Everyone wants a slice of the hydrogen market – but will the enthusiasm in the Festival State keep it ahead?
The “green hydrogen” process, which promises to replace greenhouse gas emissions, is focussing the minds of scientists, environmentalists, industry and transport. Oh, and politicians. It’s really exciting politicians.
But political promises can’t be counted on to create industry. Where is Australia’s hydrogen industry at present, and where is it going?
South Australia was first off the blocks in the race to develop a green hydrogen industry and arguably retains the national lead.
But the contest is heating up, with more than 100 hydrogen projects around Australia.
There’s also global competition for emerging export markets, with multiple entrants in this new high-stakes game of risk and reward.
Claiming the first mover advantage
SA Labor’s “Hydrogen Jobs Plan” is often described as “ambitious.” But the technology exists, it’s just a matter of scale.
With $593 million in capital funding, the government will build, own and operate a green hydrogen power plant that uses excess renewable energy to split water.
It’s a way to store surplus solar and wind power for later use. That could be days, weeks or even months later, much longer than mere hours in a battery.
There’s also potential for export, “shipping sunshine” (and wind) to Japan, South Korea, Europe and south-east Asia.
Central to the plan is a 250MWe (e for electrical as opposed to thermal) electrolyser; a 200MW power plant (to turn hydrogen back into electricity) and a 3600 tonne hydrogen storage facility.
And it’s all to be delivered in the Whyalla region by the end of 2025.
“Obviously, the tight time frame relates to the election cycle, because governments like to have their projects delivered,” Hydrogen Power SA chief executive Sam Crafter says.
“But there is a real first-mover advantage that we’re trying to capture here.”
By building one of the nation’s “first, second or third” green hydrogen projects – also one of the world’s biggest electrolysers – SA has a “real opportunity” to secure supply chains and maintenance arrangements as well as national and international markets, Crafter says.
“If we’re the 10th, 11th or 12th project that gets built then we’re going to be trying to chase people out of Gladstone and Kwinana and the rest of the country, because they will have got there first,” he says.
“And we have some advantages— we’ve got a capital commitment, we are building something, we’re going to be able to use that to make sure that we can keep ourselves ahead of that pack.”
The “market sounding” exercise attracted 60 submissions from organisations around the world. These included experienced green hydrogen infrastructure operators; large scale renewable energy developers; companies with links to local industry/workforce; and partners in university research, training, and development. The submissions are now informing procurement and final site selection.
Hyped about hydrogen
SA hit the ground running with the first hydrogen roadmap (2017), two years ahead of the national version. Then the SA Hydrogen Action Plan in 2019, was closely followed by a Hydrogen Export Modelling Tool and Prospectus in 2020. Now the state is preparing legislation to support end-to-end planning of projects through to export. A discussion paper on the draft Hydrogen Act is soon to be released.
Mining Department chief executive Dr Paul Heithersay says leadership in renewables enabled the early move into hydrogen for energy storage.
In 15 years in SA, renewable electricity has grown from 1% to 68% of total generation.
At last count there were 22 wind farms, three solar farms and four grid scale batteries. Plus the world’s highest penetration of rooftop solar (one in three homes) and about 30,000 home batteries.
Then there’s a further 48 renewable energy projects in the development pipeline totalling $20bn of investment.
Fact file: South Australian hydrogen projects
- Hydrogen Park at Tonsley Innovation District, Australian Gas Networks, Producing green hydrogen for gas networks (5% blend introduced to 700 homes so far), industrial use (trucked to Whyalla, replacing fossil gas from Victoria) and mobility (transport).
- Whyalla Region Hydrogen Power Station, Hydrogen Power SA, Power use.
- Eyre Peninsula Gateway Project (Demonstrator Stage), The Hydrogen Utility, Industrial process (ammonia production).
- Neoen Australia Hydrogen Superhub (Crystal Brook Energy Park), Export potential..
- Port Bonython Hydrogen Hub, Government of South Australia (Project lead) with seven projects – AMP Energy, Fortescue Future Industries, H2U, Neoen/Eneos, Neoen/Chiyoda/Mitsubishi, Origin Energy, Santos, Export focussed including hydrogen derivatives (eg ammonia).
- Port Pirie Green Hydrogen Project, Trafigura Group Pte. Ltd (Singapore), Export potential – ammonia, domestic use.
- Torrens Island Green Hydrogen Hub, AGL Energy Limited (consortium lead)
- Australian Hydrogen Centre, Australian Gas Networks (lead), Hydrogen in gas networks.
Source: CSIRO HyResource
The challenge now is to “sure-up” the electricity grid, to provide stability and security as the share of renewables continues to grow.
There are days when the state is already running on 100% renewable electricity and supply exceeds demand. But hydrogen offers a solution, a new way to store green electricity and also transition heavy industry away from fossil fuels when solar feed-in is curtailed and windmills stop spinning.
“(The state’s) advancing towards the target of 100% net renewable energy generation by 2030, (but we) could be producing 500% more energy than we currently use on our local grid,” Heithersay says.
The new government’s “very aggressive agenda” around renewables and hydrogen has “a signature piece of economic policy … which will provide firming services to the rest of the sector and hydrogen storage.”
