CenterPoint, Xcel move forward with 'green' hydrogen pilot projects

CenterPoint Energy has launched its inaugural foray into producing "green" hydrogen, a natural-gas substitute free of carbon emissions.

The company's hydrogen plant in Minneapolis, which uses renewable energy, is small — a foot in the water for CenterPoint. But it's a harbinger of a much-ballyhooed technology that could help battle climate change if it can overcome its challenges.

"This is one tool to help with decarbonization," said John Heer, director of storage and peak shaving at CenterPoint. "We intend to figure out the best way forward to make this a more pervasive technology."

The plant cost $2 million, an expense likely to be covered by ratepayers.

Xcel Energy also is moving ahead with a pilot hydrogen plant at its Prairie Island nuclear power plant. The company this week signed a contract with the U.S. Department of Energy, which is paying $12 million for the project.

Hydrogen now is primarily produced from natural gas — so-called "gray hydrogen" — for a variety of industrial purposes. Plans abound to create "blue" hydrogen — which involves capturing carbon waste from hydrogen production — and "green" hydrogen made from renewable power.

"There is just a whole kaleidoscope of colors to describe hydrogen," said Margaret Cherne-Hendrick, senior lead for innovation at St. Paul-based Fresh Energy, a renewable energy research and advocacy group.

"If we're moving on hydrogen, it must be green hydrogen," she said. "That's the gold standard."

Unlike natural gas, hydrogen doesn't emit carbon dioxide when it's burned. It can be used — up to a point — to replace natural gas, including as a fuel for electricity production.

In both CenterPoint's and Xcel's projects, hydrogen is produced through electrolysis: An electric current is used to separate water into its components of hydrogen and oxygen.

CenterPoint, Minnesota's largest natural gas provider, is buying electricity from Xcel that specifically originates from wind farms or other renewable sources. Hydrogen produced at the pilot plant will then be injected directly into CenterPoint's distribution system.

The plant's "electrolyser" draws 1 megawatt of power, small by international standards. Shell, the giant oil company, opened a 20-megawatt green hydrogen plant in China earlier this year. A chemical firm runs a 150-megawatt green hydrogen operation in China.

Houston-based CenterPoint says it will avoid about 1,200 tons of CO2 emissions annually with the Minneapolis plant. It will produce 432 kilograms of hydrogen per day, making up far less than 1 % of CenterPoint's fuel mix.

CenterPoint says it knows of only one other such U.S. project run by a gas company — a smaller green-hydrogen plant in New Jersey. A Southern California gas company has proposed a much larger green-hydrogen program.

CenterPoint fired up its hydrogen plant in late March.

"We are still in learning mode, making adjustments," Heer said. "A year from now, we are going to have a lot of data."

The company will likely propose other hydrogen projects in Minnesota, he said.

One of green hydrogen's challenges is economic: It costs two to four more times to make than gray hydrogen. The energy industry is betting that costs will come down as economies of scale kick in — as occurred with wind and solar power.

A mass hydrogen rollout faces physical constraints, too.

Gas transmission systems can only handle so much hydrogen before it embrittles pipeline metal. And Heer noted that home appliances — from furnaces to stoves — don't tolerate hydrogen well when it's above 10% of the gas mix.

There's also disagreement in energy circles as to where limited supplies of green hydrogen should go. Fresh Energy's Cherne-Hendrick said green hydrogen is best used when dedicated to hard-to-decarbonize industries like fertilizer production, not residences.

Instead, policymakers should prioritize "electrification" — essentially replacing natural gas with renewable electricity — for homes. Electrification has its own host of challenges.

Xcel, the state's largest electricity supplier and second largest gas utility, announced its pilot project in late 2020. But it took 18 months to negotiate with the U.S. Department of Energy, it said.

Over the next 18 months, Xcel will conduct engineering for the project, which will then take about three months to construct, said Dan Ludwig, senior engineer in Xcel's nuclear innovation group. "We are getting the project kicked off and getting the ball moving."

Unlike CenterPoint's project, which has no end date, Xcel's pilot plant will run for only three months, producing 90 kilograms of hydrogen per day. Xcel would then determine if it would go forward with nuclear-based commercial hydrogen production.

In Xcel's pilot, a semitrailer-truck sized electrolysis system will use electricity and steam from the plant to generate hydrogen from water. Nuclear power production doesn't emit CO2, though it does generate toxic waste.

Nuclear hydrogen is in a more experimental stage than renewable-powered hydrogen. And Xcel's pilot project is unique, Ludwig. It utilizes "high-temperature" electrolysis, not low-temperature as is customary.

High-temperature electrolysis uses 30% less electricity than the low-temperature version, Ludwig said.