Clean energy project set to attract billions of dollars in energy investment to Millard County
Editor's Note: An earlier version of this story referenced Mitsubishi Power as simply "Mitsubishi" in parts of the article. Mitsubishi is a separate legal entity apart from Mitsubishi Power.
The U.S. Department of Energy announced last week it had awarded a $504 million conditional loan commitment to the Advanced Clean Energy Storage Project (ACES) taking shape near the Intermountain Power Plant outside Delta.
The loan commitment represents a giant financial shot in the arm for the nascent green hydrogen industry, set to develop a hub in Millard County over the next several years.
ACES will consist of industrial scale hydrogen production—capable of producing 100 metric tons of green hydrogen a day—utilizing renewable- energy powered electrolysis, hence its “green” designation. Also, two giant caverns carved out of the salt domes sitting 1,000 feet below Millard County are planned for storing as much as 150 gigawatt hours worth of energy each—enough fuel to power 30,000 homes for a year.
Haddington Ventures, a financial advisor and equity sponsor for Magnum Development, a related business entity, is set to secure a further $650 million in funding through its equity investment program.
Another $2 billion is planned to finance the Intermountain Power Project’s transition from coal to natural gas and hydrogen power generation— a separate project from ACES, but inextricably linked as ACES will supply IPP with feedstock green hydrogen once the transition is complete in 2025.
Bond sales to raise funds for IPP’s transition and related construction commenced last week and is set to close on May 12, an Intermountain Power Agency spokesman confirmed.
Mitsubishi Power, a partner in both ACES and IPP’s transition project, has also told elected leaders, both local and at the state level, that it plans to invest billions more dollars in the development of the new green hydrogen hub.
County Commissioner Dean Draper confirmed as much to visiting board members from the Utah School and Institutional Trust Lands Administration, who held a meeting in Delta on April 21.
“They were curious whether the (political) environment was stable. So that they could proceed with their projects up there (salt domes) with the development of hydrogen and storage thereof, et cetera,” he told SITLA members. “They also went and visited the legislature. The reason being they intend to invest billions of dollars on that site. We informed them that as far as it goes with us…there was no problem here.”
Mitsubishi Power announced last week that it would be supplying ACES with the “hydrogen equipment integration, including the 220 MW of electrolyzers, gas separators, rectifiers, medium voltage transformers, and distributed control system” required for the project.
Mitsubishi Power also supplied IPP’s new gas turbines for the new gas plant, which once complete will generate an estimated 840 megawatts of power utilizing a mix of 30 percent green hydrogen and 70 percent natural gas. The plant’s goal is to reach 100 percent green hydrogen power generation by 2045.
“We are unbelievably excited to reach this important milestone, not just for our hub, but for the hydrogen industry as a whole,” said Michael Ducker, senior vice president of Hydrogen Infrastructure for Mitsubishi Power Americas and ACES president, in a press statement about the federal loan commitment. “Equally rewarding is having spent the past year partnering and working with such a forward-thinking and incredibly talented team from the Intermountain Power Agency to trail blaze this market leading facility. We are honored to be sharing this industry moment with them along with all of our world class partners joining this effort.”
What this means for Millard County residents, Draper said, is opportunity and growth.
“This is going to be big for Millard County,” he said after the DOE’s announcement. “We are going to see growth and industry and we want to see it grow side by side with agriculture so both of them are successful.”
Draper said it may take some time before the development’s progress is visible to residents. But in a few years, he said the various hydrogen projects are likely to “draw the world to Millard County.”
“This project is definitely meant to go to fulfillment and success. It’s going to involve all of Central Utah before it’s done,” he said. “In the long term, it means that their (county residents’) children won’t have to leave home to find employment. There will be opportunities here.”
Draper and his fellow commissioners have come under some fire over the past six months for supporting recent changes to the regulatory environment enjoyed by IPA in the past. SB2002, a bill passed during special session in November, for example, stripped away numerous privileges previously enjoyed by IPA for more than two decades. Opponents locally were concerned the sudden legal changes could disrupt if not outright destroy IPA’s transition plans.
