SDG&E Hydrogen Pilot Project Aims to Advance CA’s Clean Energy Goals

Project to fill knowledge gaps and assess hydrogen’s feasibility as a decarbonization tool

As another step toward fulfilling regional and state climate goals and its own net zero roadmap, San Diego Gas & Electric Company (SDG&E) submitted a proposal with the California Public Utilities Commission (CPUC) on Sept. 8 for a demonstration project on the University of California San Diego (UC San Diego) campus to study how blending hydrogen with natural gas in the existing gas system could help achieve a successful energy transition for all Californians.

The project is part of SDG&E’s multi-pronged sustainability strategy to explore the feasibility of emerging technologies to rapidly decarbonize multiple economic sectors – from buildings and transportation to industrial and manufacturing processes – to help California reach its carbon neutrality goal by 2045. If approved by the CPUC, the project would study the feasibility of injecting up to 20% of hydrogen into plastic natural gas pipe, a common material used in the natural gas infrastructure. An isolated section of a gas line serving a UC San Diego apartment complex would use hydrogen blended gas for common building equipment such as boilers and water heaters. Hydrogen used in this study would be produced onsite via a dedicated, grid-connected electrolyzer. The results of the study would help inform the development of a renewable hydrogen blending standard for California.

“Achieving the state’s climate goals, including reaching carbon neutrality by 2045, will require a broad range of clean energy technologies. That’s why we are investing in the research, development and demonstration of emerging hydrogen innovations that have the potential to be a game changer,” said SDG&E CEO Caroline Winn. “Developing clean fuels like hydrogen is key to creating a clean, reliable and climate-resilient energy sector, while also stimulating economic and job growth.”

The UC system and UC San Diego have long been sustainability leaders. The UC system aims to achieve net zero greenhouse gas emissions from its buildings and fleet by 2025. UC San Diego is a global leader in advanced battery and energy storage research and deployment, and it’s home to a microgrid powered by a fuel cell and the Deep Decarbonization Initiative.

“At UC San Diego, we take tremendous pride in fostering innovations and developing solutions to real-world problems,” said Chancellor Pradeep K. Khosla. “Sustainability and public service have been a key part of the university since its founding. That’s why we are helping to support California’s decarbonization efforts through this pilot project exploring the economical and safe use of blended hydrogen.”

The project would fulfill a key recommendation in a recent “Hydrogen Blending Impacts” study (sponsored by the CPUC and performed by UC Riverside) calling on utilities to conduct “real world demonstration of hydrogen blending” to fill knowledge gaps that cannot be addressed through modeling or lab experiments.

“Because of California’s abundant solar energy resource and strong history of clean energy innovation, we are well-positioned to pioneer a clean hydrogen economy,” said state Senator Ben Hueso, who represents the San Diego and Imperial County areas. “California is at a critical juncture in the energy transition where investments in research, development and demonstration of hydrogen and other emerging technologies are necessary to accelerate decarbonization.”

SDG&E and UC San Diego will work closely together during all the phases of the project to implement safety protocols, conduct public outreach, and identify research opportunities with students and faculty.

Submitted as part of a joint filing with SoCalGas and Southwest Gas on Sept. 8, SDG&E’s proposal builds upon the latest research and international experiences, including the HyDeploy pilot in the UK. That project demonstrated the injection of up to 20% of hydrogen into a university’s natural gas network, suggesting that blending hydrogen up to 20% by volume does not interact negatively with existing materials used within infrastructure like network pipes or in homes or businesses.

Hydrogen is already used in many industrial and manufacturing processes, including fertilizer and steel production. A versatile energy carrier, it can be used to move, store and deliver energy made from other sources. California can potentially harness, rather than curtail, its excess renewable energy to produce hydrogen. This clean hydrogen could then be injected into gas pipelines, used to power fuel cell vehicles, or stored for months at a time and converted back into electricity when it's needed.

SDG&E’s proposal comes at a time when the U.S. government is gearing up to invest $9.5 billion in clean hydrogen initiatives as part of the 2021 Infrastructure Investment and Jobs Act. To further accelerate the development of a hydrogen economy, Congress in August passed the Inflation Reduction Act, which will provide a new clean hydrogen production tax credit of up to $3 per kilogram. California announced its intention earlier this year to leverage federal and state dollars to create a renewable hydrogen hub and accelerate hydrogen market development. Governments in Asia and Europe have also launched ambitious hydrogen initiatives.

As part of the project, new pipe would be installed to isolate specific buildings from the surrounding area, along with a hydrogen storage tank, a hydrogen blender, and an electrolyzer that would produce hydrogen by splitting water into hydrogen and oxygen. The electrolyzer is expected to use about a third of the water an average household consumes in a year. Construction would start in Q2 2024 with blending occurring in late 2024 through early 2026. The site would be fully restored to its original condition upon conclusion of the project.

