Air Products, AES Corp. form joint venture to build massive $4B hydrogen plant in Texas

Virginia-based power company AES Corp. (NYSE: AES) and Pennsylvania-based Air Products & Chemicals Inc. (NYSE: APD) are bringing a massive hydrogen-production project to Texas.

The companies formed a joint venture to invest around $4 billion building and operating a renewable hydrogen production facility in Wilbarger County, Texas, Air Products and AES announced Dec. 8.

The North Texas plant will focus on producing so-called "green" hydrogen using technology powered by renewable resources. Natural gas is more commonly used to produce hydrogen by industrial facilities and petroleum refineries.

The Air Products and AES Corp. project will include approximately 1.4 gigawatts of wind and solar generation and a production capacity of 200 metric tons of green hydrogen per day, or 73,000 metric tons per year.

"The new facility in Texas will be, by far, the largest mega-scale clean hydrogen production facility in the U.S. to use wind and sun as energy sources," said Air Products Chairman, President and CEO Seifi Ghasemi. "We have been working on the development of this project with AES for many years, and it will be competitive on a world-scale while bringing significant tax, job and energy security benefits to Texas."

Air Products and AES will jointly and equally own the clean power resources and electrolyzer assets for the plant. Air Products will serve as the exclusive offtaker and marketer for the green hydrogen produced there under a 30-year contract.

The North Texas plant, slated to start up in 2027, is expected to create more than 1,300 jobs during the construction process, 115 permanent operations jobs and 200 positions for transportation and distribution.

"We will build more than 1 GW of new solar and wind facilities to provide zero-carbon energy for electrolysis and related production facilities," said AES President and CEO Andrés Gluski. "AES believes that green hydrogen has a key role to play in decarbonizing transportation and accelerating the future of energy."

Many companies around Texas see opportunity in green hydrogen, as well as so-called "blue" hydrogen — hydrogen produced with natural gas while capturing and storing the carbon dioxide emissions created in the process.

Interest in producing clean hydrogen fuel has also been growing since the Inflation Reduction Act was passed earlier this year. The IRA includes new tax credits for producing low-carbon hydrogen, as well as enhanced tax credits for carbon capture and sequestration.

The Center for Houston's Future, the University of Texas at Austin and GTI Energy are applying for billions of dollars in federal funding to develop the Houston region into a global clean hydrogen hub. The Department of Energy has earmarked $8 billion to spend on building out clean hydrogen hubs under a program created through the 2021 Infrastructure Investment and Jobs Act.

In a statement, the Center for Houston's Future said it is tracking more than 25 projects in development across Texas totaling over 5.7 million tons of clean hydrogen.

"Today’s announcement by the industrial gas company Air Products and energy company AES of the nation’s largest green hydrogen project validates our research showing that Texas will be a global leader in creating a clean hydrogen ecosystem," said Brett Perlman, CEO of the Center for Houston's Future.