Utah Business

It's time to move away from coal.

Utah finds itself in the middle of a new energy transition upon housing IPP, one of the largest hydrogen production companies in the US.

This rural Utah town will be home to the largest hydrogen hub in the world

Utah finds itself in the middle of a new energy transition upon housing IPP, one of the largest hydrogen production companies in the US.

Perhaps the average person hasn’t thought much about hydrogen as a power source, but energy moguls in Utah have focused on it for over a decade. Now, Utah finds itself in the middle of a new energy transition in the US—a movement away from carbon-laden fossil fuel to clean renewable energies, the most promising of which is hydrogen.

It all starts near Delta, Utah, at the home of the Intermountain Power Project (IPP), a nonprofit energy co-op managed by the Intermountain Power Authority (IPA). IPP’s assets include a 100 percent coal-fired power plant located on a 4,614-acre site with a current net capacity of 1,800 megawatts and two transmission systems capable of moving electric power to the western grid and parts of California. Since the mid-1980s, IPA’s power plant has made coal-generated power available by long-term contract to 23 Utah municipalities, six California municipalities, and six rural electric cooperatives.

But now, things are changing.

IPP, under the new name “IPP Renewed,” is making bold steps to move away from coal. IPP Renewed will run on 70 percent natural gas and 30 percent green hydrogen at start-up, ramping up to 100 percent green hydrogen by 2045, says John Ward, spokesman for IPA. The plant will also add wind and solar power to its portfolio.

Because wind and solar power are intermittent, it’s important to store some of it to meet fluctuating needs, Ward says. Storing hydrogen underground is better than using batteries because more power can be stored, and it lasts longer than batteries. IPP plans to store its surplus energy in a giant cavern within a salt dome below ground, the Advanced Clean Energy Storage (ACES)-Delta, owned by Magnum Development and Mitsubishi Power.

IPP is situated over the only known salt dome in the western US, and an extremely large one at that. Magnum constructed the salt dome storage site adjacent to IPP in 2014—then known as Sawtooth Caverns, LLC—and has used it to store pressurized natural gas products.

Starting in 2025, IPA will deliver renewable energy for storage to ACES-Delta where it will be converted to green hydrogen by splitting the H2O atoms with electrolysis, explains Ron Webster, Magnum’s chief strategy officer. This process will be powered by solar or wind energy, and the hydrogen will then be stored in the salt caverns. 

“When IPA participants want their renewable energy back, ACES-Delta will deliver it in the form of green hydrogen, and IPA will convert it back into electricity using gas turbines,” Webster says.“The initial caverns in Delta will store as much energy as 150 times the installed grid-scale batteries currently installed in the United States.”

Salt caverns have been used for the storage of hazardous materials around the world and on the US Gulf Coast for decades. Webster says they have been used without incident. “Many seismic studies have been performed on the Delta site dating back to the initial construction of IPP and continuing through some recent ACES-Delta work,” he continues. “The area has always been found to be seismically inactive, and that is one of the reasons why IPA spent billions there in the early 1980s to build their power plant.”

According to Ward, the project has acquired all the necessary permits, including zoning, county, state, and air permits. It also has a permit to build a natural gas line extension to the plant.

Why invest in hydrogen now? A couple of factors facilitated the plans, the first being a unique aspect of the IPP contracts: Whoever uses the power pays, Ward says. This has allowed Utahns the option of using the power or not without penalty. For years, it has been mainly Californians who have purchased 99 percent of IPA’s power. Now, California is going green and no longer wants to buy coal-based electricity.

Utah municipalities want to keep the power plant going for civic reasons alone, Ward says, but also to provide themselves with a diversified energy portfolio. With the drought, these municipalities aren’t able to supply all of their needs with cheaper hydroelectric power from the dams as they have in the past.

“We’ve seen this day coming,” Ward says. “This project has taken over a decade to put together, but this was basically an effort to utilize all this installed infrastructure that’s here.”

“This project has taken over a decade to put together, but this was basically an effort to utilize all this installed infrastructure that's here.”

If there’s any controversy to be found, it’s over the color of hydrogen to be used: green or blue. Blue hydrogen is made from natural gas, with most of the CO2 captured and stored permanently underground. IPP will only be using green hydrogen, which is made from renewable energy-sourced electrolysis, Ward says. “IPP isn’t knocking blue hydrogen. We’re just saying it doesn’t work for the participants of this project,” he continues. “And frankly, we couldn’t make blue hydrogen at the site, even if we wanted to.”

An added benefit to green hydrogen is it won’t threaten Utah’s water supply. Instead, it will protect it, Ward says. “Green hydrogen production, storage, and use consumes a whole lot less water than the coal plant that is there today,” he says. “Green hydrogen is also a lot more water-friendly than steam methane reforming, which is only the first part of making blue hydrogen.”

The Utah Mining Association would like to see blue hydrogen used at IPP, says Brian Somers, president of the association. He is skeptical about green hydrogen’s positive impact on Utah’s water supply.

“We don’t want to pretend that there aren’t really great opportunities in hydrogen,” Somers says. “We just want to make sure that we’re not closing ourselves off from opportunities to use more of our Utah resources. We’re a top 10 producer of coal, natural gas, and oil. So, why wouldn’t we want to continue using all of those resources with new technologies and markets?”

ACES-Delta has plans to vet hydrogen storage at this first hub and expand to other parts of the country, and apparently, the US government is down with that. In April, the Department of Energy granted ACES a debt loan for $504 million, saying it expects the hub to be “the world’s largest industrial green hydrogen production and storage facility.”

Haddington Ventures, Magnum’s financial advisor, secured the project with $650 million through its Equity Syndication Program.

“It’s really quite rare to see projects, like this one in Utah around renewable energy, be so far advanced right now,” says Julie McNamara, deputy policy director with the Climate & Energy program at the Union of Concerned Scientists. “Most of what’s being pushed is fossil fuel-based because they have the apparatus and the funding to be ready.”

Ward sums it up by expressing that these are all mature technologies, not science fair experiments. “We have an opportunity at this site to integrate them at a utility scale, and it’s a project that’s attracting positive attention around the world,” he says.

Diana is a seasoned freelance journalist with extensive experience covering business. She has been published in a number of publications with regional and national reach, including The Washington Post, Germantown Gazette, Digital Insurance, Fiscal Note, Meritalk, the Congressional Quarterly, Healthcare Finance, Employee Benefit News and more. Though she now lives in Washington, DC, she lived in Utah once upon a time, where she enjoyed backpacking the High Uintas.