2021-03-28 Gov’t Should Fund Green Hydrogen Plant

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The govt should fund a plant for electrolyzing green hydrogen from water. This should be able to soak up all the power from renewables that otherwise would be curtailed during off-peak demand times. The whole idea is to get the ball rolling on green hydrogen production without putting load on the grid during peak times. And this funding could be obtained from a tax on gray hydrogen made from natural gas.

Why the government funding? Because the private sector will not fund a business that’s not going to make money. The hydrogen can’t be produced when demand is high, so there will be times (especially in the beginning) where the hydrogen plant will be doing nothing. But as more and more of the total supply becomes solar and wind, the hydrogen production will become less unprofitable and businesses will take on the production.

The pilot plant could be a business, with a guarantee from government that any losses would be government funded. The business would get a power agreement from the independent system operator to obtain the supply of excess power at a cost that is low. That’s where the suppliers that generate have to agree that the excess power will be sold at a lower rate, but at a rate that will cover their costs. This is so that the companies that generate will *not* have constraints on building solar or wind farms that are larger than needed. These farms would normally be limited in size because the increased costs would normally have no guarantee of being recovered due to inability to sell the excess power produced. So another way of viewing this is that the government is covering the risk of building *increased* solar and wind generation that will be needed in the near future to supply the increases in demand for electric ‘fuel’ for EVs.

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