Having earmarked $593 million (USD 389.3 million) of public funding to build a green hydrogen power plant at Whyalla on the east coast of the Eyre Peninsula, the South Australian government has now announced it has reached an agreement with GFG Alliance to explore opportunities for hydrogen offtake from the facility.
The Hydrogen Jobs Plan facility, due to become operational in 2026, is to comprise a 250 MW hydrogen electrolyser – to be powered by large-scale wind and solar – and a 200 MW hydrogen power plant.
South Australia Premier Peter Malinauskas said the green hydrogen will be stored and used at the site to fuel the power station but could also be made available for local industry offtake.
“We got our own customer for the hydrogen that we produce, that would be the power plant itself,” he said. “But if there is the opportunity to enter into a commercial offtake agreement, to realise the green iron and green steel opportunity, then we want to grab that too.”
Malinauskas said the agreement with GFG Alliance commits to exploring opportunities for a green hydrogen offtake deal with commercial negotiations to secure the supply now progressing.
“This agreement provides a roadmap to decarbonisation,” he said.
British billionaire Sanjeev Gupta’s GFG Alliance last year announced plans to phase out coal-based steelmaking and decarbonise its operations at its Whyalla Steelworks, signing a supply contract for a low carbon electric arc furnace.
The company has also engaged equipment suppliers to install a 1.8 million tonne a year direct reduction plant, which will process local magnetite ore to produce low-carbon iron for use in the electric arc furnace.
This plan will initially use a mix of natural gas and renewable hydrogen sourced from the Hydrogen Jobs Plan facility, before fully transitioning to green hydrogen as it becomes available at scale.
South Australia Energy Minister Tom Koutsantonis said the move to “green steel” represents a new chapter in Whyalla’s steelmaking history, and hydrogen produced at the nearby Hydrogen Jobs Plan facility is poised to play a key role in this transition.
“GFG’s capital investment in this green transformation program is exactly the type of project we hoped to help make possible through our Hydrogen Jobs Plan,” he said.
“The benefits will be clear to see – we will help safeguard and modernise our steelmaking assets for the long-term while providing good local jobs and forging a hydrogen-powered industrial renaissance.”
The government has forecast that the design and construction of the Hydrogen Jobs Plan facility will help “accelerate South Australia’s green hydrogen industry, unlock the development of a $20 billion pipeline of renewable energy projects and catalyse the creation of new jobs in the supply chain industries.”
The announcement of the green hydrogen agreement came on the same day that GFG Alliance revealed it is also in talks with oil and gas giant Santos for an expanded gas supply agreement to the Whyalla steelworks.
The agreement could see GFG Alliance become the first domestic third-party customer for Santos’ carbon capture and storage project at Moomba.
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