Houston's hydrogen revolution gets up to $1.2B federal boost to power Gulf Coast’s clean energy future

HyVelocity funding

The U.S. Department of Energy funding is earmarked for the new HyVelocity Hub. Photo via Getty Images

The emerging low-carbon hydrogen ecosystem in Houston and along the Texas Gulf Coast is getting as much as a $1.2 billion lift from the federal government.

The U.S. Department of Energy funding, announced November 20, is earmarked for the new HyVelocity Hub. The hub — backed by energy companies, schools, nonprofits, and other organizations — will serve the country’s biggest hydrogen-producing area. The region earns that status thanks to more than 1,000 miles of dedicated hydrogen pipelines and almost 50 hydrogen production plants.

“The HyVelocity Hub demonstrates the power of collaboration in catalyzing economic growth and creating value for communities as we build a regional hydrogen economy that delivers benefits to Gulf Coast communities,” says Paula Gant, president and CEO of Des Plaines, Illinois-based GTI Energy, which is administering the hub.

HyVelocity, which aims to become the largest hydrogen hub in the country, has already received about $22 million of the $1.2 billion in federal funding to kickstart the project.

Organizers of the hydrogen project include:

Arlington, Virginia-based AES Corp.
Air Liquide, whose U.S. headquarters is in Houston
Chevron, which is moving its headquarters to Houston
Spring-based ExxonMobil
Lake Mary, Florida-based Mitsubishi Power Americas
Denmark-based Ørsted
Center for Houston’s Future
Houston Advanced Research Center
University of Texas at Austin

The hub’s primary contractor is HyVelocity LLC. The company says the hub could reduce carbon dioxide emissions by up to seven million metric tons per year and create as many as 45,000 over the life of the project.

HyVelocity is looking at several locations in the Houston area and along the Gulf Coast for large-scale production of hydrogen. The process will rely on water from electrolysis along with natural gas from carbon capture and storage. To improve distribution and lower storage costs, the hub envisions creating a hydrogen pipeline system.

Clean hydrogen generated by the hub will help power fuel-cell electric trucks, factories, ammonia plants, refineries, petrochemical facilities, and marine fuel operations.

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Houston's HyVelocity Hub has joined in on a joint letter with the other six H2Hubs asking for revised guidelines. Photo via Getty Images

Houston's clean hydrogen hub joins request to revise federal tax credit guidance

edits needed

The group of regional hubs tapped by the United States government to receive funding to develop clean hydrogen projects have banded together to request a revision of the U.S. Department of Treasury's proposed hydrogen production tax credit (45V) guidance.

Houston's HyVelocity Hub, which was selected to receive up to $1.2 billion from the government's initiative, has joined in on a joint letter with the other six H2Hubs asking for revised requirements. HyVelocity also submitted its own letter to the Treasury.

HyVelocity's letter asks for flexibility and certainty the implementation of the “three pillars” for electricity, which include temporality, incrementality, and deliverability.

"It is imperative that to enable the desired environmental, economic, and equity goals of the IRA, private investment in hydrogen production must advance at scale and at an accelerated pace. Hydrogen production project investments require stable market projections and assurance of regulatory stability to ensure the economics of the long-term projects. To support this investment environment, we recommend that projects be granted a 'grandfathered exemption' such that for the project's life, they can use the regulations in place at the time when construction begins," reads the letter from HyVelocity.

HyVelocity, representing the Gulf Coast region, plans to create up to 35,000 construction jobs and 10,000 permanent jobs across nine proposed core projects with a collective investment of more than $10 billion in private capital to bring low-carbon hydrogen to the market.

The Houston-area initiative is backed by industry partners AES Corporation, Air Liquide, Chevron, ExxonMobil, Mitsubishi Power Americas, Ørsted, and Sempra Infrastructure and The spearheaded by GTI Energy and other organizing participants, including the University of Texas at Austin, The Center for Houston’s Future, Houston Advanced Research Center, and around 90 other supporting partners from academia, industry, government, and beyond.

