To: Purchasing Division
From: Alexus Merino, Assistant to the City Manager
CC:George Harris, Finance and IT Director
Date: February 27, 2024
Subject: Sole Source Justification – Element Resources, Inc.
Memo: As part of the City’s objective, Element Resources, Inc., upon Council approval, will provide the City with a green hydrogen production facility in the City of Lancaster, demonstrating the efficacy and efficiency of producing hydrogen using their proprietary and patented technologies.
Element Resources, Inc. specializes in green hydrogen production and has developed a plan for a state-of-the-art facility, the Lancaster Clean Energy Center, which utilizes photovoltaic (PV) solar arrays for power supply and advanced electrolyzer catalysts for hydrogen production. This facility includes 400 MWe of hydrogen production capacity and both liquefied and gaseous hydrogen storage, making it one of the most advanced hydrogen production facilities in the country.
Element Resources, Inc. is a Houston-based development company with offices in San Diego, California. They hold significant expertise in hydrogen production technologies, including patented large-capacity, low-cost underground hydrogen storage solutions. Their proprietary methods ensure compliance with California Air Resources Board (CARB) standards and contribute to the City’s sustainability goals.
The City of Lancaster has a formalized partnership with Element Resources through a Memorandum of Understanding (MOU) established in 2023. This partnership aims to develop hydrogen infrastructure projects, enhance local job opportunities, and support California’s ambitious emissions targets. The Lancaster Clean Energy Center will bring about 35 new high- paying, permanent jobs and hundreds of skilled union positions during the construction phase.
Element Resources, Inc. is the only consultant utilizing their proprietary and patented models and tools to produce hydrogen. Their innovative approach and proven track record in deploying commercial-scale hydrogen projects make them the ideal partner for the City. Additionally, Element Resources is uniquely positioned to provide the City with the required scale of hydrogen—an average of 22,000 kilograms per day—at the competitive prices of $8.50 per kilogram for liquefied hydrogen and $6.75 per kilogram for gaseous hydrogen. No other vendor can supply hydrogen at this scale and price point while ensuring compliance with the necessary environmental standards.
Engaging another consultant would not only disrupt this established partnership but also contradict any cost savings due to the need for additional resources and expertise. Therefore, the City has no cost benefit to obtain additional quotes from other consultants for this project.
Your approval is requested to find Element Resources, Inc. as a sole source vendor.
Please get in touch with Alexus Merino at ext. 6081 if you have any questions.
APPROVAL:
Purchasing Agent – Purchasing Division, Finance Date