The California Energy Commission is helping fund the construction of a $2.8 million hydrogen fueling station for fuel-cell vehicles -- and it's happening a few hundred yards from where I live. Regular readers of GTM might savor the irony of this development, given GTM's largely critical coverage of fuel cells.

The hydrogen station is on Skyline Boulevard in Woodside, California, just 20 minutes from Silicon Valley proper. Skyline is a curvy, redwood-lined mountain ridge road that attracts motorcyclists and cyclists and feels remote, despite its proximity to the center of the world’s entrepreneurial capital.

And now it's a stop on the hydrogen highway.

The CEC is investing $46.6 million to spur the development of retail hydrogen refueling stations in California, with policy intent on supporting charging networks for battery EVs as well as fuel-cell EVs. Funding from the Commission’s Alternative and Renewable Fuel and Vehicle Technology Program (ARFVTP) went to Air Liquide, FirstElement Fuel, HyGen Industries, Institute of Gas Technology, ITM Power, Linde and Hydrogen Technology & Energy Corporation.

HTEC is the builder of my local hydrogen pump, and the recipient of $2,125,000 of the total $2.8 million needed to remodel the existing gas station to support a daily hydrogen capacity of 100 kilograms. (A Toyota Mirai fuel-cell EV holds 5 kilograms in its storage tanks.)

With about 100 kilograms of hydrogen storage capacity, the station would receive deliveries of gas, as well as generate its own hydrogen with a small on-site electrolyzer. According to Bob Boyd of HTEC, who recently spoke at a Woodside planning commission meeting, "A fill-up of 4 to 5 kilos would take a car 300 miles and cost between $40 and $50." According to the CEC, "Hydrogen sold through refueling stations funded by the CEC must be 33 percent renewable," meaning produced from biogas, or from water electrolysis using renewable energy sources. The CEC will also provide a subsidy of up to $100,000 per year for station operating costs for three years.

I spoke with Colin Armstrong, CEO of British Columbia-based HTEC, at the construction site this week. He said that he sees the price of hydrogen production coming down and that a "peaker electrolyzer" could help with grid balancing. The firm had to install a new transformer and spent "close to $100,000 in permitting costs" on this, its flagship project.

California aims to create a 100-station network of hydrogen filling stations to support the incipient surge of consumer fuel cell vehicle ownership. "To date, the [CEC's Alternative and Renewable Fuel and Vehicle Technology Program] has invested more than $400 million in at least 260 alternative fuel, infrastructure, and vehicle technology projects," according to a release. Funding for the program comes from vehicle registration surcharges, and smog check and license plate fees.

Fuel-cell vehicles have zero emissions at the tailpipe, producing just water vapor and heat. But as GTM's Julia Pyper recently reported, there are drawbacks to fuel-cell vehicle technology: "Hydrogen production is an inefficient and energy-intensive process, particularly when compared to generating electricity for direct use in plug-in cars." But, she adds, while battery electric vehicles are more efficient than fuel cell vehicles (FCVs), "They’re both more efficient than gasoline-powered cars. There are also tangible benefits to reducing local tailpipe pollution and switching to domestically produced transportation fuels. For FCVs, that means using natural gas to make hydrogen, or using excess renewable energy to power hydrogen production through electrolysis."

But the cost comparison is stark. Hydrogen refueling stations are costing California from $1 million to $2.1 million each. Contrast that with Level 2 EV charging stations costing $5,000 to $15,000, or $60,000 for DC fast chargers.

Still, despite the iffy thermodynamics of the hydrogen molecule's supply chain, and the ridiculous cost of establishing a hydrogen fueling infrastructure, California is trying to build that fueling infrastructure in the hopes that the cars will come.

A recent report from the California EPA Air Resources Board noted that there are 331 fuel-cell electric vehicles registered with the California DMV as of July 2016, up from 152 vehicles the year before. That same report projects the on-road population will to grow to 6,650 in 2017, 13,500 vehicles in 2019 and 43,600 vehicles in 2022.

I'll be reporting on the progress of the station and hydrogen demand in the Santa Cruz mountains over the coming months.