Chevron New Energies now owns a majority share of the Advanced Clean Energy Storage project in Delta, Utah. Photo via Getty Images

Houston-headquartered Chevron subsidiary acquires majority stake in ongoing hydrogen project

M&A move

The Houston-based clean energy subsidiary of Chevron is making a big splash in the clean hydrogen sector. It just acquired a majority stake in what’s being promoted as the world’s largest facility for clean hydrogen storage.

Chevron New Energies bought Salt Lake City-based Magnum Development from Houston-based private equity firm Haddington Ventures. As a result, the New Energies unit now owns a majority share of the Advanced Clean Energy Storage (ACES) project in Delta, Utah. A joint venture of Magnum Development and Mitsubishi Power Americas is developing ACES. Financial terms weren’t disclosed.

“Having been the primary financial sponsor behind this key energy hub since 2008, we believe this transaction will accelerate lower-carbon-intensity solutions that reduce emissions in the western United States,” says John Strom, managing director of Haddington Ventures.

ACES plans to use electrolysis to convert renewable energy into hydrogen and store the energy in salt caverns. The first phase, designed to convert and store up to 100 metric tons of hydrogen per day, is under construction and expected to begin commercial-scale operations in mid-2025.

“Using salt caverns for seasonal energy storage is a significant opportunity to empower hydrogen as an energy carrier and greatly expand energy storage resources throughout the U.S.,” says ACES contractor WSP, an engineering, environmental and professional services consulting firm.

The hydrogen facility will support Intermountain Power Plant, a Utah power plant operated by the municipal utility in Los Angeles. The stored hydrogen is expected to fuel a hybrid 840-megawatt combined-cycle gas turbine (CCGT) power plant that’ll replace an 1,800-megawatt, coal-fired power plant.

A CCGT plant harnesses exhaust heat from natural gas turbines to generate steam through a heat recovery steam generator, according to IPIECA, an oil and gas association that focuses on environmental and social issues. The steam is then fed to a steam turbine to supply additional power.

Michael Ducker, senior vice president of hydrogen infrastructure at Mitsubishi Power, says the ACES project “will serve as a blueprint for future hydrogen opportunities.”

“We seek to leverage the unique strengths of each partner to develop a large-scale, hydrogen platform that provides affordable, reliable, ever-cleaner energy and helps our customers achieve their lower carbon goals,” says Austin Knight, vice president of hydrogen at Chevron New Energies.

Chevron New Energies is marketing its low-carbon hydrogen offering to sectors like transportation, power, and industrial. These sectors face especially big hurdles in their efforts to reduce greenhouse gas emissions.

In June 2022, the U.S. Department of Energy (DOE) issued a $504.4 million loan guarantee to finance ACES. The facility will combine 220 megawatts of alkaline electrolysis with two 4.5 million-barrel salt caverns for storage of clean hydrogen.

ACES expects to create up to 400 construction jobs and 25 permanent jobs.

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Houston energy tech company scores spot on Deloitte's list of fast-growing businesses

by the numbers

Deloitte’s annual North America Technology Fast 500 list includes a Houston energy tech company boasting 407 percent growth.

NatGas Hub LLC landed at No. 286 on the list, which is an annual ranking of the fastest-growing North American companies in technology, energy tech sectors, telecommunications, life sciences, media, and fintech. It marks an improvement for the company, which provides an automation software for natural gas nominations and scheduling services. In 2023, the company ranked No. 356 with 364 percent growth.

Direct Digital Holdings Inc. took the highest-ranking spot for Houston companys, coming in at No. 101 (up from 108 previous year) with 1,184 percent growth. Additional Houston companies on the list include Liongard (No. 437, 246 percent growth) and Stratus Medical LLC (No. 483, 212 percent growth).

