The Australian Energy Market Commission (AEMC) has recommended to state and federal energy ministers that changes be made to the national gas and retail regulatory frameworks to allow for the eventual shipping of hydrogen and renewable gas through existing gas pipelines.
AEMC chair Anna Collyer said improvements to the regulatory framework will lay the foundations for the development of a decarbonised gas sector and keep Australia firmly at the forefront of reform in the hydrogen industry.
“From our perspective at the AEMC, hydrogen is fascinating because of the way it uniquely intersects with both gas and electricity markets. It’s a future source of renewable fuel, but it’s also set to become the largest industrial customer for electricity in the National Energy Market’s history,” she said.
“Hydrogen has the potential to deliver solutions we need for a net-zero future, and by extending the regulatory frameworks, we allow participants to develop their business and facilitate innovation.”
The recommendations come after the federal and state energy ministers last year tasked the AEMC with a review of the regulatory frameworks to ensure that Australia is in a position to leverage its potential as a producer, user and exporter of hydrogen.
In its final report published this week the AEMC said the proposed draft rules are “critical steps toward the development of a national hydrogen and renewable gas industry”.
Should the commission’s recommendations be endorsed by the energy ministers, rules would be established to allow hydrogen blends and renewable gases to be supplied through the existing distribution systems to appliances in homes and businesses.
While hydrogen has different properties to natural gas, research has found that blends of about 10% hydrogen could already be used in most existing appliances.
The capacity for hydrogen to be blended into the existing gas network is already being demonstrated with Australian Gas Network (AGN) injecting green hydrogen produced at its Hydrogen Park South Australia production facility into its gas distribution network in Adelaide.
The facility, which came online last year, is delivering a blend of approximately 5% renewable hydrogen and natural gas to 700 homes in the Adelaide suburb of Mitchell Park. AGN is aiming to supply an additional 3,000 homes by the end of 2022. AGN aims to deliver 10% blended renewable gas by 2030 and 100% renewable gas by 2040.
A similar project is also operating in New South Wales where energy infrastructure company Jemena has commenced injecting green hydrogen into the state’s gas network.
Jemena said an estimated 23,500 residential customers and more than 100 commercial and industrial customers are receiving green hydrogen produced at its Western Sydney Green Hydrogen Hub as part of their gas mix.
The AEMC said submissions on its recommended draft rules will be accepted until 13 October 2022 with the final initial rules due to be presented to energy ministers in November.
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