$100 million boost for large-scale hydrogen plants

The Australian Renewable Energy Agency (ARENA) has conditionally approved $103.3 million for three commercial-scale hydrogen projects through the Renewable Hydrogen Deployment Funding Round.

The three successful projects are:

• Engie Renewables Australia: ARENA will provide up to $42.5 million towards a 10MW electrolyser project to produce renewable hydrogen in a consortium with Yara Pilbara Fertilisers at the existing ammonia facility in Karratha, Western Australia
• ATCO Australia: ARENA will provide up to $28.7 million towards a 10MW electrolyser for gas blending at ATCO’s Clean Energy Innovation Park in Warradarge, Western Australia
• Australian Gas Networks Limited (AGIG): ARENA will provide up to $32.1 million in funding for a 10MW electrolyser for gas blending at AGIG’s Murray Valley Hydrogen Park in Wodonga, Victoria

To support these projects ARENA has increased the funding envelope, originally $70 million, by $33.3 million. In total, these three projects have a combined project value of $161 million. 

At 10MW, the electrolysers in these hydrogen plants will be among the largest so far built in the world. 

The projects will also play a significant role in supporting commercial-scale deployments of renewable hydrogen in Australia and help progress Australia’s pathway to achieving the Federal Government’s goal of ‘H2 under $2’.

Engie will use renewable hydrogen to produce ammonia at the Yara Pilbara Fertilisers site, while ATCO and AGIG’s projects will use renewable energy to produce renewable hydrogen for gas blending into existing natural gas pipelines.

In 2020, ARENA launched the funding round to support Australia’s first commercial-scale hydrogen projects to fast-track the development of renewable hydrogen in Australia. 

The funding round called for expressions of interest from large-scale hydrogen electrolyser projects across Australia to drive the commercialisation of key component technologies and facilitate cost reductions for producing renewable hydrogen. 

ARENA received 36 expressions of interest from across Australia, and following an initial assessment, seven projects were shortlisted and invited to submit full applications.

After an extensive assessment process, three projects were selected for funding. Engie, ATCO and AGIG must now satisfy a number of development conditions and achieve financial close before funding is released. ARENA will continue to work with the companies to achieve this.

ARENA CEO, Darren Miller, said renewable hydrogen presents an opportunity to help reduce emissions globally and locally, transform our energy system, and create a new export industry for Australia.

“We’re excited to have chosen three projects we believe will help kickstart renewable hydrogen production in Australia at a large scale,” Mr Miller said. 

“One of the projects will see clean hydrogen used to make ammonia for export and the other two will blend clean hydrogen into our gas pipelines to help decarbonise our natural gas networks.

“Our hydrogen industry in Australia is in its infancy, so the lessons learned from these three projects – and the entire funding round – will be important in driving our future hydrogen economy.  

“With more than $100 million in funding, we’re hoping to build some of the biggest hydrogen electrolysers in the world, with the ultimate goal of bringing down the cost of hydrogen produced using renewable energy and growing our skills and capacity to meet future global demand for hydrogen.

“We have been very impressed with the response to the round, and I’d like to thank all of the companies that submitted applications. 

“With the round stimulating interest in the sector, we can see a number of well-progressed feasibility studies and large projects emerging. 

“Australia is well placed to become a major player as the clean hydrogen market develops.”

Funding welcomed by industry

Australian Hydrogen Council CEO, Dr Fiona Simon, said, “This type of investment is the boost that the industry needs to progress commercial, large-scale projects. 

“This investment should be matched with good policy to encourage demand and improve the economics of producing hydrogen, which will ultimately increase supply of hydrogen.

“The global call for decarbonisation has put hydrogen on the table as a way to reduce emissions across many industries. 

“Australia has all the raw ingredients in place with our solar and wind power capacity, and export experience.”

ENA Chief Executive Officer, Andrew Dillon, said the funding boost showed the Federal Government’s commitment to a clean energy future in Australia.

“New energy sources such as hydrogen need to be deployed if Australia is to reach net zero emissions and investing in these technologies is a step towards achieving that goal,” Mr Dillon said.

“Investment in Australia’s emerging hydrogen industry is vital to continue the work transitioning to a clean energy future. 

“Hydrogen creates a logical path for decarbonising our current gas supplies and blending in the existing gas networks is a key early step to developing a hydrogen export industry.”

Clean Energy Council’s Director of Energy Generation, Anna Freeman, said, “This is a red-letter day for Australia’s renewable hydrogen industry.

“The delivery of these projects is critical to the scale-up of Australia’s hydrogen industry. They’ll accelerate our knowledge and capability development and get us on the way to driving down the costs of renewable hydrogen production.

“Although there is tremendous potential for Australia to become a major renewable hydrogen producer, the economics of these projects are very challenging, and no renewable hydrogen project is currently viable without additional funding support.”

According to Deloitte, the potential economic contribution of Australia’s hydrogen sector is large – up to $26 billion annually in additional GDP and 16,900 new jobs by 2050.