Clifford Chance

New technology and government incentives are boosting clean energy and driving a greater demand for high-end legal capabilities steeped in the sector. These capabilities become increasingly important when production scales in ways never achieved before. A case in point is our advice to the US Department of Energy on a landmark clean hydrogen project in Utah, US.

In 2022, Clifford Chance advised the US Department of Energy’s Loan Programs Office (DOE LPO) on a US$504.4 million loan guarantee for the Advanced Clean Energy Storage Project (ACES), an innovative end-to-end solution to produce, store and use renewable hydrogen for carbonfree, year-round power in the western part of the US.

Consisting of the largest clean hydrogen storage facility in the world, the Utah-based project will combine 220 megawatts of alkaline electrolysis with two massive 4.5-million-barrel salt storage caverns. The clean hydrogen stores will be used by a new gas turbine power plant (replacing an existing coal-fired power plant) that aims to be fully fuelled by clean hydrogen by 2045. ACES is one of the first hydrogen projects of this scale in the world to receive project financing.

“This ground-breaking transaction demonstrates you can have a bankable hydrogen production and storage project and establish confidence in the market,” says David Evans, co-head of the Americas Energy & Projects Group.

The ACES project involved the massive scaling up of existing hydrogen production technology and new interface risks, considerations that can make investors nervous – partly due to the unprecedented challenges around mitigating the risks of financing such first-of-a-kind projects. It took the Department of Energy’s involvement to absorb that risk as a way of building confidence, promoting the technology and developing the market.

“These kinds of projects raise issues the market hasn’t dealt with before,” says Counsel Peter Hughes of our Energy, Infrastructure & Projects Group. “Our longstanding commitment to advise clients on the development of all aspects of the clean hydrogen ecosystem enables us to deploy the creative and collaborative problemsolving our clients require to help move the ball forward when the technology or scale of a project is different.” 

Global team supporting the energy transition

The award-winning ACES project – winner of the 2023 IFLR Net Zero Transition Award (Americas) – is just one example of Clifford Chance advising at the forefront of the energy transition market. As many of our major clients are investing in the energy transition, we are ramping up our capabilities to assist.

Our Energy Transition Initiative already provides training for our lawyers and for clients across sectors and technologies. In 2023, we established a new office in Houston, Texas, the world’s leading energy hub with our goals including further building our energy transition offering.

What’s the deal with renewable hydrogen?

Renewable hydrogen, or clean hydrogen, has the potential to power global efforts to transition from fossil fuels to cleaner energy. However, there are numerous technological, logistical, regulatory and other complexities that relate to renewable hydrogen production, storage and usage. If current challenges, including those in relation to price, scale and transport, are overcome, clean hydrogen will change the way businesses generate, store, transport and consume energy, as well as replace fossil fuel-based feedstocks in certain industrial processes. In doing so, it will help the world decarbonise sections of the economy that green electric power cannot reach.

“The use and deployment of clean hydrogen is moving much faster than we anticipated,” says David. “The initial phase has involved government support to underpin projects, but I believe we’re now seeing the technologies being scaled up and investors willing to deploy capital, and it will not be too long before such projects are able to stack up on their own economically.” 

“Two years ago, we had a presentation deck on hydrogen that few wanted to hear. Now everyone is talking about it, which clearly shows the direction in which we’re travelling,” says Peter.