“It’s risky, there’s no doubt about it, it hasn’t been done before and it’s got a crushing timeline to be delivered by 2025,” Heithersay says.
“But it’s time, and South Australia is the ideal place to prove it. And the idea behind all this is to make sure that other partners who come along for the ride or observe what we’re doing, learn from it.
“So there are going to be mistakes and a whole lot of learning along the way, but in doing that, we’re going to move the dial with hydrogen production and all the economic development that brings.”
Keeping tabs on a growth industry
The nation’s science agency CSIRO hosts what it calls a “collaborative knowledge sharing resource supporting the development of Australia’s hydrogen industry.”
More than 100 hydrogen projects have been added to the HyResource map of Australia.
That includes eight “operating” in Australia, including Hydrogen Park in the Tonsley Innovation District in Adelaide and 11 “under construction”.
Many more are “under development” with a few listed as “advanced development”.
Western Australia tops the list with 31 projects, Queensland is not far behind with 28, whereas South Australia has eight.
“It’s risky, there’s no doubt about it…but it’s time, and South Australia is the ideal place to prove it.”Paul Heithersay
Both WA and Qld have appointed Hydrogen Industry Ministers.
CSIRO Hydrogen Industry Mission Engagement and Strategy Lead, Dr Vicky Au, says all states are clamouring to attract investment in hydrogen and make announcements.
“It’s great to see from HyResource the number of projects that we have around Australia, to see the level of activity that’s there,” she says.
“How do you say who’s leading, who’s in front? Do you judge it by the amount of investment, do you judge it by the number of industry projects? Do you judge it by the universities that you have there and the amount of research that’s happening in up and coming new technologies, or the start-ups that are in the state?”
Most of the projects are “green” Au says. But some are “blue”, where hydrogen is created from fossil fuels but the carbon is supposed to be captured and stored (rather than released into the atmosphere).
And many projects that involve construction have experienced delays and setbacks of about six months, she says, following difficulties sourcing components and equipment.
Bigger and better water splitters
The Smart Energy Council wants to see more local manufacturing in Australia and reduce reliance on imports from “one very large country”, Hydrogen Australia Senior Advisor Scott Hamilton says.
He recently travelled with Chief Executive John Grimes to India, looking at alternative supply chains to meet Australia’s growing demand for solar panels, batteries, electrolysers and other components. Some local firms are also looking to diversify.
Hamilton says the market for green hydrogen, particularly green ammonia, is growing quickly, accelerated by the fossil gas crisis. Last month German energy firms Uniper and E.ON arranged to buy a million tonnes of green ammonia every year from Canada’s EverWind, commencing in 2025.
Australia is extremely well placed and primed to take advantage of green hydrogen, Hamilton says. South Australia has one of the most promising regional export hubs. And the Whyalla power plant shows the state is “serious”.
Aiming for a 250MWe electrolyser by 2025 is “incredibly ambitious” but “welcome.”
“The difference I think, between South Australia and the others at the moment is that the new government has just come into power and has a Hydrogen Jobs Plan which is … putting (almost) $600 million on the table,” he says.
“That, in my humble opinion, puts them as certainly one of if not the front runner, to have the biggest industrial scale hydrogen plant built in the country at this point in time.”
Aiming for a 250MWe electrolyser by 2025 is “incredibly ambitious” but “welcome.”
Australia’s largest electrolyser, at Hydrogen Park SA, is a relatively puny 1.25MW. That will soon be surpassed by the 10MW Yara Pilbara plant.
The biggest on the books is at the Port of Newcastle Green Hydrogen Hub, which will initially be underpinned by a 40MW electrolyser.
Hydrogen Australia is encouraging state governments to partner in a Guarantee of Origin style scheme that promotes the uptake and distribution of renewable hydrogen products and their derivatives in Australia and overseas.
“We’re hoping that the South Australian government becomes a founding partner, as has Victoria, Western Australia, Queensland and the ACT,” Hamilton says.
Far from fair trade
University of Adelaide economics Professor Mike Young warns “competition policy doesn’t apply” in the emerging green hydrogen market.
Governments all over the world are “throwing money” at hydrogen projects and companies, Young says, and there’s no agreement on how much any one country or state can spend on the industry.
He raises “two very important questions”: “One is how Australia decides to sort out where hydrogen is produced, … how it’s produced and whether that’s going to be fair,” Young says.
Yes, SA is leading, he says, but it’s still very early days.
“And then the second is how Australia as a nation competes with the rest of the world.”
Yes, SA is leading, he says, but it’s still very early days: “It’s like a marathon race and at the moment, South Australia is still at the front of the pack, or in that front group, as we finish the first kilometre, but there’s another 41 kilometres to go.”
Young says ultimately the World Trade Organisation may need to step in and level the playing field. Otherwise the huge global market opportunities may not be available to us after all.
“There is lots of room for multimillion dollar mistakes,” Young says. “But if you get it right, the reverse could (be true). We could be the most successful country in the world.”
Clare Peddie joined Cosmos in 2022 after 15 years as Science and Environment Writer at The Advertiser in Adelaide. She previously worked at CSIRO Land and Water, UniSA, and the Cooperative Research Centre for Vaccine Technology. A passionate science communicator with an extensive and ever-expanding network of contacts, she thrives on exploring new ideas with talented people. Follow @ClarePeddie