As Secretary Granholm has said, “Clean hydrogen is a game changer.” The U.S. Department of Energy’s Loan Programs Office (LPO) is prepared to help drive the industry’s deployment progress to leverage its climate benefits, serving as a ‘bridge to bankability’ for breakthrough projects and technologies and de-risking them at early stages of investment so they can reach commercial scale.
Hydrogen projects play a vital role in meeting the Biden Administration’s goal of reducing U.S. greenhouse gas (GHG) emissions by at least 50% by 2030. In order to meet this target, GHG emissions must be slashed from traditionally difficult-to-decarbonize industrial processes like cement and steelmaking – sectors where hydrogen could play a critical role, along with transportation, power, and heating, among others.
Industries are beginning to implement clean hydrogen to reduce emissions, yet many hurdles remain to deploying it at scale, including lack of debt financing for commercial deployment. The technology has yet to establish an adequate commercial operating history to prove bankable by private lenders, and the technology remains costly in some applications. DOE recently announced its Hydrogen Shot program to drive down costs by 80% from about $5/kilogram today to $1/kilogram by 2030 to help address these issues. In tandem with this effort, LPO can help to provide financing for innovative projects that avoid, reduce, or sequester greenhouse gas emissions and meet other eligibility and programmatic requirements. Then, as the technology is proven bankable, commercial deployment can accelerate and costs will drop even further.
The role of LPO
Hydrogen projects could be eligible to receive LPO support for the deployment of utility-scale power generation, distributed energy resources, advanced technology transportation, technologies or processes for reducing GHG emissions from industrial applications, and other innovative technology areas.
Through the Title 17 Innovative Energy Loan Guarantee Program (Title 17), LPO can provide access to debt capital to support the domestic deployment of hydrogen projects from fossil fuel and/or renewable sources, so long as the projects meets all eligibility and programmatic requirements. Specifically, green hydrogen production and infrastructure project developers may be eligible to seek financing through the open Renewable Energy Projects and Efficient Energy Projects (REEE) solicitation. Further, distributed energy projects that include fuel distribution facilities, including associated hardware and software for hydrogen fuel-cell vehicles may be eligible under either the REEE Project solicitation or the Advanced Fossil Energy Projects solicitation. Hydrogen produced from fossil fuels is also potentially eligible under the Advanced Fossil Energy Projects solicitation.
Moreover, hybrid technology solutions including the addition of hydrogen at existing fossil generation and nuclear power plants may be eligible for Title 17 support. For example, by applying available or excess power to produce hydrogen, the plants can sustainably and predictably operate at optimum efficiencies and the hydrogen can be stored long-term on-site for power generation and/or incorporation into transportation.
Additionally, through the Advanced Technology Vehicles Manufacturing Loan Program (ATVM), LPO can potentially support the manufacture of hydrogen fuel-cell electric passenger vehicles and components, including manufacturing the associated hardware for hydrogen fuel-cell fueling stations through direct loans.
To learn more about how LPO could help to support your U.S. hydrogen project or to engage with LPO staff for a pre-application consultation, please email LPO@hq.doe.gov. Please provide a brief description of the project, estimated costs and timeline, and location, and we will work with you to determine whether your hydrogen technology solution could be eligible for a loan or loan guarantee.
To learn more about hydrogen technology at DOE's overall efforts, visit www.hydrogen.energy.gov.
This blog post is the first in a new series highlighting some of the technology sectors eligible for support from the U.S. Department of Energy Loan Programs Office. Learn more about LPO and its loan eligibility requirements at energy.gov/lpo.
Contributors: Nichola Kinsinger, PhD and Kennedy Nickerson