Shell, a major player in the energy industry, has quietly abandoned its plans to construct 48 new light-duty hydrogen filling stations in California.
This surprising move comes despite the company being awarded substantial government grants, amounting to $40.6 million, for this very initiative back in 2020. Furthermore, Shell recently closed five of its existing hydrogen refueling stations in the state, leaving only three still in operation.
A spokesperson from Shell confirmed this shift in strategy, stating, “We can confirm that Shell has discontinued its plan to build and operate additional light-duty vehicle fueling stations in California.” The company emphasized its commitment to hydrogen in specific sectors, such as industry and heavy-duty transport, while focusing on regions where it maintains a competitive advantage.
In essence, Shell has shuttered all its hydrogen filling stations that cater to cars in California and formally abandoned plans to develop more. Earlier this year, in August, Shell temporarily closed hydrogen operations at five light-duty stations in California due to operational issues. However, this recent statement to Hydrogen Insight suggests that these closures may now be permanent.
This isn’t the first time Shell has shifted its hydrogen strategy. In October of the previous year, it closed down its three hydrogen filling stations in the UK, which were designed primarily for cars. The company stated its intention to refocus on large vehicle refueling.
The decision to withdraw from its California car-focused hydrogen filling station project may be linked to a series of challenges Shell encountered. These include difficulties in obtaining permits, sourcing green hydrogen, and facing high construction costs. According to Abhishek Banerjee, Shell’s hydrogen commercial manager in the US, the initial stages of market deployment faced political and economic uncertainties that presented significant investment risks.
Adding to the complexity of the situation, building hydrogen filling stations is costly, with estimates suggesting a price tag of approximately $2 million per station. This high cost, combined with the limited adoption of fuel-cell vehicles in California, makes it challenging to recoup the investment. The state’s largest hydrogen fuel retailer, True Zero, also recently raised the price of hydrogen at its pumps, further diminishing the cost-effectiveness of hydrogen vehicles.
As of 2022, only 2,707 fuel-cell vehicles were sold in California, a decrease from the previous year’s 3,341. However, this figure still represents the second-highest annual sales since fuel-cell electric vehicles (FCEVs) were introduced in the state in 2012.
Shell’s decision to abandon its California hydrogen station project reflects the challenges and evolving landscape of hydrogen adoption in the automotive industry. It raises questions about the future of hydrogen fuel cell vehicles in California and the broader green energy landscape.