Dive Brief:

• First Public Hydrogen, or FPH2, a public utility created by the California cities of Lancaster and Industry, began the process of selecting hydrogen suppliers at a Jan. 13 board meeting, following the finalization of the 45V clean hydrogen production tax credit guidance.
• Although FPH2 aims to avoid dependence on the 45V tax credits, the incentives are critical to driving hydrogen adoption, according to R. Rex Parris, mayor of the City of Lancaster and chair of the FPH2 board.
• By acting as a public intermediary between buyers and sellers of hydrogen, FPH2 aims to make hydrogen more accessible, affordable and transparent, Parris said in an interview with Utility Dive.

Dive Insight:

California has a series of advantages for producing hydrogen — including an exemption from the energy procurement standards set earlier this month by the final 45V hydrogen tax credit guidance. While the tax credit played a key role in the timing of when the cities of Lancaster and Industry chose to launch FPH2, Parris said he believes there is a path for other municipalities to follow suit.

“While there are challenges at the national level, we believe the combination of 45V incentives and state-level initiatives will drive the necessary growth in renewable energy and hydrogen production to achieve scale,” Parris said. “That said, collaboration between states, the federal government, and private industry will be essential to ensuring sufficient supply.”

FPH2, which launched in December, has set a goal to secure 20,000 tons of clean hydrogen by July. The hydrogen utility plans to serve as an aggregator between suppliers of hydrogen and would-be customers, including municipalities, other public utilities, transit agencies, and private sector companies in industries such as logistics, shipping and transportation, Parris said. FPH2 will partner with private industry leaders to build out the physical infrastructure needed to store and deliver hydrogen, with a goal of beginning deliveries to early hydrogen adopters by late 2025 or early 2026, he said.

The public utility model will allow FPH2 to de-risk hydrogen adoption for end users, while helping producers to scale more quickly and offering greater “transparency, accountability and a clear focus on public benefit, setting it apart from profit-driven commercial ventures,” Parris said.

Although Parris said 45V was an important step toward promoting clean hydrogen and a key part of the timing of the FPH2 launch, he said the utility is not dependent on the incentives. Some hydrogen industry leaders have called for revisions to the 45V guidance, though most experts believe a repeal of the hydrogen incentives by the Trump administration is unlikely.

“FPH2 plans to source hydrogen that meets or exceeds these standards while exploring other pathways to bridge any gaps,” he said. “We will remain flexible, adapting to market conditions and regulatory developments to ensure progress.”

Despite some criticism from within the hydrogen industry that complicated emissions standards in the final guidance would slow the adoption of clean hydrogen made using electrolysis and renewable energy, Parris said FPH2 supports the rule's intended goal of “maintaining stringent environment standards” for hydrogen producers. “At the same time,” he said, “we are open to discussions about how the criteria can be refined to ensure widespread adoption without creating unnecessary barriers.”

Stringent standards notwithstanding, FPH2 identified nine potential suppliers of eligible clean hydrogen at its board meeting. Eight of the suppliers have plants in California, while the location of the ninth hydrogen plant is not yet decided.

FHP2 plans to issue its first request for proposals from hydrogen suppliers before the end of the first quarter of this year.