Growing popular? Green Hydrogen Sustainability
Green Hydrogen Land Leasing Initiatives in the United States
Introduction
The quest for sustainable energy solutions has led to market participants projecting a surge in Green Hydrogen as a clean and versatile fuel source. Green Hydrogen has the potential to help reduce greenhouse gas (GHGs) emissions, especially in sectors that are difficult to decarbonize, such as heavy manufacturing and energy-intensive industries like steel or chemicals. It is also emerging as a key solution for electricity storage, addressing the intermittency issues of wind and solar energy. Currently, however, its primary use is in traditional refining and industrial applications, especially for the production of ammonia. Hydrogen today is mostly produced using fossil fuels through steam methane reforming (grey hydrogen), offering no sustainable climate benefits. GIS Reports Online projected that by 2050, the global hydrogen market could surge, reaching between 600-650 million tons, potentially fulfilling over 20 percent of global energy needs. As the United States strives to decarbonize its energy sector, leasing land for green hydrogen production has emerged as a crucial avenue for renewable energy developers. In this article, we explore the dynamics of leasing land for green hydrogen projects in the US and the significant role it plays in fostering a greener energy future.
Green Hydrogen as Sustainable Energy
Green hydrogen is produced through the Electrolysis of water using renewable energy sources, primarily wind or solar power. The process yields hydrogen gas without carbon emissions, offering a clean alternative to conventional hydrogen production methods that often rely on fossil fuels. As global interest in green hydrogen grows, the United States is positioning itself as a key player in the production and utilization of this eco-friendly energy carrier.
Green Hydrogen – Source: iStock Photo
Land Leasing Considerations
Abundant Renewable Resources: Selecting land with ample access to renewable resources is paramount for green hydrogen projects. Texas is unrivalled for its solar resource and also has high wind energy availability. According to the Texas Solar Power Association sunshine is a powerful natural resource throughout Texas, which enjoys more overall solar insolation than any other state in the U.S. It is a non-depletable energy resource that could generate billions of dollars of new revenue in Texas every year in solar electric generation output.
According to Titan, Texas is a wind power leader – as of 2023, wind turbines in Texas amount to 40,555 MW (megawatts) of installed wind capacity, a higher power capacity than any other state by a significant margin. Iowa has the second highest installed wind capacity in the U.S., at 13,007 MW, which is still less than a third of Texas’ wind capacity. Texas leads other states by such a wide margin due to a variety of factors – including abundance of land, ideal topography, and early investment in wind and transmission infrastructure that gave Texas a head start in wind energy. Due to its strong renewable energy sector and chemical industries, Texas is in a potential position to forge the way ahead for Green Hydrogen ventures. Areas with abundant sunlight for solar or strong and consistent winds for wind energy are preferred, to ensure a reliable and sustainable energy source for water electrolysis.
Proximity to Infrastructure: Proximity to existing infrastructure, such as power lines and transportation networks, streamlines the development and operational processes.
Green Hydrogen needs specialized infrastructure to facilitate its storage and transportation from production facilities to utilization centers. This involves the use of specifically designed tankers and pipelines that can accommodate hydrogen under specific temperature conditions, along with dedicated storage facilities equipped with compression and liquefaction capabilities. Despite the potential placement of hydrogen equipment near renewable energy plants, the absence of suitable infrastructure for hydrogen transportation renders this prospect unfeasible. Consequently, the lack of infrastructure emerges as a significant obstacle to co-locating hydrogen technologies with renewable energy sources.
Positioning Hydrogen Electrolyzers – To augment the production of green hydrogen, it is crucial to harness green energy for hydrogen synthesis. However, the placement of hydrogen electrolyzers in areas abundant with renewable resources and equipped with suitable hydrogen transport infrastructure poses a considerable challenge. Specifically, identifying optimal locations for hydrogen electrolyzers to minimize associated storage and transportation costs while maximizing green hydrogen production proves to be a complex task. Smart Grid explores this in detail. Efficient connectivity to the grid facilitates the injection of renewable energy into the system, and easy transportation supports the distribution of hydrogen to end-users.
