Is the First Public Hydrogen Utility a Glimpse of the Future?
by Bob Shively, Enerdynamics President and Lead Facilitator
Two communities in California recently created the United States' first public hydrogen utility. A joint powers authority created by the cities of Lancaster and Industry, the First Public Hydrogen
(FPH2) utility aims to further develop the renewable hydrogen market in California. By serving as a public intermediary between hydrogen producers and consumers, FPH2 seeks to make renewable hydrogen more accessible, affordable, and transparent.
As a public hydrogen utility, FPH2 will coordinate the use of infrastructure required to produce, store, distribute, and deliver renewable hydrogen to end users much like traditional electric joint power authorities such as Northern California Power Agency (NCPA) and Southern California Public Power Authority (SCPPA). These agencies provide joint planning, financing, construction, and operation of transmission and generation projects to provide electric supply to municipal utilities and irrigation districts. FPH2 will perform similar functions to provide a supply of renewable hydrogen.
Here is what FPH2 intends to do:
- Sourcing supply: FPH2 is identifying and vetting potential renewable hydrogen suppliers across California to secure adequate supply to meet the aggregated demand. It will then enter into off-take contracts to provide a secure market for proposed projects.
- Aggregate demand: FPH2 will act as an aggregator, pooling demand from municipalities, public transit agencies, port authorities, and private sector companies to acquire hydrogen at scale. Entities developing strategies to utilize renewable hydrogen won’t have to worry about contracting with producers since they can purchase supply directly from FPH
- Developing infrastructure: FPH2 will partner with private industry to build out the physical infrastructure - pipelines, storage facilities, fueling stations - needed to store and deliver the hydrogen to end users.
- Ensuring transparency: As a public entity, FPH2 is committed to making hydrogen pricing and contract structures transparent. This transparency, along with its not-for-profit model, sets it apart from commercial ventures.
FPH2 is an integral part of California's plans to pioneer a clean hydrogen economy. It complements two other key initiatives:
- The Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES), which was recently selected by the U.S. Department of Energy as one of 6-10 "hydrogen hubs" that will receive federal funding to accelerate hydrogen deployment. FPH2's infrastructure plans align directly with ARCHES' goal of building out renewable hydrogen production and delivery networks.
- The Angeles Link pipeline project being developed by SoCalGas. Angeles Link is a proposed network of hydrogen pipelines that will transport renewable hydrogen from production sites to end users across southern California. FPH2 will likely be a key customer and partner for Angeles Link, using the pipeline network to deliver hydrogen to its public and private sector consumers.
By serving as a public intermediary focused on market development, FPH2 fills a crucial gap between suppliers and consumers of renewable hydrogen. Its aggregation of demand and development of guaranteed offtake provides producers with the certainty needed to secure financing for new projects. At the same time, by shouldering the burdens of vetting supply and building delivery infrastructure, FPH2 makes adopting renewable hydrogen turnkey for end users.
If successful, FPH2 could provide a replicable model for other public entities looking to accelerate renewable hydrogen adoption in their jurisdictions. As California positions itself at the vanguard of the clean hydrogen transition, FPH2 hopes to play a central role in making the state's hydrogen ambitions a commercial reality.
