Hyperbole about hydrogen pricing helped convict Nikola Corp. founder Trevor Milton of fraud in federal court. On Thursday, the electric truck maker laid out plans for 60 hydrogen stations by 2026, enabled by a raft of federal and state incentives.
That’s a far cry from the 700 stations at $17 million a station that Nikola outlined in its pitch deck in 2020. It’s unclear how much Nikola will pay per kilogram of production. But it probably will be substantially more than Milton’s claim of sub-$4 a kilogram. Government funding will help shave several dollars off per kilogram.
Land purchased for hydrogen-making hub
Phoenix-based Nikola recently purchased 900 acres of land in Buckeye, Arizona, where it will locate its first hydrogen-making hub. Arizona Public Service agreed to sell electricity to Nikola for about 2 cents a kilowatt hour. The company purchased electrolyzers from Nel ASA in Norway in 2020. Electrolyzers split hydrogen molecules from oxygen in an electricity-intensive process.
Nikola plans to begin series production of hydrogen-powered Class 8 fuel cell daycab variants of its battery-electric Tre model in its plant in Coolidge, Arizona. That’s about 90 miles east of Buckeye. The Buckeye hydrogen hub will produce 30 metric tons per day in its first phase. It will scale to 50 metric tons per day at completion.
Hydrogen is critical to Nikola’s fuel cell truck ambitions. It plans to bundle the cost of its truck, maintenance and fuel for 1 million miles of driving into a seven-year lease.
The Inflation Reduction Act (IRA) signed into law by President Joe Biden in August “supports every aspect” of Nikola’s business model, including low-cost hydrogen production and dispensing infrastructure, the company said in a news release.
300 metric tons per day
Nikola aims to develop access to up to 300 metric tons of low-carbon hydrogen supply per day. It is counting on the IRA and other federal and state incentives to reach cost parity with diesel trucks.
“The energy and climate investments included in the IRA are anticipated to help accelerate our strategic initiatives and drive new growth opportunities,” Nikola President Michael Lohscheller said.
“Given the expected scale of our hydrogen business model, and our early mover advantage, we believe Nikola is ideally positioned to benefit from nearly every aspect of the legislation at a scale ahead of current industry participants.”
When combined with state-based incentives, such as the California Low Carbon Fuel Standard (LCFS), the IRA will reduce the overall cost of hydrogen production and dispensing. Hydrogen supply and dispensing for heavy-duty trucks does not yet exist. Nikola plans at least three hydrogen fueling stations in California, two in partnership with truck stop owner TravelCenters of America.
Midwest production plan
Nikola also invested in Wabash Valley Resources (WVR) in Indiana, designed to produce more than 250 metric tons of low-carbon hydrogen per day. Once built, the WVR facility is expected to supply the Midwest region with approximately 50 metric tons of hydrogen per day. Nikola owns 20% of WVR.
Among the incentives Nikola is counting on:
- The clean hydrogen production tax credit, which provides up to $3 per kilogram of hydrogen produced. The tax credit counts as direct revenue for the first five years of a facility’s production.
- The extended and expanded carbon sequestration credit provides up to $85 per metric ton of carbon. That is equal to up to $1 per kilogram that is captured and sequestered. Carbon capture through WVR’s advanced technologies complement Nikola’s hydrogen distribution plans.
- An extension of existing energy investment tax credits promotes the development of renewable electricity projects.
- An additional technology neutral energy investment tax credit of up to 30% benefits various parts of hydrogen manufacturing.
IRA incentives for hydrogen
The IRA itself provides:
- An alternative fuel vehicle refueling property credit supports Nikola’s plans to build with its partners up to 60 dispensing stations by 2026. It offsets the cost of construction for up to $100,000 per dispensing equipment item.
- $1 to $2 per kilogram of hydrogen dispensed when combined with California’s LCFS. That’s provided the dispensing of low-carbon hydrogen goes into a Nikola Tre fuel cell truck. Oregon and British Columbia have enacted similar programs. Canada and the U.S. will offer programs beginning in 2023 and 2024.
- Offsets to the expansion of Nikola’s Coolidge manufacturing facility in Arizona by up to 30% from the advanced energy project credit. It is funded by a $10 billion grant for advanced energy projects that target expansion of manufacturing facilities for heavy-duty, battery-electric and fuel cell trucks.
- A $10 per kilowatt hour from the advanced manufacturing production credit for producing battery modules in house. Nikola recently completed the acquisition of Romeo Power. It is creating a battery unit within Nikola.
- A $40,000 commercial clean vehicle credit that may reduce the upfront purchase cost of a Nikola Tre battery-electric or fuel cell truck.
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