Nikola unveils cheap hydrogen production plan using Arizona power
The struggling electric truck start-up has proposed a deal with a utility in the state.
Electric and fuel cell electric vehicle (FCEV) truck start-up company, Nikola Corp., has announced its plans for cheap hydrogen production by entering into an agreement with an Arizona power utility.
The goal of the deal is to be able to produce H2 that would be supplied into a fueling network.
Nikola is hoping to land the power deal with Arizona Public Service Co., which is a unit of Pinnacle West Capital Corp. The intention to secure this deal was first made public in a December 11 filing requesting approval from utility regulators in the state.
Should Nikola achieve this deal, it would represent an important new step. The company has faced a string of various setbacks since June, when it first went public. The entire foundation of this plan is to be able to produce the H2 inexpensively. Upon first releasing the news of this strategy, the company’s shares rose by as much as 5.8 percent and traded up 3.3 percent to $17.03.
Last April, a filing from Nikola predicted that the estimated per-kilo cost of producing H2 would be about $2.50. That figure was based on a 3.5 cents per kilowatt hour wholesale electricity deal. That said, in this new deal with Arizona Public Service, the utility is proposing a much lower electricity rate of about 2.7 cents per hour.
This decreased electricity rate could make it possible for Nikola to achieve cheap hydrogen production.
“This rate schedule enables Nikola’s planned deployment of fueling facilities in Arizona in support of zero-emission hydrogen fuel-cell electric trucks,” said Nikola in a media statement.
Arizona Public Service explained that the “special contract rate” with Nikola would help the start-up to develop the H2 fueling network it has planned for the state. “We believe approval of this agreement will be an economic and environmental win for all of Arizona,” said a statement from the utility.
Nikola’s cheap hydrogen production strategy involves bundling the cost of H2 and maintenance with its own fuel cell semi trucks as a component of a 7-year/700,000-mile lease. To reach this goal, the start-up is seeking to build a 700 fueling station network across North America within the next decade.