"Houston continues to demonstrate its prowess in fostering growth and technological advancement and I’m incredibly proud to see some of our local companies making significant strides and earning their well-deserved spots on the 2024 Deloitte Technology Fast 500 list,” Houston managing partner at Deloitte Melinda Yee says in a news release.

Award winners were selected based on fiscal year revenue growth from 2019 to 2022.

The companies achieved revenue growth ranging from 201 percent to 153,625 percent over the three-year time frame with an average growth rate of 1,981 percent and a median growth rate of 460 percent, according to a news release. Texas accounts for 6 percent of the winning companies with 73 percent of the companies from Texas are in the software sector.

“These companies exemplify the entrepreneurial spirit and innovative mindset that define Houston's dynamic business ecosystem,” Yee adds.

In 2023, the Houston representation looked similar. Direct Digital Holdings again topped the Houston rankings at No. 108, with Liongard, NatGasHub.com, and P97 Networks also showing substantial growth. As a state, Texas had 30 companies that made the list of the 541 ranked. In 2022, just one Houston company was recognized, as at No. 372 Onit reported revenue increase of 369 percent.

Biopharmaceutical company TG Therapeutics, Inc. was the No.1 spot in 2024 with a growth rate of 153,625 percent from 2020 to 2023. See the full list here.

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This article originally ran on InnovationMap.

Houston founder on driving the future of geothermal energy, storage

now streaming

Cindy Taff, co-founder and CEO of Sage GeoSystems, has emerged as a visionary leader in the energy transition, recently named to Time magazine’s 100 Most Influential Climate Leaders in Business for 2024. Under her leadership, Sage is not only advancing geothermal energy innovation but also redefining how energy storage can support a renewable-powered grid.

In a recent Energy Tech Startups Podcast episode, Taff discussed the evolution of Sage GeoSystems, the challenges of scaling hard tech solutions, and the opportunities presented by geothermal and pumped hydro energy storage. Her insights reflect the unique perspective of a founder bridging oil and gas expertise with renewable energy innovation.

- YouTubeCindy shares how Sage Geosystems is leveraging its oil and gas expertise to develop groundbreaking subsurface pumped hydro ...

Breaking Boundaries with Geopressured Geothermal Systems

Sage GeoSystems is at the forefront of next-generation geothermal energy, advancing Geopressured Geothermal Systems (GGS) that can be deployed in a wide range of geographies. Unlike traditional geothermal systems, which rely on natural water reservoirs near volcanic activity, Sage’s engineered reservoirs allow geothermal energy to be tapped almost anywhere.

“Geothermal energy is no longer restricted to specific conditions,” Taff explained. “Our systems are flexible, scalable, and capable of meeting the needs of energy-intensive applications like data centers—including a recent deal with Meta to deliver 150 megawatts of geothermal power for their facilities.”

This adaptability sets Sage apart, offering a path to reliable, clean energy that can complement intermittent sources like wind and solar. Sage also secured a win in the Energy Transition Business category alongside notable finalists like Amperon and Tierra Climate, underscoring its leadership in innovative energy solutions.

Pivoting Toward Subsurface Energy Storage

While initially focused solely on geothermal, Sage uncovered a transformative opportunity in subsurface pumped hydro energy storage during field trials. Dubbed “upside-down pumped hydro,” the solution provides long-duration energy storage capable of balancing the grid for 17+ hours—far surpassing the capabilities of lithium-ion batteries for extended periods.

“Pumped storage hydropower is a critical piece of the energy puzzle,” Taff emphasized. By storing energy during off-peak times and releasing it when solar and wind aren’t producing, Sage is helping bridge the intermittency gap in renewables. This approach positions pumped storage as a game-changer for a reliable, clean energy grid.

