Highest US hydrogen tax credits will require new renewable generation

Highest US hydrogen tax credits will require new renewable generation | Windpower Monthly

The PTC, which was established by the President Biden administration’s Inflation Reduction Act(IRA), ranges from $0.60 to £3 per kg of hydrogen, depending on the lifecycle emissions of the hydrogen production.

The credit is available for ten years starting on the date that a hydrogen production facility goes into service for projects that begin construction before 2033, which means it will be available for some facilities well into the 2040s.

Incrementality, locality and time matching

The US Treasury Department is consulting on the proposed rules, which require the hydrogen producer to demonstrate incrementality, locality and time matching.

• Incrementality. The power used must come from renewable generators that began commercial operations within three years of a hydrogen facility being placed into service, or which result from newly added capacity.

• Locality. The clean power must be sourced from the same region as the hydrogen producer. The proposed rules request comment on how to consider transmission of clean power between regions.

• Time matching. The power will initially be matched to use on an annual basis, but a requirement will be phased in to match generation to production on an hourly basis, which means that the generation must occur within the same hour that the electrolyser which claims the credit is operating.

The proposed rules on time matching include a transition to allow annual matching until 2028 when hourly tracking systems are expected to be more widely available. The proposals are open for consultation until 26 February 2024.

Click here to subscribe to the green hydrogen bulletin to receive fortnightly dedicated news, analysis and comment straight to your inbox.

To submit a news, comment, case study or analysis idea for the green hydrogen bulletin, contact the editorial team.