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CALISTOGA, Calif. — A quaint northerly outpost of Napa Valley wine country, Calistoga has struggled to keep the lights on when wildfires strike the region. Now it’s got a brand-new microgrid to run the whole town for days on end without any onsite fossil fuels, just batteries and liquid hydrogen.
After disastrous conflagrations in 2017 and 2018, utility Pacific Gas & Electric began preemptively shutting off power lines to avoid sparking fires amid dangerously dry, windy conditions.
“We were the first community in all of PG&E’s network that was getting our power shut off to protect us,” said Calistoga City Council member Lisa Gift. “By 2019 we were one of the first communities to have a microgrid in all of PG&E’s network, and that was being powered by diesel generators.”
PG&E arranged a bank of truck-based diesel generators to sit in the town during fire season. When the utility cut grid power, the generators kicked on, belching smoke in a particularly beloved pocket of the 5,000-person community.
“We’re a small town, so they would come up and they’d be polluting the environment, taking up our dog park — loud, gross, noisy,” Gift recalled.
Now the diesel generators are gone and the park has been turned back over to Calistoga’s canine companions.
On a slim parcel of city land next door, publicly traded energy-storage company Energy Vault installed lithium-ion batteries and a 234-foot, reinforced-steel tank for liquid hydrogen (designed to withstand a roaring fire, should it ever come to that) that runs a bank of hydrogen fuel cells. Altogether, this compound should be able to meet Calistoga’s electricity needs without any power from the broader grid. It’s contracted to produce up to 8.5 megawatts for 48 hours, whenever PG&E shuts off grid power due to fire concerns. Refilling the hydrogen tank could let it run for several days more.
“Even though we’re taking elements — fuel cells, batteries, liquid hydrogen storage and distribution — that have been used before in commercial settings, they’re coming together for the first time as resiliency,” said Craig Horne, Energy Vault’s senior vice president for advanced energy solutions, in an interview before the project’s unveiling in early August.
Fans of hydrogen hail it as a solution to just about any entrenched decarbonization challenge, from heavy transport to steelmaking to on-demand power. But how hydrogen is produced makes a huge difference in its climate impact; seemingly clean sources can actually rack up major carbon emissions for negligible benefit. For now, the clean hydrogen economy remains largely speculative, with hardly any truly clean hydrogen being produced or any real projects using it. Many planned clean hydrogen projects have vanished without a trace, following a short-lived boom fueled by Biden-era support.
In Calistoga, Energy Vault has tapped hydrogen to deal with a very specific set of constraints — delivering energy without local emissions, over multiple days, in a tight footprint — but the cleanliness of that hydrogen is a more complicated issue than public descriptions of the microgrid suggest.
The key players all have a lot riding on the project.
Energy Vault, which previously raised several hundred million dollars in a singular bid to store energy with multi-story robotic cranes that stack blocks, wants to build a new long-duration storage business around this hydrogen microgrid showcase. Plug Power, the financially challenged hydrogen company, points to Calistoga as its largest deployment of hydrogen fuel cells (a beefy 8 megawatts, after 28 years of hard work). And PG&E has orders from regulators to add more clean energy microgrids in communities where it regularly cuts off power — Calistoga was its first delivery on that directive, after a few years of soliciting proposals and a couple more years of permitting and construction.
“Community microgrids are the future of the energy system,” said Craig Lewis, who advocates for such projects as executive director of the Clean Coalition nonprofit. The Calistoga microgrid is “a commercial-scale experiment, and I’m grateful for it.”
The results of that experiment will take time to analyze. It could unleash a new, replicable model for premium-priced community-level backup power. Or the quirkiness of the design and the murkiness of hydrogen’s supply chain and emissions could make it a quixotic outlier of questionable climate value.
The Calistoga microgrid poses an answer to the question of how to provide a few days of backup power to a small town in a small space, without worrying too much about cost. The limitations drove the design, which turned out quite unlike anything built thus far.
Energy Vault had to figure out how to pack 293 megawatt-hours of storage into just two-thirds of an acre. The lot used to hold debris from city works, like old bits of sidewalk and pipes, Horne said.