Lessons from the Founder’s Journey

Taff’s transition from a 35-year career at Shell to geothermal entrepreneurship offers valuable lessons for founders in capital-intensive industries:

Leverage Expertise, but Stay Open to New Solutions:
Taff’s oil and gas background enabled her to approach geothermal with deep technical knowledge, but Sage’s pivot to energy storage illustrates the importance of staying adaptable during development.
Educate Financial Stakeholders:
Securing funding for hard tech remains a challenge. “Investors often lack the subsurface knowledge needed to understand our technology,” Taff explained. She emphasized the need to bring on team members who can translate technical innovation into financial terms.
Be Ready for Capital-Intensive Scaling:
With geothermal plants costing millions to build, startups must carefully manage capital and timelines. Taff encourages founders to seek strategic investors, like Chesapeake Energy, who understand the challenges and potential of scaling infrastructure.

Beyond Geothermal: A Call for Pumped Storage Hydropower

In addition to geothermal, Taff champions pumped storage hydropower as an underutilized climate solution. “While lithium-ion batteries get a lot of attention, pumped storage hydropower offers long-duration storage that can stabilize the grid for days, not just hours,” she said.

By storing excess energy during off-peak times and releasing it when solar and wind aren’t producing, pumped storage hydropower can play a critical role in balancing renewables. Sage GeoSystems is uniquely positioned to integrate this technology into a broader energy strategy, offering sustainable and scalable solutions for energy-intensive industries.

A Vision for Geothermal and the Energy Transition

Looking ahead, Taff sees geothermal energy and storage as critical components of a sustainable energy mix. “We’re still in the early stages, but geothermal is following a trajectory similar to wind and solar 15 years ago,” she said. Sage’s innovative approaches are paving the way for geothermal to become a scalable, competitive solution, capable of powering industries and data centers while providing energy storage that stabilizes the grid.

With her recognition by Time magazine and a recent deal with Meta, Sage GeoSystems is proving that geothermal energy can be a powerful ally in achieving global decarbonization goals. The company’s innovative Geopressured Geothermal Systems and subsurface storage solutions are laying the groundwork for a reliable and sustainable energy future.

Listen to the full episode with Cindy Taff on the Energy Tech Startups Podcast here.

Energy Tech Startups Podcast is hosted by Jason Ethier and Nada Ahmed. It delves into Houston's pivotal role in the energy transition, spotlighting entrepreneurs and industry leaders shaping a low-carbon future.

Solar company acquires Houston manufacturer to expand production capacity, meet growing demand

M&A moves

Solar solution company TOYO Solar announced it has agreed to acquire 100 percent of membership interests in Houston area’s Solar Plus Technology Texas LLC.

Included in the deal, is the newly leased facility that spans 567,140 square feet and can accommodate 2.5 gigawatts of solar module manufacturing capacity. The goal is to expand it to 6.5 gigawatts by 2029. TOYO Solar LLC will make a capital contribution of $19.96 million to TOYO Solar LLC.

"By acquiring Solar Plus, we will accelerate our development and leverage our team's proven manufacturing excellence, as well as the extensively established customer relationships and the brand of our sister company, Vietnam Sunergy, a Tier 1 Bloomberg NEF solar manufacturer," Junsei Ryu, chairman and CEO of TOYO, says in a news release. "We are confident that our expansion in the U.S. will effectively deliver a comprehensive solar technology solution, addressing bottlenecks for developers, meeting local content requirements for U.S. solar projects, and enhancing TOYO's competitive advantage."

The factory construction of Phase 1 has been completed, and equipment will begin to arrive by early 2025.The facility's first 1 gigawatts production is expected to commence by mid-2025 with production capacity increasing to 2.5 gigawatts by the end of 2025 according to the company.

As the demand for American-made solar panels continues amid grid reliability issues in Texas, TOYO hopes it can help with its sustainable energy solutions after having success in Vietnam and Ethiopia.

"Our strategy is to supply end customers with solar solutions that are technologically advanced, highly reliable, and cost competitive,” Ryu says in the release. “We are committed to building a robust global solar supply chain structure that efficiently and competitively serves the U.S. market and other regions, adapting to a dynamic policy environment.”

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