Australian utility Origin Energy has withdrawn from a joint development agreement with Melbourne-headquartered mining chemicals company Orica, for the Koorangang Island, Hunter Valley Hydrogen Hub (HVHH) in New South Wales (NSW), 170 kilometres north of Sydney.
Origin’s estimated capital cost for the project was expected to be between $200-250 million (USD 136-171 million), but the company’s intention is to cease work on all hydrogen development opportunities, and focus on renewables and storage projects.
Origin says the decision to exit the HVHH is consistent with its strategy and reflects uncertainty around the pace and timing of development of the hydrogen market, and the risks associated with developing capital-intensive projects of HVHH’s nature.
Image: Port of Newcastle
Origin Chief Executive Officer Frank Calabria said despite believing hydrogen could play a role in the future energy mix, the slow pace of the Australian hydrogen market and consequent cost and technology risks, prevent a final investment decision on the project.
“Ultimately, we believe investments focussed on renewables and storage can best support the decarbonisation of energy supply and underpin energy security over the near-term,” Calabria said.
“We acknowledge there will be some disappointment at this decision and are grateful for the opportunity to evaluate the feasibility of this project in conjunction with Orica, and with the support of both federal and state governments, local representatives and the community.”
Origin remains open to exploring commercial options for the HVHH but intends to cease work on all hydrogen development opportunities.
Orica Managing Director and Chief Executive Officer Sanjeev Gandhi said though disappointed, Origin Energy’s decision is respected.
“We’ve been operating our Kooragang Island site for over 50 years and are committed to ensuring both our manufacturing facility and the Hunter Valley region remain competitive in a low carbon economy, while also strengthening Australia’s domestic manufacturing capability,” Sanjeev said.
“The support of both the Federal and the NSW governments for the Hunter Valley Hydrogen Hub project should also be acknowledged and Orica looks forward to continuing the collaboration with Ministers and responsible agencies on the transition of Orica’s Kooragang Island manufacturing facility and the Hunter Valley region.”
The HVHH project is intended to progressively displace gas as a feedstock in nearby ammonia manufacturing by producing approximately 4,700 tonnes of renewables-based hydrogen per year, based on a 50 MW electrolyser.
It is included in the proposed Port of Newcastle Clean Energy Precinct which has received $100 million federal government backing to enable the Hunter region’s clean energy economy.
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