Douglas County PUD hydrogen facility could get part of $1 billion Department of Energy funding

DOUGLAS COUNTY — Douglas County PUD’s hydrogen production facility could receive a piece of up to $1 billion in federal funding — at least that’s the hope.

The PUD is one of 17 entities in the Pacific Northwest Hydrogen Association’s PNWH2 Hub for which the U.S. Department of Energy on Friday announced award negotiations. The hub — spanning Washington, Oregon and Montana — is one of seven national Regional Clean Hydrogen Hubs, or H2Hubs, that will share up to $7 billion. The funds are available, in part, due to the Bipartisan Infrastructure Law passed in 2021. In 2022, the DOE announced a grant program to establish nationwide hubs.

DOE and the Pacific Northwest Hydrogen Association will negotiate the final funding and scope for the hub beginning this fall.

“It is not clear how this funding will impact Douglas PUD’s hydrogen project,” wrote Gary Ivory, PUD general manager, in a Monday email. “The Northwest Hub will be negotiating with DOE and the other members of the Pacific Northwest Hydrogen Hub to establish what projects will receive money and move forward. Regardless of the grant, we are marching forward with our hydrogen production facility and are excited to see the walls of the main building going up this week.”

Ivory also serves as the Pacific Northwest Renewable Hydrogen Association’s board secretary.

Douglas County PUD in 2019 began exploring producing hydrogen using water from wells on its property. In short, the water would be made into hydrogen using a hydrogen machine, aka an electrolyzer, which splits the water into hydrogen and oxygen molecules through electrolysis, with the gas collected separately. Production is expected to begin in 2024 at the facility, which sits on 109 acres of former orchard property off of Highway 2/97, near the Shell station.

Also in 2019, the state Legislature passed Senate Bill 5588, introduced by Sen. Brad Hawkins, R-East Wenatchee, allowing PUDs to pursue hydrogen production. In October, the PUD bought 109 acres in Baker Flats for about $2.1 million for the hydrogen facility, according to The Wenatchee World archives.

In 2021, Hawkins sponsored Senate Bill 5000, which extends sales tax incentives to hydrogen vehicles, as well as “a transportation budget item to fund the state’s first combo fast-charging electric vehicle and hydrogen fueling station” in East Wenatchee, according to an opinion column in the Wenatchee Valley Business World in April.

“It’s super exciting for the Pacific Northwest to be selected as one of our nation’s ‘hydrogen hubs’ and for the Wenatchee Valley to be helping lead this effort,” Hawkins wrote in an email. “Our region has a long and proud history of clean energy and innovation. Whether it’s building renewable hydropower in the 1960s, deploying high-speed broadband decades ago, and now advancing renewable hydrogen, our region has taken risks to help lead the way. A big congratulations to Douglas County PUD because what they are doing is not just something notable locally or statewide, but it’s of national significance. How awesome!”

U.S. Rep. Kim Schrier told The Wenatchee World on Friday having hydrogen for fuel made “economic sense,” and it was part of a clean energy portfolio that included renewable electricity.

She and U.S. Sen. Maria Cantwell earlier this year led a bipartisan group of 15 other lawmakers penning a letter of support for the PNWH2, according to a release. The state’s renewable electricity “provides a great opportunity to generate green hydrogen using excess power not needed on the grid,” she said in the release. The investment also will create thousands of jobs, she said.

“Hydrogen is a really big deal,” she told The World, adding it was exciting to see the plans come together. Douglas County PUD’s facility is “robust and noble,” she added.

After its 2019 land purchase, the PUD in April 2020 bought its first 5-megawatt hydrogen machine from Cummins Inc., formerly Hydrogenics Corp., for about $9.5 million.

The PUD project broke ground on the so far $27 million project in March 2021.

Douglas County PUD will produce hydrogen fuel at a 80-by-136 foot facility. The capacity at the site will be up to 80 megawatts of hydrogen production. A fueling station will be added near the hydrogen plant, as well as the PUD’s East Wenatchee offices.

The PUD commissioners approved buying a second electrolyzer from Cummins Inc. in February to double capacity at the facility, and, with the expansion of tax credits, the PUD received a $5 million tax credit for equipment installed in the facility.

The PUD is waiting for the rectifier and the water treatment system, said Meaghan Vibbert, PUD spokesperson, on Monday.

The building was designed to house four of these electrolyzers, Ivory said at a February board meeting.

“Its anticipated wide-scale use of electrolyzers will play a key role in driving down electrolyzer costs, making the technology more accessible to other producers, and reducing the cost of hydrogen production,” a DOE release stated.

“The Pacific Northwest Hydrogen Hub has committed to negotiating Project Labor Agreements for all projects over $1 million and investing in joint labor-management/state-registered apprenticeship programs. This H2Hub is expected to create more than 10,000 direct jobs — 8,050 in construction jobs and 350 permanent jobs.”

Environmental organization Sierra Club’s deputy regional field director, Robin Everett, said in a release the hub “receiving funding is good news because it’s a hub that has already committed to using one hundred percent clean energy. We’ve got a regional reputation for prioritizing the health of our communities and planet, and we hope this proposal will honor those intentions.

“However, it’s essential that any projects developed as part of this hub link directly to a hard-to-electrify sector, and that we continue to prioritize cost-effective electrification above all else wherever we can. We remain committed to staying involved in the process, ensuring this hub sets an example for how to do hydrogen right, and engaging the communities it will impact the most every step of the way.”