SDG&E is an innovative San Diego-based energy company that provides clean, safe and reliable energy to better the lives of the people it serves in San Diego and southern Orange counties. The company is committed to creating a sustainable future by providing its electricity from renewable sources; modernizing energy infrastructure; accelerating the adoption of electric vehicles; supporting numerous non-profit partners; and, investing in innovative technologies to ensure the reliable operation of the region’s infrastructure for generations to come. SDG&E is a subsidiary of Sempra (NYSE: SRE). For more information, visit SDGEnews.com or connect with SDG&E on Twitter (@SDGE), Instagram (@SDGE) and Facebook.

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Factors, among others, that could cause actual results and events to differ materially from those expressed or implied in any forward-looking statement include risks and uncertainties relating to: California wildfires, including the risks that we may be found liable for damages regardless of fault and that we may not be able to recover all or a substantial portion of costs from insurance, the wildfire fund established by California Assembly Bill 1054, in rates from customers or a combination thereof; decisions, investigations, regulations, issuances or revocations of permits and other authorizations, renewals of franchises, and other actions by (i) the California Public Utilities Commission (CPUC), U.S. Department of Energy, U.S. Federal Energy Regulatory Commission, and other regulatory and governmental bodies and (ii) the U.S. and states, counties, cities and other jurisdictions therein in which we do business; the success of business development efforts and construction projects, including risks in (i) completing construction projects or other transactions on schedule and budget, (ii) realizing anticipated benefits from any of these efforts if completed, and (iii) obtaining the consent or approval of partners or other third parties, including governmental and regulatory bodies; civil and criminal litigation, regulatory inquiries, investigations, arbitrations and other proceedings; changes to laws and regulations; cybersecurity threats, including by state and state-sponsored actors, to the energy grid, storage and pipeline infrastructure, information and systems used to operate our businesses, and confidentiality of our proprietary information and personal information of our customers and employees, including ransomware attacks on our systems and the systems of third-parties with which we conduct business, all of which have become more pronounced due to recent geopolitical events and other uncertainties, such as the war in Ukraine; failure of our counterparties to honor their contracts and commitments; actions by credit rating agencies to downgrade our credit ratings or to place those ratings on negative outlook and our ability to borrow on favorable terms and meet our debt service obligations; the impact of energy and climate policies, laws, rules and disclosures, as well as related goals and actions of companies in our industry, including actions to reduce or eliminate reliance on natural gas generally and any deterioration of or increased uncertainty in the political or regulatory environment for California natural gas distribution companies and the risk of nonrecovery for stranded assets; the pace of the development and adoption of new technologies in the energy sector, including those designed to support governmental and private party energy and climate goals, and our ability to timely and economically incorporate them into our business; weather, natural disasters, pandemics, accidents, equipment failures, explosions, acts of terrorism, information system outages or other events that disrupt our operations, damage our facilities and systems, cause the release of harmful materials, cause fires or subject us to liability for damages, fines and penalties, some of which may be disputed or not covered by insurers, may not be recoverable through regulatory mechanisms or may impact our ability to obtain satisfactory levels of affordable insurance; inflationary and interest rate pressures, volatility in commodity prices, our ability to effectively hedge these risks, and their impact, as applicable, on our cost of capital and the affordability of customer rates; the availability of electric power, natural gas and natural gas storage capacity, including disruptions caused by failures in the transmission grid or limitations on the withdrawal of natural gas from storage facilities; the impact of the COVID-19 pandemic on capital projects, regulatory approvals and the execution of our operations; the impact on competitive customer rates and reliability due to growth in distributed and local power generation, including from departing retail load resulting from customers transferring to Community Choice Aggregation and Direct Access, and the risk of nonrecovery for stranded assets and contractual obligations; changes in tax and trade policies, laws and regulations, including tariffs, revisions to international trade agreements and sanctions, such as those that have been imposed and that may be imposed in the future in connection with the war in Ukraine, which may increase our costs, reduce our competitiveness, impact our ability to do business with certain counterparties, or impair our ability to resolve trade disputes; and other uncertainties, some of which are difficult to predict and beyond our control.

These risks and uncertainties are further discussed in the reports that the company has filed with the U.S. Securities and Exchange Commission (SEC). These reports are available through the EDGAR system free-of-charge on the SEC’s website, www.sec.gov, and on Sempra’s website, www.sempra.com. Investors should not rely unduly on any forward-looking statements.

Sempra Infrastructure, Sempra Texas, Sempra Mexico, Sempra Texas Utilities, Oncor Electric Delivery Company LLC (Oncor) and Infraestructura Energética Nova, S.A.P.I. de C.V. (IEnova) are not the same companies as the California utilities, San Diego Gas & Electric Company or Southern California Gas Company, and Sempra Infrastructure, Sempra Texas, Sempra Mexico, Sempra Texas Utilities, Oncor and IEnova are not regulated by the CPUC.

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