Draper and the other two county commissioners— Draper and Evelyn Warnick are both running for reelection and face primary opponents who currently work at IPP— have repeatedly said they didn’t believe the legal changes would ultimately harm the transition project.
A few more pieces of legislation passed during the most recent session were also clearly aimed at exerting more state and local control over IPA, including forcing it to comply with Utah procurement code, government transparency laws and for its financial dealings to be overseen by the state’s Public Service Commission and a special committee governed by the state’s Office of Energy Development.
State Sen. Derrin Owens, who represents Millard County, led the legislative charge to tighten regulations related to IPA.
Asked for his comment regarding the DOE’s loan commitment, he said he was happy for Millard County and the economic impact a successful ACES will have on the area. He also said he would have been happier if the $500 million was coming from private corporations rather than from taxpayers.
“I’m excited for Millard County and that area… this is really good news and I’m happy about it,” he said. “It’s a major statement of support for the longevity of energy production in Millard County.”
But, he also said he thinks more needs to be learned about hydrogen’s ability to replace coal as a fuel source for power generation. He said he was concerned that not enough is known about industrial-scale hydrogen production’s potential impact on water resources.
“We (the legislature) still have questions on whether there is sufficient water…this is a spot on the map in all of the country. Boom, this is it. Well, do we have the natural resources to sustain that with water? I don’t know. I hope so,” he said.
Owens noted the legislature passed HB393 this last session, commissioning a $500,000 independent study to determine the answers to those questions, specifically about IPP’s transition away from coal.
“We are going to do a study on that. That was a really good piece of legislation to get through,” he said.
A May 1 article published online by The Salt Lake Tribune, under the headline “As Utah’s drought persists, clean energy advocates say it’s time to power down water- guzzling coal plants,” suggests if there is a concern related to water consumption and power generation, that it’s coal burning plants that present the bigger likely threat to water resources.
“Total water consumption for both making hydrogen through electrolysis and operating IPP’s new electricity-generating units will be less than three-fourths of the project’s current consumption,” the article quoted from IPA’s 2021 annual report, “and around a third of IPP’s water consumption at its coal-fueled peak.”
At its peak, IPP consumed about 25,000 acre feet of water annually. Today that figure is down by half, to about 12,500 acre feet annually. When the new plant comes online in 2025, according to figures provided by IPA spokesman John Ward, that figure will drop almost by half again to 6,500 acre feet annually. About 2,500 acre feet will be needed annually to create the green hydrogen IPP plans to utilize each year after the transition.
Currently, IPP owns annual consumptive water rights to 45,000 acre feet.
Still, Owens said he was also concerned about the potential price shocks to consumers that the transition away from coal could deliver.
“When we eliminate coal, and it is going to happen, prices are going up, folks. And I don’t know how much,” he said.
However, in the federal government’s extensive plans to support green hydrogen—the Biden Administration has committed $8 billion to the development of green hydrogen hubs—one reason given for providing taxpayer support, like the $500 million conditional loan guarantee to ACES, is to create a more stable marketplace for renewable energy overall and spur new renewable energy projects throughout the western U.S., eventually reducing the unit costs of green hydrogen, and thus the electricity it produces, over time.
“Advanced Clean Energy Storage could help reduce curtailment of renewable energy in the Western United States by providing long-term energy storage that is currently not available,” the DOE’s Loan Programs Office stated following last week’s announcement. “Participants in the existing Intermountain Power Project (IPP) in Utah have excess supplies of renewable energy, particularly in the spring. This results in the curtailment of renewable energy during those months and a shortage of renewable energy during subsequent months. Advanced Clean Energy Storage would convert that excess renewable energy to hydrogen that can be stored until needed. This will help to seasonally balance supply with demand and further stabilize the grid.”
