Consultation opens to help unlock Australia’s renewable hydrogen future

The Australian government has released a consultation paper to help shape the design of its $2 billion Hydrogen Headstart program announced in the May budget and has also opened consultation to revamp the National Hydrogen Strategy as it looks to support the domestic hydrogen industry.

The government said the review of the National Hydrogen Strategy will build upon the original 2019 strategy to ensure Australia can leverage hydrogen’s immense economic potential and deliver jobs and energy in the transformation underway.

Energy Minister Chris Bowen said the review is vital to support a fit-for-purpose strategy in an increasingly competitive investment environment for hydrogen.

“Australia is well on track to build an innovative hydrogen industry that will bring immense economic opportunities across the country, especially in the regions that have always powered Australia,” he said.

“We have up to $300 billion of potential renewable hydrogen investments in the pipeline, the largest in the world – but we face huge competition from other countries to create the environment to get these announcements to final investment decisions.

“Our government is committed to working with industry, communities, states and territories to bring our strategy up to date and capitalise on this opportunity.”

Among the government’s commitments is the recently announced Hydrogen Headstart program that will provide revenue support for two to three large-scale renewable hydrogen projects through competitive production contracts.

The Hydrogen Headstart consultation paper is seeking feedback from stakeholders to help frame the design of the program and outlines the criteria for the Australian-based renewable hydrogen projects that will get funding as part of the $2 billion initiative.

The Australian Renewable Energy Agency (ARENA) said successful projects will be able to receive a production credit over a 10-year period to cover the commercial gap between the cost of hydrogen production from renewables and its sale price.

This is expected to help bridge the gap with private investment to make large-scale Australian green hydrogen projects commercially viable.

“Hydrogen Headstart is a key step towards unlocking an estimated $300 billion in private investment in Australian renewable hydrogen,” Bowen said. “Working with industry experts and stakeholders to design the program means we can maximise the success of Australia’s renewable hydrogen future.”

Bowen said the Headstart program would put Australia on course for up to a 1,000 MW of electrolyser capacity by 2030 with the criteria revealing that the minimum size of electrolyser for a hydrogen project to be eligible under the scheme would be 50 MW, with no upper limit.

This will be a major step up for Australia’s industry with the largest electrolyser projects that have reached final investment decision so far 1 to 10 MW in scale.

The funds will only be available for a new renewable hydrogen project and will not be granted towards the upfront capital costs of a project.

It is expected the program will open for initial applications for funding in the December quarter of 2023 or the March quarter of 2024.