Essay by Eric Worrall
“… The “hourly matching” rule will force hydrogen producers to either cease production when renewables are not available … or sign up for excess renewable power …”
Fortescue slams Biden administration’s green hydrogen tax rules
Peter Ker Resources reporter
Updated Apr 21, 2024 – 2.09pm, first published at 2.00pmFortescue says the proposed design of the Biden administration’s green incentives scheme could triple the cost of low-carbon hydrogen projects …
The iron ore group has an ambitious strategy to become a major force in hydrogen and renewable energy …
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But Fortescue’s enthusiasm has waned since the US Treasury issued draft regulations known as “45V” which provide the detail on eligibility for the tax credits. Fortescue’s biggest problem is the requirement that companies must match each hour of production to an hour of renewable power generation and consumption to be eligible.
The rule is designed to ensure that subsidies are not given to hydrogen made from fossil fuel power during times when solar and wind power are not available.
The “hourly matching” rule will force hydrogen producers to either cease production when renewables are not available – an option that would undermine productivity and viability – or sign up for excess renewable power from diverse sources to improve the chances of having clean energy available from at least one source at all times.
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“If I am building a gigawatt of electrolysers in Texas I may only need a gigawatt of energy at any time, but I have to buy seven times that to ensure that I have all the probabilities working, so I know I can match in that hour, which means the bulk of what I buy I don’t need,” he told a Bloomberg podcast.
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Read more (paywalled): https://www.afr.com/companies/energy/fortescue-slams-biden-administration-s-green-hydrogen-tax-rules-20240419-p5fl78
You can understand Fortescue’s distress. Who could have imagined Biden would insist green projects actually be powered by renewables?
As Fortescue helpfully explained, renewables are so unreliable they would have to build or buy 7x overcapacity to ensure continuity of supply, which would be prohibitively expensive. A bit like how attempting to power the entire economy using renewables would be prohibitively expensive.
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