Shell abandons hydrogen refuelling stations in California.
2024 comes with more painful news for hydrogen cars in the United States as multiple hydrogen refueling station closures are expected. The financial battle over fueling station funding may be the beginning of the end for California’s expensive and energy-intensive hydrogen-powered passenger automobiles.
Oil firms and environmentalists are engaged in a tug-of-war concerning Assembly Bill 241 (CA AB241 23R), which would decrease specific funding for hydrogen passenger vehicle fueling stations and increase support for electric vehicle infrastructure.
For energy endeavors, the last year has been one of creative destruction when it comes to hydrogen, or more specifically, the destruction of creative accounting and predictions in business cases. Though only 0.2% of over 1,300 transactions reached production by volume, green hydrogen supply ideas failed miserably to spark financial interest since they could not find off-takers for realistically costed hydrogen. In addition to the creative destruction this year, it seems there is room for the failure of hydrogen refueling stations.
Shell quietly abandons filling stations for hydrogen cars
Shell, a major player in the energy industry, has discreetly backed out of its plans to build 48 new light-duty hydrogen filling stations in the state of California. As a result, the oil major is now limited to running three hydrogen filling stations for heavy-duty cars throughout the state.
This unexpected move was taken despite the corporation receiving large government grants totaling $40.6 million for this very endeavor back in 2020. Earlier this year, in August, due to operational problems, Shell briefly suspended hydrogen operations at five light-duty stations in California. However, in a recent statement to Hydrogen Insight, the oil company claims that these closures may now be permanent.
Executives confirmed that the group of energy and petrochemical companies canceled its intention to construct and run more fueling stations for light-duty vehicles in California. Nonetheless, the company reaffirmed its dedication to hydrogen in certain industries, like heavy-duty transportation and industry, and concentrated on areas where it still has a competitive advantage.
Although Shell has exited the light vehicle market, it remains engaged in the heavy vehicle market, as do other companies that have closed tiny stations. This makes sense because there have been numerous extremely poor TCO studies that heavily favor hydrogen trucking by making erroneous assumptions and pushing the thumbs up in both directions. Still, it is hard to get the total cost of ownership of hydrogen transportation even close to that of battery electric vehicles.
Challenges in the hydrogen filling stations project
Shell’s decision to quietly abandon its hydrogen filling station project in California could be related to several obstacles the company faced. Some of the roadblocks the oil company faced included securing permissions, locating green hydrogen, and dealing with exorbitant building expenses.
Shell’s hydrogen commercial manager for the United States, Abhishek Banerjee, stated that there were substantial investment risks during the early phases of market deployment due to political and economic unpredictability.
Building hydrogen filling stations is expensive; estimates put the price tag at about $2 million per station, which further complicates matters. This high cost, paired with California’s slow fuel-cell vehicle adoption rate, makes it difficult to recover the investment.
Additionally, True Zero, known as the biggest supplier of hydrogen fuel in the state, recently increased the price of hydrogen at its pumps. Leading to a significant reduction in the affordability of hydrogen cars.
The problems and changing nature of hydrogen adoption in the automobile sector are reflected in Shell’s decision to scrap its California hydrogen station project. But it also raises concerns about the future of hydrogen cars in California as well as the state’s overall green energy landscape.
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Shell abandons hydrogen refuelling stations in California. source
