Air Products, AES Team Up for Mega Green Hydrogen Facility in Texas

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Researched by Industrial Info Resources (Sugar Land, Texas)--Wilbarger County, Texas, will be home to what its developers tout as the largest green hydrogen production facility in the U.S. to date if Air Products (NYSE:APD) (Lehigh Valley, Pennsylvania) and The AES Corporation (NYSE:AES) (Arlington, Virginia) have their way.

Propelled by tax incentives contained in the U.S. Inflation Reduction Act (IRA), the industrial gases giant and power company announced joint plans on Thursday to invest about $4 billion to build, own and operate the facility in north Texas. The project includes 1.4 gigawatts (GW) of wind and solar power generation, along with electrolyser capacity capable of producing more than 200 metric tons per day of green hydrogen. Commercial operations would begin in 2027, according to a press release from the two companies. Subscribers to Industrial Info's Global Market Intelligence (GMI) Chemical Processing project and plant databases can click here for the project report and click here for the related plant profile.

A 50:50 joint venture company from Air Products and AES will build, own and operate the facility, with Air Products serving as the exclusive off-taker and marketer of the hydrogen under a 30-year contract.

During an investor presentation on the project, Air Products Chief Executive Officer Seifi Ghasemi said his company and AES have been in talks about the project for three years, but the passage of the IRA earlier this year was the critical element in moving forward.

Ghasemi mentioned hydrogen fuel-cell-powered heavy trucks as a potential customer base for the hydrogen. He said production from the facility would be enough to power 4,000 such vehicles. According to the companies' press release, hydrogen from the facility would eliminate more than 1.6 million metric tons of carbon dioxide (CO2) emissions annually when compared with diesel use in heavy-duty trucks.

"The project is huge but the available market is significantly huge, so we are very bullish about that," Ghasemi said.

He added the hydrogen could be converted into other green products, such as ammonia.

"We are using the site of an old coal-fired power plant (for the project) and there are some benefits in doing that," Ghasemi said.

The wind and solar power-generation facilities for the project also would receive federal renewable energy tax credits, Ghasemi said, adding that about 900 MW would come from wind power and 500 MW from solar power.

He emphasized the role of the IRA and its tax credits in moving the project forward.

"I think what has happened since the passage of the IRA is the fundamental nature of the market has been changed," Ghasemi said. "What has changed is it makes it more attractive for the market now to build and invest in the United States in green hydrogen, and blue hydrogen because the IRA gives you the $85 (per ton) tax credit for sequestration of CO2 (carbon dioxide).

Whereas the production of green hydrogen includes no greenhouse gas emissions, blue hydrogen is produced from natural gas, a process that releases carbon monoxide and CO2, which in turn is captured and sequestered.

"So, what has changed is instead of us announcing a project in another country where there is a lot of wind and sun, now we do a project in Texas," Ghasemi said. "Physically it is less efficient because there is less wind and sun but the tax incentives make it more interesting."

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 Trillion (USD).