California Cities Unveil America’s First Public Hydrogen Utility

Key Takeaways

First Public Hydrogen (FPH2), a utility formed by Lancaster and Industry, is selecting hydrogen suppliers to promote clean energy.
FPH2 aims to secure 20,000 tons of clean hydrogen by July, acting as an intermediary between suppliers and various customers.
While influenced by tax incentives, FPH2 strives for independence from them and ensures stringent environmental standards are met for hydrogen production.

Public Utility Initiative to Advance Clean Hydrogen

First Public Hydrogen (FPH2) is a new public utility launched by the California cities of Lancaster and Industry that aims to facilitate the adoption of clean hydrogen. The initiative began its supplier selection process during a board meeting held on January 13, coinciding with the finalization of guidance related to the 45V clean hydrogen production tax credit.

FPH2 is not fully reliant on these tax credits; however, R. Rex Parris, mayor of Lancaster and chair of the FPH2 board, acknowledges that these incentives are vital for promoting hydrogen usage. As a public intermediary, FPH2 plans to make hydrogen more accessible, affordable, and transparent for various sectors.

California is in a strong position for hydrogen production due to recent exemptions from new energy procurement standards. According to Parris, despite challenges at the national level, the combination of 45V incentives and state initiatives presents a viable path for other municipalities to develop similar projects. Parris emphasizes that collaboration among states, the federal government, and private industry is crucial for ensuring a steady hydrogen supply.

FPH2’s primary objective is to secure 20,000 tons of clean hydrogen by July 2023. The utility will serve as an aggregator, connecting hydrogen suppliers with entities like municipalities, public utilities, transit agencies, and industries such as logistics and transportation. By partnering with industry leaders, FPH2 plans to establish the necessary infrastructure for hydrogen storage and distribution, with the goal of initiating deliveries to early adopters by late 2025 or early 2026.

This public utility model allows FPH2 to reduce the risks associated with hydrogen adoption for end users while facilitating rapid scaling for producers. Parris highlights that FPH2 will ensure transparency and public benefit, distinguishing it from profit-driven ventures.

Although the 45V tax credit was a motivating factor for FPH2’s formation, Parris insists that the utility is not solely dependent on these incentives. Some within the hydrogen sector have voiced concerns regarding the emissions standards outlined in the final guidance, suggesting that they may hinder the adoption of clean hydrogen produced via electrolysis. Nevertheless, Parris supports the standards aimed at ensuring environmental compliance but remains open to refining them to promote broader adoption without imposing excessive barriers.

During the board meeting, FPH2 identified nine potential suppliers of clean hydrogen, with eight having facilities in California. The location of the ninth supplier is yet to be determined. FPH2 is set to issue its first request for proposals to hydrogen suppliers before the end of the first quarter of 2023, signaling a significant move toward fostering a sustainable hydrogen economy in California.

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