Traditionally, large energy industry focused distribution companies have mainly provided maintenance, repair and operations (MRO) products and services to the O&G industry.
Over the past few decades, however, the business-friendly regulatory environment in Texas has attracted both established and emerging industries to the point that it has become the largest producer of wind energy and the second-largest producer of solar power in the U.S.
DXP, a Houston-based MRO distribution company with over 120 years of experience, has followed the energy transition alongside industry, diversifying its portfolio with the addition of products and services related to the renewable energy market while maintaining its presence in the O&G energy segment. As such, DXP also offers its expertise in the biodiesel, renewable diesel, emission reduction, water and wastewater and hydrogen generation industries.
Clean hydrogen production
Clean hydrogen has gained momentum over the last few years as an option for the combustion of fossil fuels. Of the many colors of hydrogen, blue, produced through steam methane reforming (SMR) with carbon capture, and green, generated by electrolyzers using renewable electricity, have been the most sought after. Up from the handful of companies a few years ago, there are now dozens of domestic and multinational companies competing to become the golden standard for clean hydrogen production. Nothing has given the clean hydrogen industry a boost like the one from the Inflation Reduction Act (IRA). Since the bill was passed, the market for electrolysis-and SMR-based hydrogen modules, and the balance of plant equipment, has exploded. Incumbents, as well as newcomers in the hydrogen sector and subsidies for large hydrogen hubs, are vying for production and investment dollars.
With proven capabilities, engineers with DXP can build modular gray, blue and green hydrogen generation systems. Hydrogen modules are either build-to-order or engineered to optimize our customer’s process requirements — the latter utilizing Aspen HYSYS ® process simulation software. Whether skid mounted or containerized, our packages are designed as truckable modules for ease of transportation worldwide and minimum site installation time.
The IRA
The IRA includes $369 billion in investments in clean energy production. While countries in Europe and our neighbors to the north have elected to enact carbon taxes for GHG emissions, our country has chosen to create a set of tax reductions and direct payments for those deciding to invest in clean energy. The IRA also includes tax credits for the purchase of hydrogen fuel cell vehicles, which are an integral part of the hydrogen economy.
IRA production tax credits
For the first time in history, investment in clean energy matched investment in fossil fuels from 2022. A big contributor to this was the introduction of the IRA, which promised a 10-year clean hydrogen production tax credit (PTC). In round numbers, the PTC offers up to $3 per kg of hydrogen generated for green electricity and around $1 per kg of gray hydrogen. This is important because green hydrogen production typically costs between $6 and $9 per kg. The tax credit makes hydrogen competitive with other energy sources and thus incentivizes investment in hydrogen production technology.
In addition to the PTC, hydrogen producers have the option to apply for an investment tax credit of up to 30% for investments in clean hydrogen production facilities. Although the IRA was passed over a year ago, it was only in late December 2023 that the U.S. Treasury and IRS released proposed regulations for the clean hydrogen tax credit. These regulations provide definitions and procedures for administering and claiming the credit, which is critical for hydrogen producers to determine the viability of their projects and gain the required investment from their partners and shareholders. The hope is that these regulations will provide a much needed final push required by most companies investing in the hydrogen economy.
The modular concept
Even the most conservative forecasts expect the green hydrogen market to grow tenfold between now and the year 2030. This would result in energy market growth that we have not seen since the heydays of the offshore O&G market or the most recent shale oil production boom.
Leaning on our experience gained during those decades of high equipment demand as well as integration experience in the hydrogen space, DXP is able to present a complete value proposition to our customers that encompasses our ability to engineer-to-order the first iteration of modular equipment design. This keeps in mind a future configure-to-order mentality that allows us to take advantage of economies of scale and reduce production costs and timeframes. Coupled with our North American-wide service and MROP supply network of over 200 locations, DXP is a valued partner for the full hydrogen supply chain.
Hydrogen hubs
Deploying modular hydrogen production equipment is a way to rapidly grow production capability around the country. As part of our government’s investments in the energy transition, the DOE has invested $7 billion to launch seven Regional Clean Hydrogen Hubs (H2Hubs) across the U.S. to accelerate the commercial-scale deployment of low-cost clean hydrogen. Seven large H2Hubs have been selected for award negotiations to build complete hydrogen hubs — production, storage, delivery and end use of clean hydrogen — throughout the country. From California to the upper Midwest, the Texas Gulf Coast to the Mid-Atlantic and the Midwest all the way to the Pacific Northwest, these areas are covered by DXP’s extensive network of service locations in North America with the highest level of technical expertise in industrial distribution.
Controls and automation complete the cycle
Adding to our in-house automation and process control capabilities, alongside our equipment expertise, we offer complete design, fabrication, monitoring and control of your rotating and packaged equipment. The controls can be skid mounted and prewired, or remote mounted in an unclassified electrical area. Optionally, the control system can interface with the customer’s plant control system. A typical control system includes a National Electrical Manufacturers Association enclosure, power distribution components, control power components, a programmable controller and on-skid wiring in conduit.
DXP is your partner in developing, implementing and maintaining your process and rotating equipment. We combine unparalleled engineering depth to the most extensive service and support network in North America. Our DXP Renewables team is able to offer the best solution for your application, from hydrogen production equipment to CO2 sequestration and biofuel handling to process automation and control.
For more information, visit dxpe.com.