Lithium-ion batteries have proven themselves capable of storing power, be it as a Powerwall in someone’s garage or as a large-scale grid storage facility. But to store nearly 300 megawatt-hours, grid battery enclosures need more acreage than was available to lease from the city. Even if enough batteries could fit, the auxiliary power consumption for keeping them safely cooled would pose a challenge for a project that’s supposed to mostly sit around waiting for an emergency event.
Hydrogen gas can be liquefied by cooling it to ultra-low temperatures, which unlocks greater energy density. When converted back to gas and run through fuel cells, it produces a stream of electricity and no byproduct besides water vapor. That core technology powers hydrogen vehicles, though their cost and inconvenience make for a widely derided car-ownership experience. At Calistoga, the hydrogen flows directly to six Plug Power GenSure 1540 fuel cells, boxy containers with cooling units stacked on top, making them about two stories tall.
The engineers added a small lithium-ion battery (7.7 MW/11.6 MWh) to perform “black start,” the complicated and crucial task of rebooting an electrical system after a complete blackout, Horne noted. The battery also buffers the output of the system while the hydrogen gets up and running. Then the power flows to Calistoga’s grid, which, when PG&E shuts off the transmission lines, will be fully islanded from the surrounding network.
The hydrogen is stored onsite in an 80,000-gallon tank, manufactured in Minnesota by Chart Industries. The tank holds enough to power the fuel cells for about two days, but Energy Vault will try its best to keep the lights on beyond the contracted timeframe, Horne said. So the company made sure the tank can be refueled while it’s in active use.
“The task is to squeeze toothpaste into a toothpaste tube that was being squeezed,” Horne said. “That’s what we proved in our acceptance testing, running for multiple hours while the fuel cells were running and a tank trailer here in the driveway is pushing liquid hydrogen into the tank itself.”
The microgrid’s promise as a clean energy breakthrough, of course, hinges on the supply of clean hydrogen, but supply chains are barely getting started. Almost all commercial hydrogen is currently made from methane gas, a fossil fuel, through a procedure called steam methane reforming that sends the carbon dioxide byproduct straight into the atmosphere.
For hydrogen to stake any claim as a climate solution, it needs to be made without massive carbon emissions. That usually involves an alternative production method called electrolysis, which separates hydrogen from water using electricity. But this method can produce even more emissions than the dirty methane version if the electrolyzers are drawing power from the grid rather than dedicated renewable sources like solar and wind (see this previous Canary Media coverage for a detailed account of why that’s the case).
Energy Vault describes the hydrogen it’s using in Calistoga as “clean,” which Horne clarified as meeting the federal standard of no more than four kilograms of carbon dioxide emitted per kilogram of hydrogen produced. But he declined to name the source. Notably, California has subsidized hydrogen fueling stations for over a decade but still hasn’t managed to develop a clean hydrogen supply in-state. So for Calistoga’s hydrogen to be clean, it must be coming from somewhere else.
During a tour of the microgrid, Deepesh Goyal, vice president of stationary power at Plug Power, told Canary Media that Plug Power currently supplies hydrogen from its electrolyzer site in Georgia, which runs on grid power. More than half of Georgia’s electricity comes from fossil fuels, so that electrolysis incurs substantial power-plant emissions. Plug Power buys credits for clean energy supply to compensate for this, Goyal said.
To meet the highest federal standard for clean hydrogen, producers need to obtain clean power matched to their consumption on an hourly basis in the areas where they operate. Plug Power did not respond in time for publication to questions clarifying what type of credits it buys. But a spokesperson for Energy Vault told Canary Media that currently there aren’t any facilities that could supply Calistoga with liquid hydrogen from electrolysis powered by time-matched, dedicated clean electricity, and the earliest such facility is targeting completion in 2026.
Goyal also said some of Calistoga’s hydrogen comes from an unnamed partner in Las Vegas that uses renewable natural gas (RNG) as its feedstock. As it happens, legacy gas supplier Air Liquide opened a steam methane reformer in that area a few years ago to serve California’s demand. Air Liquide says it can substitute RNG for the usual methane, which would make the resulting hydrogen carbon-negative according to the convoluted calculations of California’s clean fuels bureaucracy. It’s still hydrogen made by splitting methane and releasing carbon dioxide, but it looks good on paper thanks to controversial rules that privilege certain politically connected providers of RNG.
