SDG&E’s hydrogen blending project: Hope or hype?

In the coming months, the California Public Utilities Commission will make a decision on whether to give the go-ahead for a handful of pilot projects — including one from San Diego Gas & Electric — that will experiment with blending hydrogen into natural gas pipelines.

The demonstration projects are part of a larger effort to see if hydrogen is a practical step for California to take in its efforts to derive 100% of the state’s energy from carbon-free sources by 2045.

SDG&E says blending efforts already underway in Europe, Canada, Australia and Hawaii show promise. But critics have raised concerns about the safety and expense of injecting high percentages of hydrogen into pipelines and say gas companies are just looking for a lifeline to keep their business models viable in light of California’s environmental goals.

The public utilities commission, known as the CPUC for short, hosted a pair of public hearings recently in Kearny Mesa in which SDG&E officials gave details of their request to spend $21.1 million on its pilot program.

“Hydrogen technologies offer a promising pathway to reducing greenhouse gas emissions and enhancing reliability while supporting California’s climate goals and SDG&E’s commitment to a cleaner, more sustainable energy future,” said Miguel Romero, SDG&E’s senior vice president and chief commercial officer.

“Instead of throwing away $21 million for a project that prolongs our reliance on fossil fuels, we should be investing in real solutions,” said Isaiah Glasoe of Public Power San Diego, a group that wants to replace SDG&E with a municipal utility.

In addition to SDG&E, Pacific Gas & Electric, Southern California Gas and Las Vegas-based Southwest Gas have submitted their own separate hydrogen projects for the CPUC to consider.

Charles Ferguson, an administrative law judge with the commission, will soon write a proposed decision on whether to accept, deny or make modifications to the projects. Then, the CPUC’s five commissioners will cast a vote to determine the fate of the proposals.

After the first public session in Kearny Mesa wrapped up, Ferguson told the Union-Tribune that the commission’s final decision should come by the first half of next year.

What does hydrogen have to do with natural gas?

In recent years, hydrogen has become a hot topic in the energy sector because the element is seen by supporters as a versatile tool to slash CO2 levels.

While hydrogen is not a source of energy, it is an energy carrier and when mixed with oxygen in a fuel cell, hydrogen burns clean. Crucially, the element can be applied across a variety of sectors, such as:

• Hard to de-carbonize industries. Steel and cement require tremendous amounts of heat. Hydrogen can be injected into the natural gas that’s used as feedstocks at those factories to reduce their carbon footprints.
• Energy storage facilities. While batteries can store energy for hours at a time, a number of companies are using hydrogen in places such as large underground salt domes that can store energy for much longer periods of time — for months, in some cases.
• The natural gas system. A good number of national, state, provincial and local governments want to reduce or eliminate the use of natural gas — a fossil fuel — as a source of electricity. Blending hydrogen into the 3 million miles that make up the natural gas pipeline system in the U.S. may lead to drastic reductions in greenhouse gas emissions.

There are concerns that injecting relatively substantial amounts of hydrogen damages pipelines that carry natural gas.

A study released in 2022 by UC Riverside reported that while hydrogen blends of up to 5% into the natural gas stream are “generally safe,” injecting higher levels results “in a greater chance of pipeline leaks and the embrittlement of steel pipelines.”

Blends above 5% may require modifications to appliances such as stoves and water heaters, the study said, and injecting more than 20% presents “a higher likelihood of permeating plastic pipes,” which may increase the risk of gas ignition outside the lines.

That said, the study concluded that more work needs to be done to determine if blending hydrogen into the gas system can be done safely.

Hydrogen supporters point to a pilot program conducted in the United Kingdom, called HyDeploy, that blended up to 20% hydrogen into 100 homes and 30 buildings on the campus of Keele University in England.

The project delivered more than 42,000 cubic meters of hydrogen and saved about 27 tons of carbon emissions. The analysis reported minimal modifications to the existing gas grid infrastructure and no changes to customers’ household appliances.

Details on SDG&E’s proposal

SDG&E’s request to the CPUC calls for mixing hydrogen with natural gas in a closed-loop test site at the utility’s Kearny Construction and Operations System, located in a commercial and industrial area on Overland Avenue. The blending pilot program would not be distributed into the gas system of SDG&E customers.

The project would begin with a hydrogen blend of 5% by volume and gradually increase to 20% over the testing period to explore the effects.

If approved, the $21.1 million pilot would result in residential customers paying 40 cents more per month on their gas bills. SDG&E ratepayers who do not have gas hookups will not be charged.

“Blending hydrogen with natural gas is not new,” Romero said. “It’s been around for decades and has already been safely demonstrated in many other places around the U.S. and worldwide … Hawaii Gas has been using hydrogen in its fuel mix for half a century to serve homes, restaurants and businesses on the island of Oahu.”

The hydrogen used in the project will come from SDG&E’s Palomar Energy Center and will be trucked to the custom-built test site in Kearny Mesa. The utility says the pilot “has been designed with safety at its core” and the equipment will be monitored 24/7.

During public comment, a representative from Cleantech San Diego spoke in favor of the project, as did officials from local unions and building trades.

“We need to take an all-of-the-above approach to decarbonization and utility resiliency,” said Nate Fairman, business manager for IBEW Local 465 that includes SDG&E workers. “This study … is a key part of that picture. We don’t know the real impacts of this blended-fuel approach unless we study it and have pilots like this.”

But other speakers called on the CPUC to reject the funding.

“I’m highly skeptical of safety claims,” said Katharine Harrison, a retired teacher. “We need to retire methane pipelines, not find expensive ways to prolong the use of gas indefinitely and passing the costs on” to ratepayers.

“We need to keep our utility companies in check and not let them build facilities simply because they want to provide more sources of energy under the guise of reducing greenhouse gas emissions,” said Jack Shu of La Mesa. “It is a scheme, not a solution.”

Federal funding for ARCHES cut

In a separate move unrelated to the CPUC’s consideration of the pilot programs sought by SDG&E, PG&E, SoCalGas and Southwest Gas, the U.S. Department of Energy announced late Wednesday that it will terminate award funding made during the Biden administration for 223 energy projects across the country.

“Following a thorough, individualized financial review, DOE determined that these projects did not adequately advance the nation’s energy needs, were not economically viable, and would not provide a positive return on investment of taxpayer dollars,” the department said in a news release, estimating the cuts will save more than $7.5 billion.

The move rescinds $1.2 billion of federal funding earmarked for ARCHES, or the Alliance for Renewable Clean Hydrogen Energy Systems, a public-private partnership in California designed to aid efforts to accelerate renewable hydrogen’s to decarbonize the state’s economy.

The chief executive officer at ARCHES responded, vowing that the hydrogen hub “will continue to advance in collaboration with state leaders and private sector innovators.”

Gov. Gavin Newsom blasted the decision, saying in a statement, “In Trump’s America, energy policy is set by the highest bidder, economics and common sense be damned. Clean hydrogen deserves to be part of California’s energy future — creating hundreds of thousands of new jobs and saving billions in health costs.”

According to Politico, the Department of Energy said award recipients have 30 days to appeal their termination decisions. Some projects already have appealed cancellations, it said.