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Chevron throws weight behind North America's largest hydrogen energy hub

Billion-dollar Advanced Clean Energy Storage Project will be complete in 2025

Electrolyzers arrive at the ACES Delta project in Delta, Utah. (Courtesy Business Wire)
Electrolyzers arrive at the ACES Delta project in Delta, Utah. (Courtesy Business Wire)

Chevron Corporation (CVX-N) is expanding its commitment to renewable energy by taking a controlling interest in the Advanced Clean Energy Storage (ACES) Project in Delta, Utah.

The billion-dollar facility is poised to become the largest green hydrogen energy hub in North America upon completion in 2025 and will enable a coal-fired power plant to be converted into a hybrid 30 per cent hydrogen-powered, 70 per cent gas-powered generating station.

In September, Chevron, the world's third-largest energy company (behind Saudi Aramco and ExxonMobil) with a market capitalization of $370 billion, became the majority stakeholder and key strategic partner in the ACES Delta Hub following the 100 per cent acquisition of Magnum Development by its Chevron New Energies division. 

First set in motion in 2019 as a joint venture between Magnum and Mitsubishi Power Americas, ACES will now see Chevron add to its longstanding presence in Utah by spearheading the development of a massive renewable energy complex. 

The ACES timeline

The first phase of the project will see the ACES plant rely on renewable energy resources to produce and store up to 100 metric tonnes of hydrogen per day. The hydrogen will then be used as fuel to generate 30 per cent green electricity for the Intermountain Power Agent upon commissioning in 2025.

Current plans call for the Delta Hub to eventually deliver 100 per cent green hydrogen-powered, carbon-free electricity by 2045. 

"As we continue to pursue lower-carbon energy solutions, we are excited to move forward with the ACES hydrogen project, through our acquisition of Magnum Development and partnership with Mitsubishi Power, to build on Chevron’s 75-year history in Utah," Austin Knight, vice president, hydrogen, Chevron New Energies, said. 

Although Chevron has not disclosed the amount it paid for a controlling stake in ACES, the total cost of the hydrogen plant is expected to exceed $1 billion. It will also likely see further expansion take place over the course of the decade in response to increasing demand for environmentally-friendly green hydrogen.

Mitsubishi Power provides engineering, tech services to ACES plant

Engineering work at the ACES Delta facility is being carried out by Mitsubishi Power Americas, which is currently deploying its Hydaptive integrated production plant technology following the company's first major shipment of equipment to the Utah site in late October.

"The integrated Hydaptive technologies will empower our customers to produce cost-effective hydrogen at scale and facilitate the transition to a cleaner, more sustainable energy future," Kent Rockaway, vice president, hydrogen production, Mitsubishi Power Americas, said.

Mitsubishi's Hydaptive technology will produce green hydrogen by splitting water into hydrogen and oxygen through electrolysis which, according to the company's October release, will deliver "cost-effective hydrogen at scale, and facilitate the transition to a cleaner, more sustainable energy future."

Unlike other forms of hydrogen produced from fossil fuels, "green hydrogen" is produced by electrolysis – extracting hydrogen from water – using renewable energy sources (such as wind, solar and geothermal) to power the process.

Utah was chosen as the site for the project because its natural salt cavern geological formations – the Delta power plant lies in close proximity to the only major salt dome formation in the western U.S. – allow for dispatchable, seasonal storage of liquid hydrogen. Dispatchable energy allows for utilities to adjust power output supplied to the electrical grid according to demand.

With installation of the Mitsubishi equipment set to begin, this signals the beginning of a new stage in the development of the ACES Delta Hub. When up and running in 2025, the 300 gigawatt-hour system alone will deliver nearly double the existing annual level of green hydrogen production worldwide.

"Reaching this milestone in the development of our hydrogen project will not only have significant benefits to the western U.S. population, but it will also serve as a blueprint for future hydrogen opportunities," Michael Ducker, senior vice president of hydrogen infrastructure for Mitsubishi Power, said. 

A belated fossil fuel industry commitment to clean energy

Chevron's backing of the ACES Delta project is also significant in that it reflects a major step by one of the world's fossil fuel giants to increase its investment in the renewable energy sector.

The oil and gas sector has only had "minimal" engagement in helping the world shift to green energy. As of 2022 it accounted for only one per cent of global clean energy investment, according to Dr. Fatih Birol, head of the International Energy Agency (IEA), the world’s energy watchdog.

In remarks accompanying the release of a new IEA report prior to the COP28 climate conference in Dubai on Nov. 30, Birol bemoaned the fact the global oil and gas industry spends only 2.5 per cent of its capital on clean energy, as compared to 97.5 per cent on fossil fuel-related investments. 

He argued the sector should be investing "a minimum of 50 per cent" of revenues on clean energy while taking greater steps toward reducing carbon emissions from their operations related to the extraction and production of fossil fuels. 

Although the world's leading oil and gas producers are developing carbon capture technology as a means of sharply reducing emissions, Birol stated it's an "illusion" to believe carbon capture "is the solution."

He declared the sector faces "a moment of truth" which obliges it to make "profound decisions" about its role in the transition to a low-carbon future; it must choose between exacerbating the climate crisis or "becoming part of the solution."

"The uncomfortable truth that the industry needs to come to terms with is that successful clean energy transitions require much lower demand for oil and gas, which means scaling back oil and gas operations over time - not expanding them. There is no way around this," Birol said.

Hub a pathway to clean energy grid

The integrated storage facility that is a key component of the ACES project is expected to provide long-term seasonal energy storage to the Intermountain Power Plant near Delta, Utah.

"Using salt caverns for seasonal energy storage is a significant opportunity to empower hydrogen as an energy carrier and greatly expand energy storage resources throughout the U.S.," according to ACES contractor WSP, an engineering, environmental and professional services consulting firm.

The coal-fired power plant located in Delta went into service in 1986 and is operated by the Intermountain Power Agency. Given that other forms of renewable energy such as wind and solar power are not dispatchable, the ACES Delta Hub will serve as a model of how green hydrogen can advance the cause of transitioning to a 100 per cent clean energy grid.

"People look to Utah as the place where we work together to find solutions addressing today’s biggest challenges," Utah Gov. Spencer Cox said when Chevron announced its majority stake in the project.

The governor's remarks were echoed by Craig Broussard, CEO of ACES Delta LLC and CEO of Magnum Development, which will continue to manage the project under the auspices of Chevron.

"Chevron will add tremendous strategic value as we develop a hydrogen production and storage facility,” Broussard said.

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