Good morning from Seattle, where I finally kicked my jetlag after two whirlwind weeks in Europe.
Amena Saiyid — our new DC-based correspondent we introduced you to last week! — examines an under-covered angle on hydrogen and breaks down new U.S. electricity data.
The United States’ first hydrogen plant fueled by nuclear energy has just powered up in New York.
The moment reflects two trends converging in the past few years.
Nuclear is making a comeback as an electricity source around the world at the same time support is growing for hydrogen to power the industrial base of our economies.
Constellation Energy, which operates the largest number of U.S. nuclear plants, has in the last couple weeks begun producing a small amount of clean hydrogen in a pilot project that pairs a 1.25-megawatt (MW) electrolyzer with its Nine Mile Point nuclear plant in upstate New York.
In an earnings call last month, the company’s chief financial officer called the Inflation Reduction Act, which directs nearly $370 billion toward clean energy, “transformational” and said it accelerated some projects.
“We continue to believe that hydrogen produced by nuclear plants will play a critical role in addressing climate change by helping to decarbonize hard-to-decarbonize sectors,” said Dan Eggers, Constellation’s CFO.
The company, which is also part of two separate efforts seeking federal funding for hydrogen hub projects, plans to start commercially producing at least 30,000 tons of hydrogen a year at an Illinois nuclear plant by 2026.
The energy crisis stemming from Russia’s war in Ukraine, coupled with growing urgency to tackle climate change by moving away from fossil fuels, has compelled governments in the U.S., Europe and Asia to recommit to nuclear power, both at existing plants and with new kinds of reactors, as solutions.
At the same time, companies, governments and investors are taking an interest in clean hydrogen for its potential use as a versatile energy source in carbon-intensive industries like steelmaking and heavy transportation.
Hydrogen today is produced almost entirely from unabated natural gas and coal and is used almost exclusively in the fertilizers and chemicals sectors.
The nascent efforts underway to produce cleaner hydrogen have mostly focused on using natural gas plants equipped with carbon capture equipment or renewable power to split water into hydrogen and oxygen in a process called electrolysis.
That is starting to change.
In the oft-mentioned hydrogen rainbow scheme, renewable energy is green and natural gas with carbon capture is blue. At Cipher, we find this color scheme overly simplistic, but for the record, nuclear-powered hydrogen is usually pegged as red or pink.
The European Commission recently adopted rules to make it easier to produce clean hydrogen from nuclear power, in a nod to demands from France, which gets about 70% of its electricity from nuclear.
In the U.S., nuclear power provides roughly a fifth of the nation’s electricity and half of its carbon-free power.
“Traditional and advanced nuclear reactors are well-suited to provide this constant heat and electricity needed to produce clean hydrogen, which could open new markets for nuclear power,” the U.S. Energy Department said late last year when highlighting four such projects, including Constellation’s.
The government is directing record amounts of money toward clean hydrogen. The Energy Department set a goal of ramping up production from “nearly zero levels” to 10 million metric tons by 2030 and 50 million metric tons by 2050.
The U.S. Congress authorized $9.5 billion under the 2021 infrastructure law for clean hydrogen, including to create several regional hydrogen hubs that house infrastructure developing it. At least one of the hubs will focus on nuclear power, the Energy Department has said. Congress also provided tax breaks for hydrogen in the IRA.
Other utilities are also likely to pursue nuclear-powered hydrogen.
Five major utilities—Duke Energy, Dominion Power, Tennessee Valley Authority, Southern Company and Louisville Gas and Electric Company & Kentucky Utilities Company—joined six southeastern states and the engineering firm Battelle to apply for federal funding. Except LGE & KU, four of these utilities together operate nearly one-fourth of the 55 active nuclear plants in the country.
When reached for comment, the four companies declined to elaborate on the potential use of nuclear to make clean hydrogen, with Duke and Dominion officials saying they intend to use both renewable and nuclear resources.
Experts said nuclear power has advantages in hydrogen production.
"Nuclear power has an edge over variable renewables because it can operate around the clock to produce hydrogen, while wind and solar power remain as intermittent as the resource itself,” said Jon-Michael Murray, nuclear policy manager for the environmental nonprofit Clean Air Task Force.
One big hurdle nuclear-powered hydrogen may face is how the 2022 law is implemented.
Maria Martinez, director of policy and advocacy for Breakthrough Energy, sounded a note of caution about whether existing nuclear generators will benefit from the hydrogen production tax credit, among others. “That will largely depend on how the U.S. Treasury implements these new credits and writes the rules around carbon accounting,” she said.
As with most clean energy, high cost is another challenge. Electricity prices and equipment costs determine hydrogen’s price.
Hydrogen from natural gas is still cheapest, provided natural gas prices stay low. But hydrogen from nuclear and solar power become competitive when gas prices soar, according to a recent report from the Nuclear Energy Agency within the Organisation of Economic Co-operation and Development.
The Energy Department will decide which coalitions it will select to build hydrogen hubs this fall.
Editor’s note: Maria Martinez is U.S. policy and advocacy director at Breakthrough Energy, which also supports Cipher.
Lunchtime Reads and Hot Takes
Technology over the long run: zoom out to see how dramatically the world can change within a lifetime — Our World in Data Amy’s take: We will probably interact with technology we at one point considered unimaginable.