If someone were to design a climate solution from a blank slate, they probably wouldn’t run electrolyzers on grid power in Georgia in order to load the super-cooled hydrogen onto diesel-powered tankers and haul it more than 2,800 miles to Northern California, where it will sit around almost every day awaiting a utility power outage.
“We still have to truck in that hydrogen,” said Gift. “That’s not ideal, but we were trucking in the diesel, and we were trucking in the diesel sometimes three times a day and burning that diesel.”
One incontrovertible fact is that the microgrid doesn’t combust anything onsite, so the operations within the fenceline emit almost no carbon emissions and don’t impact air quality. But it will be hard to gauge the real climate impacts of such a project until a more verifiably clean and geographically localized hydrogen supply chain develops. Several companies have said they will build truly green hydrogen production in the coming years. That task has only grown more difficult with the Trump administration’s efforts to thwart renewables development and vastly curtail clean hydrogen tax credits.
The other make-or-break variable for hydrogen-backed resilience is how much it costs. Liquid hydrogen is an expensive, specialty fuel only produced by a handful of suppliers in the U.S., and clean liquid hydrogen is even rarer.
For this first project, Energy Vault didn’t need to worry about consumer price sensitivity. The city of Calistoga isn’t paying Energy Vault for backup power: PG&E is paying the company to provide this service, out of funds socialized across the utility customer base. In fact, Calistoga is making some money, since Energy Vault leased the land from the municipality for 10 years.
The project’s total price tag has not been made public. Regulators allocated up to $46.3 million for PG&E to spend on the endeavor. Energy Vault closed $28 million in project financing this spring to support construction. (The company also said on Thursday that it has raised $300 million to launch Asset Vault, a subsidiary that will build, own, and operate storage projects, with Calistoga as one of two anchor properties.) Horne allowed that the hydrogen microgrid costs more than diesel generators up front, but argued it can be competitive in terms of operating costs, given all the hassles associated with diesel.
“We can do more and waste less, and so that’s how we can be more cost effective,” he said.
The regulatory authorization paints a different picture. The California Public Utilities Commission explicitly allowed PG&E to spend more money than the diesel generators cost in order to test a new model for cleaner resilience.
“This project was supported by a CPUC plan that said we could build a solution that costs no more than twice what it would cost to deploy diesel generation over 10 years,” said Jeremy Donnell, a senior manager for microgrid strategy and implementation at PG&E. “It’s a bit of an arbitrary marker, but that’s what was laid out, and this project did come in under that threshold.”
“But still, we have a ways to go to bring the cost down,” Donnell added. “So hopefully, through implementation of this first project, Energy Vault learned a lot, the industry learned a lot on how to integrate these solutions in future projects.”
Energy Vault hopes to improve the project economics by upgrading the site to allow regular power exports to the grid. Currently, the system is configured to only push out power when PG&E has scheduled a shutoff event; that means the microgrid sits idle almost every day of the year (and is unavailable for unforeseen outages, like if a tree falls on a key line). But with the right permissions and technical tweaks in place, Energy Vault expects to use the battery, and potentially even the hydrogen, to send power to California’s grid at particularly lucrative times.
“We can now have a viable second revenue stream outside of providing that resiliency service, without compromising our ability to provide the resiliency service,” Horne said. PG&E amended its contract this summer to clarify that Energy Vault is allowed to pursue this, provided it does not interrupt delivery of the required resilience services.
Going forward, Calistoga will serve as a showcase for Energy Vault’s new “H-Vault” product line, marketed as a high-tech option for long-duration clean energy needs. Hydrogen tanks will join gravity-based block stacking and conventional lithium-ion batteries as the company’s core offerings.
For the people of Calistoga, the project softens the upheavals of living through climate change–induced extreme weather, without all the downsides of onsite fossil fuel combustion.
“Is it absolutely perfect? No,” Gift said. “But as a society, it is about making that next best right step. And for us in our community, this was that next best right step.”
For Energy Vault and the budding hydrogen industry, the next right step will be expanding hydrogen production that’s definitively low-emissions, and closing the 2,800-mile gap between supply and demand.
Wendy Becktold contributed reporting from Calistoga.
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