ARKANSAS, Dec 13 (Future Headlines)- The Department of Energy’s allocation of taxpayer money to electric utilities, particularly for the establishment of Hydrogen Hubs, has sparked debate over the efficiency and appropriateness of such investments. This discussion centers on the argument that instead of funding Hydrogen Hubs, federal dollars should be redirected towards the development of Virtual Power Plants (VPPs). Examining the case of Minnesota and drawing parallels with experiences in California, this analysis aims to shed light on the potential drawbacks of Hydrogen Hubs and advocate for a shift in focus towards VPPs.

The concept of Hydrogen Hubs involves investing in facilities that produce hydrogen from renewable energy sources like wind and solar. While the intention is to contribute to clean energy goals, concerns have been raised regarding the practicality and impact of such hubs. Drawing a parallel with the growth of Community Solar Gardens (CSGs) in Minnesota provides insights into potential challenges.


Minnesota’s high growth in CSGs, which are distribution-connected solar facilities ranging from 1-5 MW, has led to a capacity bottleneck. Electric utility Xcel Energy, grappling with the surge in CSGs, faces challenges in interconnecting rooftop solar due to limited distribution system capacity. This issue illustrates how rapid growth in a specific sector can strain existing infrastructure, hindering the integration of additional clean energy sources.

Hydrogen-powered combustion turbines, a key component of Hydrogen Hubs, are expected to consume a significant portion of the limited transmission grid capacity. The analogy with the challenges faced by Xcel Energy in interconnecting rooftop solar highlights the potential transmission grid constraints that may arise with the proliferation of hydrogen-related projects.

The generator interconnection queue at the Midcontinent Independent System Operator (MISO) is already congested, and the addition of hydrogen-fueled combustion turbines could exacerbate the situation. This competition for transmission capacity may impede the progress of other clean energy initiatives and create challenges for effective grid management.

States like Minnesota are cited as examples where Hydrogen Hubs may not be the most suitable investment. The argument is grounded in the premise that certain states have not fully explored the potential for behind-the-meter solar and storage. In Minnesota, for instance, there is a perceived lack of emphasis on these decentralized solutions compared to centralized hydrogen production.

Contrasting this with California, a state known for its aggressive renewable energy mandates and energy storage initiatives, reveals a different landscape. California’s commitment to behind-the-meter solar and storage, backed by legislative mandates, provides a more conducive environment for the integration of hydrogen production from renewables.

The potential for “greenwashing” and spikes in electricity prices and emissions associated with clean hydrogen production adds another layer of concern. Forty-six U.S. Congress representatives, along with clean energy organizations, have expressed their apprehensions regarding the implementation of the Clean Hydrogen Production Tax Credit. The letter to the U.S. Treasury Secretary emphasizes the importance of sustainable hydrogen production under specific conditions.

The conditions outlined in the letter include the principles of Additionality, Deliverability, and Hourly time-based matching. Additionality underscores the need for clean hydrogen to be created using new renewables that do not currently exist. Deliverability emphasizes the proximity of clean energy production to the hydrogen production site. Hourly time-based matching requires hydrogen to be produced during the same hours as renewable energy.

California stands out as a state where hydrogen funding aligns with its legislative mandates and existing renewable energy initiatives. The state’s storage mandate has driven significant energy storage capacity additions, with both utility-scale and behind-the-meter installations. The interconnected 8,500 MW of energy storage to the transmission and distribution grid by the end of 2023 in California demonstrates a strategic approach to addressing grid challenges.

Advocates for a shift in federal spending argue that Hydrogen Hubs might not be the optimal solution for states like Minnesota and North Carolina. Instead, the focus should be on legislative mandates that promote behind-the-meter energy storage. The absence of an energy storage mandate in states like Minnesota can lead to challenges in addressing renewable curtailments and ensuring grid reliability.

The crux of the argument in favor of redirecting funds towards VPPs lies in their ability to address grid resiliency and localized energy production. Drawing a parallel with efforts in Puerto Rico, where VPPs are receiving federal support, highlights their potential benefits. VPPs offer a decentralized and resilient approach to energy generation and distribution, aligning with modern grid requirements.

Reporting by Kevin Wood; Editing by Sarah White