World’s biggest renewable developer plans 1st hydrogen plant

Source: By Kristi E. Swartz, E&E News reporter • Posted: Monday, July 27, 2020

Florida’s largest electric utility has proposed a hydrogen pilot project that executives said will further its goal of becoming a zero-emissions company.

Florida Power & Light Co.’s $65 million project would produce green hydrogen from solar power by using a 20-megawatt electrolysis system. For FPL’s parent company, NextEra Energy Inc., the technology could offer a way to capitalize on its status as the world’s largest renewable energy developer.

“This is a big strategic initiative for us, and we’re going to drive it,” said NextEra CEO Jim Robo. “It’s going to be very important for this company over the next decade.”

Hydrogen from the pilot project will replace a portion of the natural gas from one of three turbines at FPL’s Okeechobee power plant west of Vero Beach, Fla.

Electric companies are eyeing green hydrogen — which is made from renewable electricity sources such as solar and wind power, rather than coal or methane — as an option to get them to the finish line of decarbonization goals. Robo said Friday he sees an opportunity five or 10 years from now where the colorless gas could displace the last 10% of carbon emissions in the electric sector.

South Florida-based NextEra’s backlog of 14,400 MW of wind, solar and storage projects is the largest in the company’s history. It is also larger than the current operating wind and solar portfolios of all but two other companies in the world as of year-end 2019, NextEra Chief Financial Officer Rebecca Kujawa said. Those resources could help power energy-intensive electrolysis systems for producing green hydrogen in the future.

“We are excited about the technology’s long-term potential, which should further support future demand for low-cost renewables,” she said during the company’s second-quarter earnings conference call with Wall Street analysts Friday.

Florida utility regulators would have to sign off on the project, which FPL would like to build by 2023, Kujawa said.

Electric companies nationwide have net-zero or full decarbonization goals. Executives have said they can achieve roughly 80% to 90% of those goals by closing coal-fired power plants and replacing them with more efficient natural gas-fired generation. Additional technologies such as hydrogen are needed to meet the 100% goal. But green hydrogen now costs more to make than “gray” hydrogen derived from methane, oil or coal, or “blue” hydrogen produced from fossil fuels paired with carbon capture and storage technology.

NextEra executives said a zero-emissions profile could be too costly for customers when first discussing the idea roughly a decade ago, Kujawa said. They consider green hydrogen to be the missing link and aim to expand its use during the 2030s decade and beyond.

This could include retrofitting its natural gas plants to run fully or partly on hydrogen, she said.

“We’ve got a tremendously efficient fleet that’s already in service, and the investments we would make are really around conversion,” she said.

FPL started a coal phaseout strategy in 2015 to remove the remaining 2,700 MW of the fossil fuel from its profile. The company announced in June that it would close one of the units at the nation’s largest coal plant in central Georgia (Energywire, June 30).

Doing so means FPL will have no more coal on its system.

NextEra’s Gulf Power Co. is also converting its Plant Crist coal plant to run on natural gas.

Kujawa emphasized that FPL is taking a “toe-in-the-water” approach to green hydrogen, meaning its development will be slow going until the technology matures and costs drop. Yet Wall Street analysts asked whether NextEra’s wholesale power unit — which operates in several countries and more than 30 U.S. states — will be looking to add its own pilot project.

“Wondering if you see a potential path for this to be an opportunity at NextEra Energy Resources?” asked David Arcaro, an analyst with Morgan Stanley.

Robo said he would be disappointed if that didn’t happen next year. He likened it to the strategy that NextEra Energy Resources took with battery storage. The company took a cautious approach, as well, but battery storage now is a key part of its business.

“We won’t make any money on [green hydrogen] in the next five years, just like we didn’t make any money in batteries in the first five years,” Robo said. “And next year, we’re deploying $1 billion of batteries.”

He said he also thinks it could replace diesel fuel and other more polluting feedstocks in industrial applications.

“All of that in the end comes back to a very important thing, which is this is going to drive gigawatts and gigawatts and gigawatts and gigawatts of renewable demand in this country,” he said.