Chesapeake Utilities sees opportunities in hydrogen
DOVER — With Delaware among a collective of states positioned to develop one of the hydrogen hubs in America, Chesapeake Utilities sees an opportunity to leverage its existing network to help transport the fuel source.
The utility company has 2,000 miles of distribution mains in several states, and is banking on that infrastructure to best position it as a key business in the rising hydrogen hub comprising businesses and universities. Chesapeake Utilities is a member of the Mid-Atlantic Clean Hydrogen Hub (MACH2), a nonprofit collective of businesses and higher education institutions in Delaware, southern New Jersey and southeastern Pennsylvania.
In October, the U.S. Department of Energy awarded the MACH2 $750 million in funding, as one of 33 to receive part of the $7 billion in overall funding.
“The selection of MACH2 presents significant opportunities for us and our fellow partners to promote hydrogen development and deployment across multiple uses,” Chesapeake Utilities Vice President Beth Cooper told investors on an earning call on Nov. 3 “We are excited to work with these partners in furtherance of our mission to deliver hydrogen based solutions that support a more sustainable future.”
Researchers have increasingly come to believe that hydrogen, the most abundant element in the universe, could be a carbon-free fuel source of the future, powering commercial vehicles, ships and planes without harming the environment. President Joe Biden and his administration has set a goal of lowering hydrogen costs to $1 per 1 kilogram in a decade, opening it to a vast array of uses.
In some ways, Chesapeake Utilities has been ahead of the curve. In early 2022, the company completed a pilot project to use 4% hydrogen mix to run equipment at the turbines at Eight Flags at Amelia Island, Fla. Using its Marlin Gas Services branch the company transported hydrogen to the distribution main it owns at the site.
Chesapeake’s Marlin Gas Services also retrofitted three steel tankers to transport the hydrogen into an interconnection point. Those tankers have a tighter weave to accommodate the smaller hydrogen molecules, opening up possibilities in transporting the fuel mix to other customers in the network.
Chesapeake Utilities has 101,000 residential, commercial and industrial customers, and right now, it’s assessing other opportunities for hydrogen customers.
Another way Chesapeake Utilities hopes to lean into hydrogen is with workforce training. In January 2021, the company opened Safety Town, a million-dollar project that offers a fully immersive experience for employees and contractors while out on the job. The site is on a two-acre parcel at Chesapeake Utilities’ headquarters in Dover, and offers training on emergency response, propane tanks, underground utility line excavation and more.
“For us specifically, one of the areas that we feel we can play a big part in is on the training and certainly on the transportation fuel side of those particular endeavors,” Cooper said. “We also see opportunities as we start to think about hydrogen and its utilization again on the transportation side.”
Chesapeake Utilities reported a net income, excluding pending expenses from buying Florida City Utilities, was $12.2 million for the third quarter of 2023. Despite struggles with rate increases and warmer temperatures reducing the need for natural gas to heat homes, the company also adjusted its gross margin to $7.6 million, or by 8.8%, from the prior year.
“Despite continued challenges … in the first half of the year, Chesapeake Utilities has delivered strong performance on a year-to-date basis,” Chesapeake Utilities CEO and President Jeff Householder wrote in the third quarter report. “Not only do we see additional growth opportunities to drive incremental growth in our legacy businesses, but we are excited about the additional opportunities that the FCG acquisition will provide once it is a member of the Chesapeake family of businesses. Across the organization, our team remains committed to executing on our growth strategy, achieving another record year of performance.”