The US government has pledged to lend $504.4m to the developers of what will be the largest green hydrogen project in the country, and one of the biggest in the world.
The conditional debt financing commitment from the Department of Energy (DoE) will support construction of Mitsubishi Power Americas and Magnum Development's Advanced Clean Energy Storage project in Utah, which will employ 220MW of wind- and solar-powered electrolysers to produce 36,500 tonnes of renewable H2 per year.
The complex will store the hydrogen in two natural salt caverns each capable of holding 150 GWh of energy, or 4,500 tonnes, with the facility supplying H2 to the Intermountain Power Agency's IPP Renewed Project — an 840MW natural-gas combined-cycle power plant in southwest Utah capable of burning 30% hydrogen from 2025 (with a view to using 100% H2 by 2045).
“We are unbelievably excited to reach this important milestone, not just for our hub, but for the hydrogen industry as a whole,” said Michael Drucker, president of Advanced Clean Energy Storage I, the project company owned by ACES Delta, a joint venture between Mitsubishi and Magnum.
While many gigawatt-scale green hydrogen projects are in development around the world, the largest in operation is currently a 150MW facility in central China, with a 260MW scheme under construction in northwest China that is due to come on line in mid-2023.
While the conditional commitment demonstrates the DoE’s intent to finance the project, several steps remain, and certain conditions must be satisfied before it issues a loan guarantee.
The Loan Programme Office (LPO) finances projects that accelerate commercial deployment of innovative energy technology that avoids, reduces, or sequesters greenhouse gas or air pollutant emissions.
LPO’s Outreach and Business Development Division has been helping the Advanced Clean Energy Storage I investors through the application process, and also the due diligence and underwriting process led by LPO’s Origination Division. After loan closing, LPO’s Management Division maintains this borrower partnership through project construction, operation, and maintenance, and eventual loan repayment.
DoE officials argues that this approach is essential to achieving project milestones and overall project success while protecting taxpayer interests.
Currently, the Advanced Clean Energy Storage I hub has secured all major contracts including offtake; engineer, procurement and construction contractors; major equipment suppliers, and operations and maintenance providers.
The project's equity sponsor, Houston-based fund Haddington Ventures, aims to raise $650m in financing for the project.
ACES Delta aims to build further green hydrogen projects in the US, totalling more than 1GW and producing more than 164,000 tonnes annually.