Nel to Build Gigafactory in Michigan

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Nel and General Motors Partner to Drive Down Costs of Green Hydrogen Production

On May 3, Nel, the green hydrogen company, revealed its plans to construct a colossal plant in Michigan in partnership with General Motors, with the aim of lowering the cost of hydrogen.

The Norwegian firm is responsible for producing electrolyzers, which are devices that divide water into hydrogen and oxygen, as well as fueling stations. Håkon Volldal, the CEO, announced that the company will be manufacturing electrolyzers in the Detroit region, generating up to 4 GW of hydrogen per year, and creating one of the world’s largest factories of this kind.

Despite evaluating every state, Nel selected Michigan, the historic home of the American automobile industry, for its new “gigafactory” to be close to General Motors. Volldal also cited Michigan’s attractive financial incentives, partnerships with universities and training programs, and strong support from the governor’s office. The estimated cost to establish the factory is $350 million.

According to Michigan Governor Gretchen Whitmer, the upcoming Nel plant presents a “remarkable opportunity” to improve people’s lives by providing cleaner, alternative energy sources and creating high-paying jobs.

Nel, which has been in existence for almost a century, is also planning to expand its manufacturing facilities in Herøya, Norway, from 500 MW to 1 GW, and in Wallingford, Connecticut, from 50 MW to 500. With significant orders coming in from the United States, Nel’s CEO, Håkon Volldal, anticipates even more growth. The Inflation Reduction Act provides a substantial tax credit for the production of green hydrogen, encouraging the replacement of fossil fuels in heavy manufacturing. Additionally, there are proposals to employ hydrogen in power generation and transportation to lower carbon dioxide emissions.

According to Volldal, hydrogen is no longer just a concept; it has become a reality. He further added that the industry is now being viewed as a solution to environmental problems, rather than a niche laboratory technology.

In November, Nel and General Motors had announced their partnership to enhance the efficiency and affordability of electrolyzers. A significant challenge in replacing traditional fuels with clean hydrogen is the large amount of renewable electricity required to separate water. The goal is to reduce these expenses so that Nel can expand its operations while GM and its consumers can have access to green hydrogen. GM is working on the development and commercialization of hydrogen fuel cells for larger vehicles and electricity generation. Fuel cell automobiles are electric vehicles that rely on hydrogen’s chemical energy instead of lithium-ion batteries.

Charles Freese V, the executive director of General Motors’ Hydrotec business, stated that having Nel in close proximity would simplify technology, workforce, and resource sharing, resulting in fewer obstacles and faster progress.

The cost of producing hydrogen using electricity derived from a renewable energy-powered grid, such as wind and solar, is around $5 per kilogram, according to the US Department of Energy. This is primarily due to the cost of electricity and varies significantly depending on the location. The majority of hydrogen available today is not of this type and contributes to climate change because it is derived from natural gas. It is significantly less expensive, costing roughly $1 to $2 per kilogram to manufacture. The DOE’s objective is to reduce the cost of producing clean hydrogen to $1 per kilogram within ten years.

Energy Secretary Jennifer Granholm stated that her department has been developing the technology at the heart of Nel for nearly two decades. The DOE granted over $35 million to an electrolyzer developer in Wallingford that was acquired by Nel in 2017. The grants were used to fund research, innovation, and demonstration projects aimed at scaling the technology from the laboratory to the megawatt level.

“We are delighted to witness the impact on manufacturing, job creation, and clean energy on the grid with products marked ‘Made in the U.S.A.’ and, in this case, ‘Made in Michigan,'” Granholm stated in a press release.

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