$103 million flows from ARENA to commercial ‘green’ hydrogen projects, despite concern around gas couplings


The Australian Renewable Energy Agency (ARENA) today announced the three projects it’s conditionally approved to back under its Renewable Hydrogen Deployment Funding Round, which was increased from an initial $70 million to over $100 million.

Engie Renewables Australia has been awarded $42.5 million from the government agency to go towards a 10 MW electrolyser project it has with Yara Pilbara Fertilisers in Karratha, Western Australia, where it is seeking to use renewable hydrogen to produce ammonia for export.

ATCO Australia has also been conditionally approved for $28.7 million in government funding for a 10 MW electrolyser project, although its intention is to use it for gas blending its Innovation Park in Warradarge, midwest Western Australia.

Australian Gas Networks Limited (AGIG) is the final successful funding candidate, drawing $32.1 million for another 10 MW electrolyser for gas blending at AGIG’s Murray Valley Hydrogen Park in Wodonga, Victoria.

With all three projects planning to use 10 MW electrolysers, the subsequent hydrogen facilities will be among the largest built in the world so far. The Australian Renewable Energy Agency says the projects will help get Australia to the government’s goal of ‘H2 under $2’ (that is, hydrogen priced at $2 per kilogram, a rate at which it would be globally competitive with other fuel sources).

Both ATCO and AGIG’s projects will use renewable energy to produce hydrogen for gas blending into existing natural gas pipelines.

Image: AGN

Growing concern about combining hydrogen with gas and touting it as ‘green’

There is a growing choir of voices raising concerns, however, about gas projects attracting government money allocated for renewables by including 2021’s buzzword, hydrogen. Both ATCO and Australian Gas Networks’ projects fall into this category. The questions they raise ultimately centre on whether ‘stepping stones’ enable or disable cleaner energy systems.

Just yesterday it was announcement EnergyAustralia had attracted over $80 million in government funds to build Australia’s first ‘green hydrogen’ and gas peaker power plant near Wollongong on the New South Wales south coast. The news was immediately met with indignation from industry peak body the Clean Energy Council.

“If private investors are willing to bet on gas over energy storage, that’s a decision for them. But the general public is becoming increasingly uncomfortable seeing their taxes used to prop up more expensive fossil fuel generators,” the Council’s Chief Executive Kane Thornton said in a media statement about the news.

Are batteries really a panacea?

Thornton went on to say taxpayer dollars would be better spent on large-scale battery storage, pumped hydro and accelerating transmission upgrades to provide cost-effective, reliable, flexible and low-emissions power.

Dr Kerry Schott, the Independent Chair of Australia’s Energy Security Board – the body tasked with designing Australia’s electricity system transition – seems to be far less convinced that big batteries are Australia’s panacea.

“[Batteries have a] duration at the moment that’s largely limited to about four hours and that will not be sufficient to get us through… so we do need backup,” she said at a briefing yesterday.

Aware of the cool reception it would elicit, Schott said gas, blended gas and hydrogen and perhaps “in due course” hydrogen alone would be necessary for the time being to ensure reliability of Australia’s electricity systems.

Port Kembla (just down the road from where EnergyAustralia is planning its gas + hydrogen peaker plant) has been identified as a potential site for a green hydrogen production hub.

Image: Wollongong City Council

Hydrogen funding windfall

Australian governments, both federal and state, have set aside considerable sums to fund hydrogen projects – which have been the subject of enormous excitement globally this year.

ARENA launched its funding round in 2020, designed to support Australia’s first commercial scale hydrogen projects to fast track the country’s renewable hydrogen industry.

The funding round called for expressions of interest from large scale hydrogen electrolyser projects across Australia focussed on the commercialisation of key component technologies and facilitating cost reductions for producing renewable hydrogen. ARENA said it received 36 expressions of interest, and following an initial assessment, seven projects were shortlisted and invited to submit full applications.

After an extensive assessment process, Engie, ATCO and AGIG were conditionally approved for funding and must now satisfy a number of development provisions and achieve financial close before funding is released.

“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,” ARENA’s CEO, Darren Miller, said in a statement.

“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.”

Miller went on to describe Australia as “well placed” to become a major player in the global hydrogen market – a view which has almost uniform support in Australia.

ARENA said it has committed over $57 million to hydrogen projects since 2016, including $22.1 million towards 16 research and development projects.

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