by Lachy Haynes, Integrated Infrastructure Partner, PwC Australia
With abundant land and high-capacity factor renewable energy resources, Australia has the building blocks to produce globally-competitive green hydrogen to service growing domestic and international markets.
The nascent green hydrogen industry in Australia stands to benefit from sovereign commitments to clean hydrogen economies, including major trading partners such as Japan and Korea. This is evidenced by the growing offshore investor interest and participation in, and commitments to, Australian projects.
But with other energy-rich nations racing to capture this opportunity, there’s little time to waste. That’s why PwC Australia’s Integrated Infrastructure team has produced a new report, Getting H2 Right. This report highlights four critical factors that will underpin the success of green hydrogen projects in Australia.
This success will create more jobs of the future and new opportunities for regional Australia through the production of globally-competitive green hydrogen. Three years ago, you could have counted the green hydrogen projects in Australia on one hand. But today, there are more than 90 publicly-announced green hydrogen projects, and many more not yet on the public radar.
Our analysis highlighted that capital investment attributable to this pipeline exceeds $250 billion – yet more than 98 per cent of this figure is accounted for by the largest 20 projects, leaving a long tail of relatively smaller ones.
So far, so good, but this is no time for complacency. That’s why the four critical success factors we’ve identified are important to keep front-of-mind for all developers. While there are specific factors that change for every project, these four remain common across projects we work on within the sector.
1. Getting the price right
Firstly, improving Australia’s cost competitiveness will enhance its position as a green hydrogen supplier of choice. Our report reveals Australia’s forecast green hydrogen production costs will decline rapidly by 2040, positioning Australia as a first quartile cost producer.
Developers will need to think innovatively about how they can best configure their project, including the sizing of the electrolyser, the choice of technologies, and where best to locate the project, for ongoing access and proximity to a secure water source, low-cost renewable energy and export infrastructure.
2. Infrastructure and supply chains must be developed
Secondly, Australia’s critical infrastructure and hydrogen supply chain will require parallel development as pilot projects progress towards
industrial-scale production targeting both the domestic and export markets over the coming decade.
There will be important tradeoffs to be considered. Examples might include reliance on offshore electrolyser suppliers or domesticating
some production to alleviate potential bottlenecks, and the development and ownership of infrastructure on a sole or shared basis. How existing infrastructure could be repurposed is another consideration.
The form of hydrogen for export as it leaves Australia’s shores represents a further trade-off. Whether it’s liquified hydrogen, ammonia or methylcyclohexane, each method comes with its own pros and cons. Emerging technologies such as compressed hydrogen tankers or metal hydride technology will provide more food for thought when it comes to how to transport hydrogen effectively.
3. Navigating policy and regulation
Beyond the physical infrastructure required across the renewable hydrogen value chain, it’s the ‘soft’ infrastructure – the regulatory and social infrastructure – that is required to accelerate the growth of Australia’s green hydrogen industry.
We anticipate that the setting of formal emissions targets will help drive demand signals and improve the investment attractiveness of the industry. Furthermore, a Guarantee of Origin scheme would provide muchneeded transparency and consistency, and would enable different hydrogen products to be compared accurately.
There is a role for Governments, industry, educational institutions and registered training organisations to work together to develop and deliver quality education and training. This collaboration will be crucial to ensure a skilled and capable workforce is established to support the hydrogen transition.
Our analysis has found more than 40 roles are needed to support the Australian hydrogen economy over the next five years, spanning six occupational clusters including engineers, technicians and tradespersons, safety and quality control, specialists, logistics and managers.
The good news is that many existing skills are transferable to the hydrogen industry, yet this may only exacerbate the current tightness in the market for skilled labour.
4. Making projects bankable through partnerships
For investors and financiers, hydrogen projects are currently more challenging than traditional infrastructure assets due to complex technology and supply chain considerations. Nevertheless, many hydrogen export projects under development today are forming consortia bringing together the requisite industry knowledge, skillsets and delivery capability.
From getting the price right, and establishing a hydrogen-ready supply chain, through to navigating policy and regulation and engaging partners and offtakers, these success factors are essential when it comes to developing the projects that will underpin a competitive green hydrogen industry.
There is great potential for Australia to play a leading role as a globallytraded hydrogen market evolves – but this is not a time to watch and wait. Australia must put its green hydrogen future at the forefront, or risk innovation and investment being deployed elsewhere.
