Feasibility of Underground Hydrogen Storage in California

The California Energy Commission (CEC) is offering a grant to evaluate the feasibility of using existing underground gas storage facilities to store clean renewable hydrogen in California. This project aligns with the CEC's mission to advance California's clean energy goals by exploring innovative solutions for energy storage. The overarching goal is to assess the technical and economic viability of converting these facilities for hydrogen storage, contributing to the state's renewable energy infrastructure. The grant specifically targets projects that will benefit California Gas Investor Owned Utility (IOU) ratepayers. The project focuses on developing comprehensive technical and economic assessments of storing and retrieving hydrogen blends and/or pure hydrogen. Key priorities include engaging with local communities and Community Based Organizations (CBOs) around selected sites to assess awareness and support for underground hydrogen storage, and leveraging this feedback to inform experimental design. The project also emphasizes studying the characteristics of at least two existing underground gas storage facilities, conducting experiments to assess the impacts of hydrogen introduction on well integrity and reservoir dynamics, and proposing necessary mitigation measures for safety and reliability. Expected outcomes include quantitative risk assessments and techno-economic analyses for converting selected facilities, comparing costs and risks of various use cases, and estimating levelized costs of hydrogen storage, capital costs, and operations and maintenance costs. The project will also develop recommendations for Gas IOUs, CBOs, policymakers, and relevant stakeholders to guide decision-making on the future role of underground hydrogen storage in California. Optional but desired elements include comparing the levelized cost of hydrogen storage and life-cycle emissions with alternative storage options and examining the potential of storing hydrogen in saline aquifers. The CEC's strategic priority in offering this grant is to support the integration of clean renewable hydrogen into California's energy mix. The theory of change is that by thoroughly assessing the feasibility, risks, and economic implications of underground hydrogen storage, the state can make informed decisions about deploying this technology, thereby accelerating the transition to a cleaner, more resilient energy system. The grant, with a funding range of $2.5 million to $3 million and a duration of three years (November 1, 2024 – September 30, 2027), aims to produce actionable insights that can directly influence future policy and infrastructure development in California's hydrogen economy.