he State of Hydrogen Report by Australia’s Department of Climate Change, Energy, the Environment and Water assesses the domestic hydrogen sector against global competitors and reviews the path ahead for the industry.
While Australia has “a large pipeline of announced hydrogen projects, it still trails many OECD nations in terms of projects proceeding to deployment,” the report said.
“To be a global leader in the hydrogen industry by 2030, Australia will need to accelerate its delivery of the early actions identified in the National Hydrogen Strategy,” it said.
The report singled out market-based policies and new economic incentives propelling hydrogen development in the US, Canada and Germany.
Considering increasing international appetite for hydrogen and emerging competition, Australia may need to reconsider the need for targets and incentives to ensure its industry is competitive, it said.
Australia and New Zealand are expected to produce 8.9 million mt/year of electrolytic or enewable hydrogen by 2030, behind Europe’s 16.74 million mt/year of production, according to S&P Global Commodity Insights’ Hydrogen Market Monitor published March 31.
Globally, about 80.47 million mt/year of hydrogen is expected to be produced by 2030 primarily using electrolysis and also via fossil fuels with CCS and biomass, the Monitor said.
Investments
As of December 2022, Australia has a total of 106 active, planned or operational hydrogen projects with 64 announced since end-2021.
In total, Australia’s hydrogen and ammonia projects are estimated to be backed by investments of over A$230-A$300 billion ($156-$203 billion).
“A significant portion of the projects, yet to achieve final investment decisions, have been undergoing development and financial restructuring for the past two-three years and are pending feasible financing solutions,” the report said.
Both federal and state governments are seen investing in hubs, incentives and research and development to bring down the osts of hydrogen production, with public funds amounting to around A$1.02 billion.
Of this, the federal government is providing A$526 million for establishment of eight hydrogen hubs through the ‘Regional Hydrogen Hubs’ program.
Looking ahead, the report identifies usage of clean hydrogen as a chemical feedstock and in electricity generation as the applications advancing most quickly by 2025, whereas transport, iron and steel and industrial heat applications showed weaker momentum.
Costs
Global supply chain issues and rising demand for cleantech equipment from solar panels to electrolyzers had resulted in higher costs for key elements of clean hydrogen projects in 2022 versus 2021, the report said.
Costs of clean hydrogen production varied depending on scale and location, it said, referencing data from ActewAGL Hydrogen Refuelling Station, with a pump price of A$10-15/kg hydrogen.
“Although this cost is closely related to the small scale of the electrolyser (75 kW), it is reflectve of high national production costs,” it said.
A pre-feasibility study released by Frontier Energy for their Bristol Springs Project estimates the project could achieve a total cost of A$2.83/kg of hydrogen, it added.
“The cost competitiveness of hydrogen production will likely benefit from the Australian government’s actions to modernise the Australian electricity grid,” it said.
“This initiative includes achieving 82% renewable electricity by 2030 through the A$20 billion ‘Rewiring the Nation’ initiative.”
Platts assessed Western Australia hydrogen produced via alkaline electrolysis at $2.51/kg April 13, up 16% on the month, showed S&P Global data.
Japan hydrogen produced via alkaline electrolysis (including capex) was assessed at $4.93/kg April 13, down 9.2% on the month, showed S&P Global data.
Green ammonia
The number of green ammonia projects proposed in Australia increased significantly in the last year with the 10 MW electrolyzer project of Yuri Renewable Hydrogen to Amonia passing final investment decision, the report said.
The Australian Renewable Energy Agency approved a grant of A$47.5 million to the Yuri project in Western Australia in September 2022, triggering a positive final investment decision by developers Engie and Yara.
Co-firing of ammonia has advanced worldwide since 2021, with further trials in Japan, the United States and China underway, it said, underscoring Australia’s export potential.
In Japan, JERA and IHI Corporation have undertaken small-volume ammonia co-firing, with larger-volume co-firing (20% of heating value) anticipated to commence in mid-to-late 2023, it said.
Australia: support for hydrogen hubs
Approximate funds (million Australian dollars) Initiatives
New South Wales 150 NSW hydrogen hub focuses on Illawarra and Hunter; government assesses applications.
Northern Territory Northern Territory government, Total Eren sign MoU to develop project in Darwin.
Queensland 15 Renewable Energy and Hydrogen Jobs Fun to progress Stanwell consortium CQ-H2 project.
South Australia 67 Upgrade of Port Bonython jetty.
Development of Port Bonython Hydrogen Hub.
Tasmania 230 Tasmanian Green Hydrogen Hub to establish hydrogen industry at Bell Bay.
Western Australia 124.5 Development of Pilbara Hydrogen Hub
Development of Oakajee Strategic Industrial Area as a renewable hydrogen hub for the Mid-west.
Feasibility study for the H2 Kwinana project.
Commonwealth 526 Establishment of eight hydrogen hubs through the ‘Regional Hydrogen Hubs’ program
Source: State of Hydrogen Report 2022
