A planned renewable energy hub in central Utah has received a $500 million conditional loan guarantee from the U.S. Department of Energy.
The money is a significant chunk of what’s needed to build one of the largest hydrogen production and storage sites in the world, according to the DOE.
The operation, called the Advanced Clean Energy Storage project, is based in Delta. It would produce hydrogen through excess wind and solar energy and store it in two underground salt caverns to fuel the nearby Intermountain Power Plant. The facility currently burns coal but will be converted to a hybrid-natural gas and hydrogen plant in 2025. It will ultimately run on green hydrogen by 2045.
John Ward, a spokesperson for the plant, said the two operations could run independently of each other. But the partnership is key to expanding the use of utility-scale renewable energy. ACES has a power plant “right across the fence” ready to use its hydrogen rather than just running on natural gas alone.
“That's what allowed them to do things like go out and secure this very significant piece of DOE funding to get the ball rolling,” Ward said, adding the loan guarantee helps ensure they’ll be up and running by 2025.
It also helps put to rest earlier concerns that efforts by state and local leaders would derail the project.
The power plant has been an economic boon for Millard County since it first opened in the early 1980s. But because the transition was largely driven by the needs of the plant’s main customers in southern California, state and local leaders worried they were losing control of its future.
State lawmakers passed a bill in Nov. 2021 removing several of IPA's "special privileges" in order to regain some control. They also created a new “Project Entity Oversight Committee” this year, which gives the state additional oversight of the project.
IPA and ACES officials worried the unexpected changes would jeopardize their ability to secure funding.
Ward said IPA did have to delay its efforts to raise the $2 billion it would need to finance the plant’s conversion. It originally planned to enter the municipal bond market in January but has pushed that to May. That will likely add additional costs given higher interest rates, he said.
But now, he said, the federal loan guarantee for ACES, while still conditional, helps ensure the plant will have a source of clean energy to run on. And there do not appear to be any major obstacles to meeting the 2025 start date.
“We're just getting to the fun part of the project now where we get to actually build things and put them into service,” he said.