Land Use Compatibility: Green Hydrogen projects require land for the Hydrogen generating plant and the renewable energy plants as an input power source, mostly wind and solar farms. Assessing land use compatibility is crucial to prevent conflicts with other land activities. It is crucial to consider physical land features such as terrain, topography, geotechnical aspects, vegetation cover, nearness to powerlines, Green hydrogen projects often require vast expanses of land, and choosing areas with minimal impact on existing land uses, ecosystems, and local communities is essential. It is worth noting that for Green Hydrogen, the power supply would ideally need to be located near the electrolysis plant. Balancing energy development with environmental conservation is a key consideration. Reach out to us for a free assessment on whether your land is suitable for Green Hydrogen production and general advice on solar leases.
Regulatory Environment: Navigating the regulatory landscape is a critical aspect of land leasing for green hydrogen projects.
The United States initially established a hydrogen policy with the Energy Policy Act of 1992, which initiated extensive research into hydrogen as an alternative fuel source. This policy aimed to reduce the country's reliance on petroleum while promoting the adoption of alternative fuels, overseen by the Department of Energy.
Oxford Academic explains that for over two decades, the hydrogen policy in the USA remained largely unaltered. Despite former President Barack Obama's reduction in funding for several hydrogen initiatives, funding for hydrogen research and development (R&D) has experienced a steady increase since 2017. The Department of Energy launched H2@Scale to enable affordable and reliable large-scale hydrogen generation, transport, storage and utilization throughout the energy system in the US. Understanding federal, state, and local regulations related to energy development, environmental impact assessments, and permitting processes is essential for smooth and compliant project execution.
Community Engagement: Green hydrogen projects, like any other power projects, have the potential to generate significant anticipation and optimism regarding clean energy, economic investment, and employment opportunities. It is imperative for project developers to initiate early and meaningful engagement with local communities. From the project's inception, communities should be consulted, ensuring that their voices are heard, concerns are understood, and contributions are valued throughout the project's lifecycle to secure a social license to operate. Green Hydrogen Organisation explores the community engagement aspects in detail.
To foster broader engagement with citizens across the entire country where a project is situated, transparency regarding key project information plays a vital role in garnering nationwide support for specific projects and for the industry as a whole. Drawing from practices in the oil, gas, and mining sectors, transparency measures include making essential agreements between the host state and project sponsors publicly accessible. This transparency extends to disclosing payments made under these agreements, along with comprehensive documentation and integrating environmental and social impact assessment. Such transparency efforts contribute to building trust, enhancing accountability, and promoting public confidence in green hydrogen. Establishing positive relationships with local communities is vital for the success of green hydrogen projects.
Economic Viability: The primary factors influencing the cost of producing green hydrogen are the investment in the water electrolyzer, its annual operating time, and the expense of the renewable energy utilized to operate the electrolyzer. Among these factors, the cost of purchasing the water electrolyzer itself is significant. 100% RE expounds this in detail - The price range for acquiring a water electrolyzer for green hydrogen production varies from $500 per kilowatt (kW) to $5600 per kW. This initial investment outlay plays a crucial role in determining the overall cost-effectiveness of green hydrogen production projects. Despite being one of the most plentiful elements, hydrogen is frequently found in combination with other elements, making its extraction from nature more difficult. Assessing the economic viability of green hydrogen projects involves considerations such as the cost of land leasing, equipment, transportation, and maintenance. According to 100% RE the cost of producing Green Hydrogen ranges from $5.5/kg to $9.5 /kg. This is relatively expensive compared to other traditional hydrogen production methods. Apart from the production costs, one needs to examine potential revenue streams, including hydrogen sales and potential government incentives (such as the 45V tax credit), and run financial analysis to evaluate the economic soundness of Green Hydrogen Projects.
Electrolysis – Source: Shutterstock
Conclusion
Leasing land for green hydrogen projects is a crucial element of the United States' strategy to transition to a low-carbon economy. With ongoing technological advancements and the growth of the green hydrogen industry, the demand for suitable land for production is expected to rise. Collaborative efforts involving renewable energy developers, landowners, local communities, and policymakers will be essential in unlocking the full potential of green hydrogen as a clean and sustainable energy solution.
This step towards land leasing for green hydrogen projects fosters a significant milestone in the United States' journey towards a more sustainable and carbon-neutral energy future. By carefully considering various factors such as the availability of renewable resources, proximity to infrastructure, compatibility with land use, compliance with regulations, engagement with local communities and economic feasibility, stakeholders can contribute to the successful development of green hydrogen projects. Reach out to Telkes to determine if your land is suitable for Green Hydrogen projects and be part of the energy transition.
