VX Excerpt: The Future of Clean Hydrogen in Los Angeles

Maressa Brennan provides independent oversight over rate making and investment decisions for the Los Angeles Department of Water & Power (LADWP). Brennan’s article in the Ratepayer Advocate’s Office Blog discusses the clean energy future of Los Angeles in the wake of the U.S. Department of Energy (DOE) cancelling up to $1.2 billion in federal funding for California’s clean hydrogen hub. Brennan emphasizes the importance of Clean Hydrogen for ratepayers and the path ahead for California’s energy system, especially as it relates to LA100.

“What remains to be seen is how LADWP adapts to the loss of federal support in the best interest of ratepayers – keeping the door open for clean hydrogen while also advancing other solutions that balance decarbonization with affordability.” - Maressa Brennan

In early October, California’s broader clean energy community were informed that the U.S. Department of Energy (DOE) had cancelled up to $1.2 billion in federal funding for the development of California’s clean hydrogen hub. The funding was intended for ARCHES (Alliance for Renewable Clean Hydrogen Energy Systems), a statewide public-private partnership established to accelerate the hydrogen economy and support California’s transition to renewable energy. 

ARCHES was one of seven hydrogen hubs initially selected to receive DOE funding to advance clean hydrogen projects across California. Among its planned initiatives, ARCHES was expected to help support LADWP’s modernization and decarbonization of the aging Scattergood Power Plant. Located on the coast between LAX and Manhattan Beach, LADWP has plans to upgrade two of Scattergood’s natural gas power units to incorporate clean hydrogen – enhancing regional energy reliability and reducing emissions.  A successful demonstration of clean hydrogen integration at Scattergood can also serve as a proof point for the use of hydrogen in power generation and as a pathway towards a firm, reliable, and carbon-free electric grid. 

Why Clean Hydrogen’s Use in the Energy System Matters for Ratepayers

For decades, large power plants in Los Angeles, like Scattergood, have provided power to supply and balance LADWP’s grid and demand. This has been especially true during emergencies when the power system is the most stressed, like in January 2025 when the wind and fire storm disrupted power lines throughout the Los Angeles Basin. According to LADWP analysis, and backed by external reviews, without system resources to generate and balance energy within the Los Angeles Basin, the City and ratepayers would face greater risks of shortages, higher costs, and potential outages.

Power plants like Scattergood rely on fixed infrastructure and a readily available fuel supply, which is traditionally natural gas. However, since burning natural gas emits carbon dioxide and other air pollutants, maintaining firm capacity facilities like Scattergood presents a significant challenge for LADWP in meeting its decarbonization goals. This is where clean hydrogen is expected to come in. When produced using renewable energy, hydrogen can serve as a carbon-free fuel, offering an alternative to natural gas while still providing the firm power needed to support grid reliability for the city. 

While installing and operating infrastructure needed to use clean hydrogen at plants like Scattergood entails a cost, it has been a core part of LADWP’s future planning portfolio to replace fossil fuels. Looking forward though, the recent decision by DOE to withdraw its funding for ARCHES raises new uncertainties, and questions for the utility.

Navigating the Path Ahead for the Energy System Amidst Clean Hydrogen Uncertainty 

Our office asked several developers in the regional hydrogen economy about the impact of the federal announcement and loss of funding, and a consensus was clear – DOE’s action to withdraw its funding doesn’t close the door on clean hydrogen. While the DOE funding was $1.2 billion, over $10 billion in private sector cost share remains committed to ARCHES. Further, leaders in California’s state government have already made it clear the state remains committed to clean hydrogen as a central pillar for broad decarbonization. 

What remains to be seen is how LADWP adapts to the loss of federal support in the best interest of ratepayers – keeping the door open for clean hydrogen while also advancing other solutions that balance decarbonization with affordability.  The good news is that since clean hydrogen was never meant to be the entire solution to LADWP’s clean energy needs, many of those other solutions have already been identified, and efforts are already underway. While not exhaustive, solutions of note include:

• Investing in Widespread Power Infrastructure – Strategically expanding and upgrading energy transmission and distribution systems to enhance energy balancing, while also supporting renewables, storage and the electrification of end use technologies. Additionally, investments in reliability, generation modernization, climate adaptation planning, and other initiatives will ensure LADWP decarbonizes its power grid in a way that is reliable, affordable, and equitable.

• Updating Energy Rates & Incentive Structures– Updating rates to better reflect and manage renewable supply and peak demand, and ensuring solar and distributed generation incentives are structured fairly, can support clean energy adoption while more accurately apportioning overall system costs and encouraging smarter energy use. Distributed energy resources, such as local solar, local energy storage, energy efficiency, demand response, and electrification help ensure utility customers can participate in LADWP’s clean energy transition.

• Integrating Smart Technology: Advanced technology and distributed energy resources to leverage real-time data to better manage use, improve reliability, and reduce costs.

At a minimum, the path forward for the energy system requires a holistic ‘all of the above’ strategy.  And with an upcoming release of DWP’s analysis on LA100 implementation to meet regional decarbonization goals by 2035, the utility’s focus on the energy solutions being pursued will be pushed further into the public eye. 

Looking Forward

As energy policy and technology shifts, a continued focus on balancing affordability, reliability, and decarbonization is critical to ensure Los Angeles navigates the energy transition in the best interests of ratepayers.  While current federal actions may shift the landscape, they also underscore the importance of local leadership and collaboration in building a cleaner, more reliable, and more equitable energy system. By keeping energy system reliability and both economic and environmental sustainability at the core of every decision, and by continuing to execute a broad range of solutions for achieving LA’s energy and environmental goals, LADWP can retain a focus on meeting today’s challenges while not over relying on any one solution.