The anticipated energy revolution posed by the generation and transportation of massive amounts of hydrogen has caught the attention of state regulators who have discovered that they have few hydrogen-specific regulations.

The problem comes as some utilities plan to use renewable power to produce hydrogen even as the nation begins to electrify transportation and vastly increase power demand. And it comes amid questions about the integrity of aging cast iron and bare steel gas pipelines.

The subject was the focus of a webinar at the National Association of Regulatory Utility Commissioners’ annual meeting this week, and the discussion produced more questions than answers. It revealed that most state utility commissions don’t have the regulatory language to talk about hydrogen.

Oregon Public Utility Commissioner Mark Thompson, one of the panel’s moderators, tried to bring the problem into sharper focus with this summation: Hydrogen “maybe represents a tremendous solution, but it looks unlike conventional solutions we have today in many respects. For example, the production of green hydrogen involves huge amounts of electricity to create it. Maybe it represents an interesting flexible load, like what utilities are used to dealing with.

“But then once it’s created, it could be brought back to bear and benefit that electrical system, or it might take that electricity as a feed stock; basically create hydrogen and then pour it into different industries. It might go into agriculture [for fertilizer production], might go into transportation, or to industry.

“And those are things that we as regulators don’t do, right? We don’t really look across those silos, even if it stays within the energy chain, and goes from the electric side to the natural gas side,” Thompson concluded.

Kristin Munsch, National Grid’s director of regulatory and customer strategy, also noted that the laws state regulators rely on don’t say anything about hydrogen or how it might be produced or used because “most of what we deal with was written a long time ago.”

“That’s actually not in anyone’s siting board authority right now. It’s just sort of … they don’t talk about it,” she said.

“So how do we close those gaps? And I think it’s not necessarily the stumbling block, but it’s bringing that conversation together so that you can work with the developer; work with us as the [local distribution company]; work with the regulators. And you start to find out all these little holes … are gaps that need to be filled, because the definitions just aren’t there. It wasn’t ever thought of.”

But utilities are already moving into hydrogen. New Jersey Natural Gas, a subsidiary of New Jersey Resources (NYSE:NJR), last month began operating a 175-kW solar-powered electrolyzer, producing hydrogen and then inserting about 65 kg/day into its natural gas pipelines — a first for any company on the East Coast.

Mark Kahrer, vice president for regulatory affairs at NJNG, said the project “represents a giant leap to the clean energy future.”

But flourishing in that future will involve more than building electrolyzers. It will entail a new gas delivery system.

“New Jersey Natural Gas is the first in the state [to have] eliminated cast iron mains back in 2015 and will complete the replacement of our unprotected steel mains and services by the end of this year,” Kahrer said. “By doing this, we’ve not only significantly reduced operational emissions, but more importantly, we positioned our system to be able to deliver decarbonized fuel to our customers.”

With the state planning for 7,500 MW of offshore wind and more than 14,000 MW of additional solar capacity by 2035, Kahrer said his company figures there will be times when supply and demand are out of balance.

“And that’s where New Jersey Natural Gas believes that this is a great opportunity for hydrogen to play a strategic role in balancing the supply-demand energy picture,” he said. “By strategically locating hydrogen production facilities, we’ll be able to take excess power from renewables and create green hydrogen to eject into our system, delivered for home use and heating and appliances, or for electric generation to help shave peak demands.”

For that to occur across the nation, regulators will need more than just new regulatory language. They will need to develop new regulations and the authority to balance the operations between electric and gas utilities.

Montana Public Service Commissioner Anthony O’Donnell, one of more than 50 people in the audience watching the discussion, brought up what is essentially a conundrum for regulators trying to figure out how to deal with a system like the one NJNG is planning.

“In the rush towards decarbonization, I think that many people overlook that there [will be] an extraordinary need for carbon baseline fuels production for a long time,” he said. “Relying upon [creating] a reliable system of hydrogen production from unreliable [renewable] sources of generation, I don’t see how you can cross that divide successfully. I know that production plants [and] manufacturing facilities need a constant supply of electricity. So relying upon ‘in-constant’ supply source I think presents some real problems. …

“You have the move towards electrification, and they want to electrify everything. We seem to be running counter to that [with], ‘We’ll electrify, but we’ll take some of that electricity, and we’ll turn it into a system that is transmitted by pipelines and used for other purposes.’ Is there a conflict between the people who want to electrify everything and the people who want to do hydrogen?”

Michelle Detwiler, executive director of the Renewable Hydrogen Alliance, said there does not need to be a conflict.

“Where we hear the conflict is from the ‘electrify everything’ advocacy groups, who are pushing that because their main goal is to eliminate the natural gas systems. We don’t jump into that fray. For us, it’s about decarbonizing; it’s about reducing carbon emissions. I come from the utility world as well. So, I get that there needs to be baseload [generation] for reliable power.”

National Grid’s Munsch said the demand for electrification is not always agenda-driven that way.

“There is a demand for electrification, and I think it’s driven by concerns that are valid about fossil fuel use, the way we’ve used it traditionally. I think that’s fine.

“The most cost-effective and most emissions-reducing pathway is a blend. … So, no doubt, there are parts that we need to electrify, including home heating. But you retain the gas network and decarbonize that fuel that’s going through it. You look at those industrial processes and see where you can electrify but then also where they need to have firm reliable power,” she said.

Lea Márquez Peterson, chair of the Arizona Corporation Commission, noted that the cost of hydrogen at this point is still too high. The Biden administration has set a target of $1/kg by the end of the decade.

Cost recovery for utilities rebuilding their gas pipelines or building hydrogen generation facilities is another potentially thorny problem facing regulators.

Peterson noted that her state has already faced some regulatory issues with the founding of electric truck maker Nikola (NASDAQ:NKLA) in the state. The company plans to produce heavy-duty, over-the-road semis, some powered by batteries, others by fuel cells using hydrogen.

“Our commission approved a special rate agreement between Arizona Public Service Co. and [Nikola]. It included a special contract and an innovative rate structure that will help Nikola accelerate the development of hydrogen in Arizona, while helping APS balance the grid and spur economic development in our state,” she said.

Adding to that, the U.S. Department of Energy awarded $20 million to a startup company, PNW Hydrogen, working in tandem with Idaho National Laboratory and APS to use power from the three-reactor Palo Verde nuclear plant to make hydrogen in an electrolyzer. That hydrogen will fuel a nearby gas-fired power plant also owned by APS.

“There’s talks of future hydrogen storage between Phoenix and Tucson in modified salt caverns,” Peterson added. Hydrogen storage is seen by some as a way to store energy to fuel gas turbines during times of peak demand.

Peterson recommended state regulators educate themselves on hydrogen and issues associated with it, including the cost of the gas itself. And she suggested regulators will face a steep learning curve.

“From an Arizona perspective, I’d call us in the ‘exploratory phase,’” she said.