ARKANSAS, Sept 21 (Future Headlines)- The green hydrogen revolution is gaining momentum, and Verdagy, a leading provider of water electrolysis electrolyzer technologies for large-scale industrial applications, is stepping up its game with the opening of a cutting-edge manufacturing facility in Newark, California. This state-of-the-art facility, covering over 100,000 square feet, is poised to become a cornerstone in the United States’ journey toward becoming a green hydrogen superpower.

Verdagy’s decision to establish a manufacturing hub in Silicon Valley is a significant move that underscores the growing importance of green hydrogen in the transition to a sustainable energy future. This facility, set to commence operations in the first quarter of 2024, is expected to be one of the first in the United States capable of manufacturing advanced water electrolyzers at scale.

Green hydrogen, produced through the process of water electrolysis using renewable energy sources, is emerging as a critical resource in the fight against climate change. It has the potential to revolutionize industries that require large quantities of hydrogen, including chemicals, ammonia/fertilizer production, steel manufacturing, and the production of e-fuels. Verdagy’s focus on serving these heavy industries positions it as a key player in the green hydrogen value chain.

Verdagy’s expansion aligns with California’s ambitious goals for developing its hydrogen economy, as outlined in Governor Gavin Newsom‘s Hydrogen Market Development Strategy. This strategy envisions California becoming a federally funded hydrogen hub, emphasizing the state’s commitment to hydrogen as a clean energy source.

However, one of the pressing issues facing the hydrogen sector, especially in the wake of the Inflation Reduction Act (IRA), is the uncertainty surrounding how green hydrogen qualifies for tax incentives. The IRA has created a burgeoning market for green hydrogen in the U.S., but advocates are concerned that its future hinges on decisions made by the Treasury Department.

One of the key challenges in defining green hydrogen incentives under the IRA lies in determining the “3 Pillars” of green hydrogen production:

New Clean Electricity Capacity: This pillar involves expanding the capacity for generating clean electricity from renewable sources, which is essential for powering the electrolysis process.

Feasible Deliverability of Power: Beyond generating clean electricity, ensuring that this power can be efficiently delivered to electrolysis facilities is crucial. This may involve upgrading grid infrastructure and improving energy transmission.

Hourly Matching for Emissions: Achieving carbon neutrality through green hydrogen production requires matching the electricity supply with the hydrogen production process. This means ensuring that renewable energy is available when hydrogen production is active.

These three pillars are integral to defining how green hydrogen projects qualify for incentives and how they contribute to reducing carbon emissions.

Andy Marsh, CEO of Plug Power, has been a vocal advocate for green hydrogen. He emphasizes that the U.S. has a unique opportunity to become a green hydrogen superpower but highlights the challenges posed by those who advocate for an “electrify everything” approach without fully understanding the carbon footprint implications. Green hydrogen, produced through water electrolysis, offers a clean and versatile energy carrier that can decarbonize various sectors, including heavy industry and transportation.

The American Clean Power Association trade group has proposed an exemption to hourly matching requirements for green hydrogen projects that commence construction before 2029. While this proposal aims to incentivize the rapid deployment of green hydrogen infrastructure, experts warn of unintended consequences. Princeton University’s ZERO Lab forecasts that such exemptions could lead to around $200 billion in incentives, contributing to 700 million metric tons of cumulative CO2 emissions. Striking the right balance between incentivizing green hydrogen production and ensuring emissions reduction remains a complex challenge.

Verdagy’s recent success in securing a $73 million Series B funding round, co-led by Temasek and Shell Ventures, positions the company to accelerate the commercialization of its eDynamic 20 MW electrolyzer module. This module serves as a foundational unit for larger systems, with capacities of up to 200 MW and beyond. Verdagy’s vision extends beyond its Silicon Valley facility; the company aims to establish even larger-scale production facilities in different locations to support its expansion efforts.

While Verdagy’s new facility in Newark, California, will focus on manufacturing, the company’s existing location in Moss Landing, California, will continue to play a crucial role in research and development (R&D) activities. This emphasis on R&D underscores Verdagy’s commitment to continuous innovation and technology development in the green hydrogen sector. Verdagy’s journey exemplifies the potential for green hydrogen to revolutionize multiple sectors, from industry to transportation, and underscores the critical role of technology innovation and collaboration in achieving a sustainable energy future.

Writing by Kevin Wood; Editing by Sarah White