Greta Thunberg accuses Norway of ‘green colonialism’ over wind farm — Financial Times (paywall) Anca’s take: Despite the catchy headline, this story is yet another reflection of the difficult trade-offs countries and societies face as part of the energy transition.
Ajay Banga, World Bank nominee must swap finance for climate — Financial Times (paywall) Amena’s take: That headline is misleading on several counts. You cannot tackle climate impacts without a great deal of financing.
Ford’s F-150 Electric Pickup’s Built From Metal Damaging the Amazon Rainforest — Bloomberg Amy’s take: A revealing and troubling investigation. I wish it had given more context up front connecting the dots and noting the implications for the energy transition writ large.
Russian nuclear fuel: The habit Europe just can’t break — POLITICO Anca’s take: A nice deep dive looking at EU countries’ different relationships with Russia on nuclear energy and the challenges (or unwillingness) to change fuels.
The U.S. Has Billions for Wind and Solar Projects. Good Luck Plugging Them In. — The New York Times Amena’s take: Even if there were enough interconnections, there would still be delays because there are more applications than the staff at these agencies can handle.
Efforts to block sunlight get boost from prominent scientists — E&E News (paywall) Amy’s take: It is interesting to see James Hansen joining this letter.
France mounts battle for nuclear energy in Europe — Financial Times Anca’s take: The main point here is France’s assertive push to put nuclear higher on the EU agenda.
Some states backtrack on anti-ESG efforts, citing ‘unintended consequences’ — S&P Global Market Intelligence Amena’s take: This development is unsurprising: Americans won’t give up on investment funds that give them decent pension returns for the sake of ideology.
How this company plans to use Earth’s heat to cool the planet — The Washington Post Amy’s take: It’s refreshing to read a story about new power sources that can be dedicated to industrial processes (whether direct air capture or others).
Kenya to set up 136 solar mini-grids for remote communities — Reuters Anca’s take: I wrote previously about big energy access problems in various parts of Africa. It is nice to read about progress as well.
EV charging infrastructure is “inadequate and plagued with non-functioning stations”: J.D. Power — Smart Cities Dive Amena’s take: This story doesn’t tell you whether it’s government-owned and operated public charging stations malfunctioning or the ones controlled by private companies.
More of what we're reading:
EU agrees 'world's first' bond issuance rules to combat greenwashing — Reuters
Wind Turbines Are Safer for Birds Than Thought, Power Company Says — Bloomberg
The world is on track to overshoot 1.5 degrees of warming, so it’s time to study reflecting sun away from the Earth, UN says — CNBC
Chart: Who’s the leader in utility-scale solar — California or Texas? — Canary Media
Offshore Wind Halt Urged by Native Americans Seeking Sway – Bloomberg
DATA DIVE
Record U.S. renewable electricity to replace fossil fuel power
Source: U.S. Energy Information Administration • Preliminary Monthly Electric Generator Inventory, December 2022. All other additions—including biomass, geothermal and hydro—represent less than 1% of the total. All other plant retirements—including landfill gas, waste biomass and hydro—equal less than 1% of the total.
The U.S. electricity grid is undergoing a rapid energy about-face: A record amount of clean energy is set to come online this year at the same time fossil-fuel power plants keep retiring at a fast clip, according to new data from the U.S. Energy Information Administration.
The data is the latest to illustrate the energy transition in action across the world’s major electricity systems.
New utility scale solar arrays could provide nearly 30 additional gigawatts of power, more than half of the total electricity capacity (54.5 GW) developers plan to bring online in 2023, setting a new installation record, the EIA said.
Large-scale solar capacity now totals 73 GW in the U.S., including 10 GW added just in 2022.
“If all of this capacity comes online as planned, 2023 will have the most new utility-scale solar capacity added in a single year, more than doubling the current record (13.4 GW in 2021),” the EIA said.
Wind capacity, which has tripled since 2011 and now supplies 11% of total power in the U.S., will add only 6 GW in 2023, down from record highs of 14 GW brought online in 2020 and 2021.
Battery storage will more than double this year, adding 9.4 GW to the grid and exceeding the amount of new natural gas coming online for the first time.
This growth is coming despite delays connecting new generation plants to electricity grids, which Cipher wrote about last summer.
EIA data also show 8.9 GW of aging and inefficient coal-fired generation being retired, about 4.5% of all U.S. coal generation.
Favorable tax credits in the Inflation Reduction Act and lower construction costs, especially for solar, will allow wind and solar to increasingly replace coal- and gas-fired generation in 2023 and 2024 in the U.S., EIA projected.
AND FINALLY...
Inside look
Drone photographer Ricardo Manno took this photo of three wind technicians working inside a turbine in Oude-Tonge, The Netherlands in November 2021. The unique view shows them waiting about 260 feet in the air to install a new turbine blade.
Each week, we feature a photo that is somehow related to energy, the thing we all need but don’t notice until it’s expensive or gone. Email your ideas and photos to news@ciphernews.com.
Editor’s note: In addition to supporting Cipher, Breakthrough Energy also supports and partners with a range of entities working to tackle climate change, including nonprofits, corporations, startups and research firms. For more information on Cipher’s editorial policy, click here.
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