Shell has quietly scrapped previously announced plans to build 48 new light-duty hydrogen filling stations in California, despite having been awarded $40.6m of government grants back in 2020 for the initiative.

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And last month, the oil giant closed five of its existing hydrogen refuelling stations in the state, leaving it with only three in operation.

“We can confirm that Shell has discontinued its plan to build and operate additional light-duty vehicle fueling stations in California,” a company spokesperson tells Hydrogen Insight.

“We will continue to invest in hydrogen in a disciplined manner, with a focus on hard-to-abate sectors such as industry and heavy duty transport and emphasis on key regions where we have competitive advantage and strong adjacencies with our existing business.

“Shell remains active in hydrogen in California where we operate three heavy-duty stations as part of project ZANZEFF: Zero and Near Zero-Emission Freight Facilities Shore to Store Project.”

In other words, the company has now closed all its car-focused hydrogen filling stations in California and has formally scrapped plans to build more.

On 9 August, Shell announced that it “will temporarily close hydrogen operations at five light duty stations [in California] due to operational issues”, adding: “It is unknown at this time when each site will reopen”.

However, the statement to Hydrogen Insight suggests that these closures — in San Francisco (two), Sacramento, Berkeley and Citrus Heights — are permanent.

In October last year, Hydrogen Insight exclusively revealed that Shell had closed down its three hydrogen filling stations in the UK, which could only cater to cars, with the company stating that it would be refocusing on large vehicle refuelling.

Formal rejection of funding

Shell had been awarded $7.3m from the California Energy Commission (CEC) in December 2020 for the first eight of the 48 new filling stations, from a total allocated pot of $40.58m (subject to future appropriations and funding allocations).

However, the funding appears to never have been actually been sent to Shell.

In July, the company formally rejected the funding, telling the CEC that “political and economic uncertainty in the initial stages of market deployment present a significant risk in further investment”, according to a letter obtained by local news website CalMatters through a public records request.

“These barriers need to be overcome in order to enable future investment from Shell in this segment of the market,” said the note, written by Abhishek Banerjee, Shell’s hydrogen commercial manager in the US.

He also wrote that the project had encountered difficulties getting permits and sourcing green hydrogen, and faced high construction costs.

The California-based trade body Hydrogen Fuel Cell Partnership states on its website that H2 filling stations cost an “estimated” $2m to build, a sum that might be difficult to ever recoup, given that only 17,284 fuel-cell cars have ever been sold or leased in the state.

California’s largest H2 fuel retailer, True Zero, which operates 37 of the 53 hydrogen filling stations in the state, recently hiked the price of H2 at all its pumps to $36/kg, up from around $30/kg. As recently as April 2021, it was charging just $13.14 per kilo.

According to Hydrogen Insight calculations, this now means a Tesla EV is now roughly 14 times cheaper to run than a Toyota hydrogen car in the state.

Only 2,707 fuel-cell cars were sold from California dealerships in 2022, compared to 3,341 in 2021, which was an all-time high supported by massive discounts.

However, the 2,707 figure is still the second highest annual mark since FCEVs first went on sale in the state in 2012.