NextEra’s Plan to Ditch Carbon Is a Huge Bet on Hydrogen

Source: By Mark Chediak, Bloomberg • Posted: Thursday, June 16, 2022

One of the world’s largest clean energy generators says it can wipe out emissions without using offsets.

Wind turbines at the San Gorgonio Pass wind farm, owned by NextEra Energy Inc., in Whitewater, California.

Wind turbines at the San Gorgonio Pass wind farm, owned by NextEra Energy Inc., in Whitewater, California. Photographer: Bing Guan/Bloomberg

NextEra Energy Inc.’s plan to eliminate greenhouse gas emissions by 2045 without relying on carbon-capture systems or offsets marks one of the biggest bets yet to make hydrogen a central piece of the energy landscape.

The company, which operates Florida Power & Light and owns one of the world’s largest developers of wind and solar power, wants to convert more than two-thirds of its natural gas power plants to run on hydrogen. The fuel, in this case, would be produced by renewable energy with devices called electrolyzers. In addition, NextEra is looking to become a leader in producing hydrogen and developing infrastructure so it can be used to decarbonize power plants, transportation and heavy industry across the country.

To achieve its clean-energy targets, the Juno Beach, Florida-based company also plans to deploy massive amounts of solar and battery storage. Yet it’s NextEra’s hydrogen ambitions that will likely face the biggest technical and financial hurdles. Hydrogen, which doesn’t emit carbon dioxide when burned, costs multiple times more to produce using renewable sources and very little is produced this way now. Another concern is the amount of energy lost when electricity is used to make hydrogen that is then used to produce power.

Expensive upgrades will need to be made to NextEra’s natural gas pipelines and turbines if they are to use pure hydrogen without leaks or other safety issues. And scientists are now warning that if too much hydrogen seeps into the atmosphere, it can contribute to climate change.

Here’s how NextEra Chief Executive Officer John Ketchum, 51, sees the role that hydrogen will play in the company’s operations and how he plans to address the challenges. The conversation has been edited for length and clarity.

Q: Your predecessor at NextEra said last year that setting net-zero goals are disingenuous. Why did the company decide to set this goal now?

A: I think we really wanted to find a way to do it on a “real zero” basis. And what we mean by “real zero” is no need for offsets. Our goal is 100% carbon-free generation, no emissions — all renewables and green hydrogen together with nuclear.

Q: Can you talk about the role hydrogen will play in this?

A:  At our utility, we would move to converting 16 gigawatts of our existing natural gas-fired generation fleet to run off of green hydrogen. That would occur around 2042, 2043 timeframe — at the end of the useful life of [a] certain [number] of our [natural gas]assets that would be retired.

Q: The cost of green hydrogen is considerably more expensive than natural gas. I was wondering how you plan to drive that down.

A: For one, natural gas is pretty expensive today and there are some fundamental things that might keep us there. What I see is there are a limited number of manufacturers that make hydrogen. So the first piece is going be technological advancement and you are going to start to see global competition for electrolyzer manufacturing in a way you have not seen before, which is going to force companies to get smarter in terms of lean manufacturing principles and really finding ways to drive efficiencies in electrolyzer production, manufacturing operation.

And I think what you are seeing in Europe will really help drive that because even if hydrogen’s expensive today here in the US, it’s not expensive in Western Europe, where gas supplies have been cut off due to the unfortunate conflict… And we will see what happens with [incentives] from the federal and state government.

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John Ketchum Source: NextEra Energy

Q: What about hydrogen development outside of NextEra’s Florida Power & Light?

A: So it’s a big opportunity for [our renewables business] outside of Florida, just like inside of Florida. Because when you provide green hydrogen, what you’re really doing is you’re taking renewable energy — the solar, wind and battery storage that’s powering the electrolyzer — to create [it]. You are not relying on electricity from fossil sources to run the electrolyzer… So to provide green hydrogen and provide green hydrogen at scale in our energy resources business, it requires a lot of renewables.

Q: Are you thinking of selling green hydrogen to others or just supplying your own operations in terms of green hydrogen?

A: The goal ultimately would be to become a green hydrogen producer where we can provide the renewables necessary to produce the green hydrogen, and that green hydrogen can be used for industrial applications, manufacturing applications, transportation applications, just to name a few.

Q: Is it more of the idea that you would be the provider of the renewables for the green hydrogen production, and the green hydrogen production would be owned by someone else?

A: A little bit of both. I mean our main goal would be to build the renewables to support the green hydrogen, but also we plan to partner with companies outside the power sector, and when we do that, that might require us to own the electrolyzers and actually provide the hydrogen to them directly.

Q: Are you looking at transporting hydrogen in your natural gas pipelines, with all the leak issues involved there?

A: So we have already invested in a company that has a lot capability. We’re looking at other applications as well. Part of the hydrogen future is to be able to leverage and operate our existing gas pipeline at scale to be able to deliver [the fuel].

Q: NextEra owns nuclear power plants and I noticed in your announcement that there wasn’t any talk of using those reactors to produce hydrogen. Why?

A: Our focus really is on renewable hydrogen production because we think that renewables being used to produce hydrogen is a lot cheaper than [using] nuclear to run an electrolyzer.

Q: Regarding your natural gas plants, what would be the cost to convert those to run on hydrogen?

A: I have a cost today, but I’m not going give it to you because it is proprietary and confidential. It’s not very expensive … and it’s going to get a lot cheaper as you get down the road.

Q: Would NextEra also need to build out infrastructure to deliver green hydrogen?

A: It would either have to be transported by pipes or stored onsite. Electrolyzers built onsite that would be served by renewable energy capacity onsite, or you could build the renewables offsite with the electrolyzers and then deliver it by pipeline.

Q: Burning hydrogen in power generators does produce some other emissions. Is that something NextEra has looked at in terms of trying to control? Or is that too far down the road?

A: I think it’s a little too far down the road and I think that’s really inconsequential.