Nikola locks in a special APS electricity rate for hydrogen fuel productionJanuary 21, 2021
The new deal helps the H2 producer to move closer to efficient production in Arizona.
Nikola Corp. has announced that it has secured a special competitive APS electricity rate, completing a key step toward its goal of efficient H2 fuel production.
The Arizona Public Service Company agreed to a special pricing arrangement.
The special APS electricity rate for Nikola’s efficient hydrogen fuel production was first placed in the spotlight last year. The application for this special pricing was first filed with the Arizona Corporation Commission on December 11, 2020. That proposal received unanimous approval following a January 12 vote.
Nikola, a Phoenix-based company, aims to design and manufacture vehicles running on hydrogen fuel cells, and producing and selling the H2 itself. However, as a part of an emerging market, this production process remains an expensive one.
Splitting water into oxygen and hydrogen through electrolysis demands large amounts of electricity. Even with this large electricity consumption rate, the power utility has said its facilities will continue to respond to the grid’s needs and that it will draw down the power usage for electrolysis during heatwaves.
The special APS electricity rate is meant to ensure the H2 production process remains affordable.
Nikola required a lower price for electricity in order to be able to produce hydrogen that can be sold at a competitive rate.
“Nikola values the joint efforts of APS and the ACC to enable competitive electrolytic hydrogen production. The approval of this special rate for hydrogen production is critical for advancing the future of zero-emissions transportation and building a hydrogen economy,” said Mark Russel, chief executive officer at Nikola, in a media statement.
Arizona Corporation Commission chairperson, Lea Márquez Peterson, said she hopes that this will be the first step to transforming the state into the country’s hydrogen production epicenter.
“For decades, hydrogen has been a promising, but elusive, source of clean energy for both the transportation and power sectors. We simply haven’t done enough to bring hydrogen to the mainstream,” she said when discussing the special APS electricity rate and what it could mean for Arizona. “As we begin to enter a new energy economy, however, I want to ensure that we take all steps necessary to promote Arizona’s gradual and innovative move towards decarbonization. By supporting this application, we are doing exactly that.”