydrogen network, accelerating momentum behind hydrogen production from nuclear power, and evolving projects among power producers.

Yet several executives also said a federal subsidy for clean hydrogen production — now in jeopardy after Sen. Joe Manchin, D-W.Va., announced his opposition to the Build Back Better bill — would determine the scope and speed of their efforts to support the low-carbon fuel.

"The big question mark would be whether or not there's a hydrogen production tax credit ultimately in the final reconciliation bill," NextEra Energy Inc. CFO Rebecca Kujawa said during a fall conference call. "At $3 a kilogram production tax credit, that really closes the gap between gray hydrogen and green hydrogen alternatives."

Gas utility pilot projects, plans advance

The quarter has seen the startup of the East Coast's first pilot project to blend green hydrogen into a distribution system at New Jersey Natural Gas Co. The New Jersey Resources Corp. subsidiary began flowing small quantities of the zero-carbon fuel to customers from its Howell, N.J., training facility in October.

The company's executives expect green hydrogen to play a role in the gas utility's path to net-zero operations by 2050 but stressed that the opportunity to scale up the initial Howell project would depend on several "evolving factors."

In setting new climate goals, Washington Gas Light Co. parent AltaGas Ltd. also highlighted the potential to distribute hydrogen through its three gas utilities. And AltaGas discussed opportunities to export hydrogen through its other main business line: a midstream unit that operates a liquefied petroleum gas processing hub and export terminals in Western Canada and the Pacific Northwest.

Gas utility operator Northwest Natural Holding Co. said its green hydrogen pilot project is already advancing.

The company's project partner, Eugene Water & Electric Board, has purchased land for the project, and the partners have hired consultants. Additionally, the partners are trying to secure funding through the Low-Carbon Resources Initiative and a 2013 Oregon law that allows gas utilities to invest in emissions-reducing projects, according to the company.

In October, Enbridge Gas Distribution Inc. started up an Ontario gas blending facility, enabling the utility to blend hydrogen at 2% of the total gas stream to about 3,600 residents, Enbridge said. Through its Quebec gas distributor, Gazifere Inc., Enbridge Inc. is also developing a project in Gatineau, Quebec, that will aim to achieve a 15% hydrogen blend for 43,000 customers, the company noted.

Overall, the gas distribution unit, which serves 3.8 million meters, has 10-15 hydrogen projects in development, and Enbridge expects to invest substantially in the space.

Utilities see North American hydrogen grid emerging

More broadly, Northwest Natural Senior Vice President of Operations Kim Heiting said the company is working with peers in the U.S. and Canada to develop a North American plan similar to the European Hydrogen Backbone. Europe's plan envisions developing a 23,000-km hydrogen grid across Western Europe by 2040, with roughly a quarter comprising new hydrogen pipelines and the majority converted from existing gas infrastructure.

Enbridge President and CEO Al Monaco said he expects his company to be well-positioned to develop a hydrogen and carbon capture hub in southern Ontario, thanks to the proximity of its Dawn natural gas storage facility to Sarnia, Ontario, which is home to petrochemical plants and borders Michigan. The Canadian midstream giant is assessing its potential to transport hydrogen through its long-haul pipes in the future, he said during the company's investor day in December — though Enbridge's gas utility business is already blending hydrogen into distribution networks.

"We believe hydrogen blending and standalone new hydrogen pipeline and storage is a multibillion-dollar opportunity for us just this decade," Enbridge President of Gas Transmission and Midstream Bill Yardley said.

Roger Dall'Antonia, president and CEO of British Columbia gas distributor FortisBC Inc., noted that the province in July expanded hydrogen opportunities by allowing gas utilities to purchase renewable gas volumes equal to 15% of their total annual supply — up from 5% previously. Lawmakers also revised the allowance to include hydrogen, he added.

As gas utilities chase limited RNG supplies, hydrogen will become an increasingly important part of the energy mix over time, Dall'Antonia said during a fall conference call hosted by parent company Fortis Inc., which also operates gas utilities in New York and Arizona.

Nuclear power-to-gas gathers momentum

Large-scale hydrogen production at nuclear power plants presents another avenue for exploration, although additional research into its safety may be needed.

"That's an engineering challenge, but as with other engineering challenges, I'm sure there are solutions," Public Service Enterprise Group Inc. President, Chairman and CEO Ralph Izzo said during a November conference call. "But that does need to be discussed much more prominently than it's getting attention right now."

Exelon Corp. is exploring the potential to harness electric power production and heat from nuclear power stations for hydrogen production. Through a grant from the U.S. Department of Energy, the company is demonstrating hydrogen production, storage and use at its Nine Mile Point plant in New York.

In the longer term, the company is exploring the potential to blend the fuel with natural gas, Exelon President and CEO Christopher Crane said during a November conference call. Exelon is still evaluating transportation methods, including by participating in metallurgical research into the potential for hydrogen to embrittle existing natural gas pipelines.

Minneapolis-based multi-utility Xcel Energy Inc. is starting with a hydrogen pilot project at its Prairie Island nuclear power plant and is exploring five to eight additional projects, President and CEO Robert Frenzel said during a conference call. With Minnesota and Colorado having passed clean fuel legislation, Xcel believes its "favorable renewable generation conditions" will help the company advance beyond pilots to commercial green hydrogen production, Frenzel added.

Power generators see signs of growing hydrogen demand

Chesapeake Utilities Corp. has made material progress on its pilot project to blend hydrogen into the gas-fired turbine at its Eight Flags Energy Project cogeneration plant on Amelia Island, Fla. The diversified energy delivery company will start with a 4% hydrogen blend but ramp up to a 20% blend when it completes a scheduled turbine replacement in 2022, the company said. Chesapeake also converted four compressed natural gas tankers to carry hydrogen through its Marlin Gas Transport Inc. subsidiary.

In a sign of emerging industrial demand for the fuel, NextEra — which is also piloting hydrogen blending for power generation in Florida — said it had contracted to develop a 500-MW wind farm to power a new green hydrogen facility. The company said the green hydrogen output would displace gray hydrogen and fossil fuel purchases made by commercial and industrial companies.

Also in the power generation domain, DTE Energy Co. said hydrogen is in the running to refuel the Belle River coal-fired power plant in East China Township, Mich., and the company is considering a small hydrogen pilot at the adjacent Blue Water Energy Center.

NiSource Inc. Chief Strategy and Risk Officer Shawn Anderson also said during a conference call his company has plans to evaluate hydrogen and other emerging storage technologies. "It's important for us to gain a risk-informed understanding of the options and technologies that may emerge as pathways toward further decarbonization," Anderson said.