AEMC takes critical steps for hydrogen, renewable gases

Wooden blocks with H2 for hydrogen printed on them (hydrogen AEMC)
Image: Shutterstock

The Australian Energy Market Commission (AEMC) has released a draft report outlining what changes to the gas and energy retail rules are needed to incorporate hydrogen and renewable gases into the Australian market.

The AEMC’s draft recommendations provide an important development in setting up the national regulatory framework so low-level hydrogen blended gases and renewable gases can be safely supplied to existing distribution systems and appliances in homes and businesses.

AEMC chair Anna Collyer said reforms in the regulatory framework would lay the foundations for the development of a decarbonised gas sector in Australia.

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“Hydrogen is one of a handful of new, low carbon, zero-emissions fuels that can be used for heating and cooking in homes. Fuel cells can also power trucks, trains and cars,” Collyer said.

“In the future, the hydrogen sector may grow to include power generation and some industrial processes. Electrolysers that create hydrogen may also provide beneficial services to the electricity market such as contributing to demand response and essential system services.

“These reforms are considered a priority under the Australian Government’s National Hydrogen Strategy and we need to make sure they’re delivered in an efficient, safe, and secure way that’s also in the best interests of consumers.”

The AEMC’s work in this area aims to expand existing gas market frameworks to hydrogen and renewable gases to facilitate trade, investment, and innovation in these markets.  The draft recommendations are also aimed at ensuring the continued quality, safety, reliability, and security of supply of gas to end-users.

A stakeholder forum will be held by the Department of Industry, Science, Energy, and Resources on April 1, 2022. AEMC staff will present an overview of this report at the forum. Submissions to the draft report are open until Thursday 19 May 2022.

The review was undertaken concurrently with consultation on a rule change request to include distribution connected facilities in the Victorian Declared Wholesale Gas Market (DWGM).

Today the AEMC published a draft rule to open up the Victorian Declared Wholesale Gas Market (DWGM) to include distribution connected facilities that can supply natural gas, low-level hydrogen blended gas, biomethane, and other renewable gases.

Currently, the Victorian DWGM only recognises transmission-connected facilities and does not allow market participation from entities connected to distribution pipelines.

This work addresses that by amending the National Gas Rules (NGR) to also recognise facilities connected at the distribution level.

The draft rule seeks to maintain the current design of the Victorian gas market while clarifying the roles and responsibilities of all market participants.

Collyer said importantly, this will encourage technological innovation in an evolving market and regulatory environment as it seeks to promote safety, reliability, and security of supply.

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“These reforms will enable the proposed pilot projects to participate in the Victorian gas market, providing the foundation for innovation that will allow this industry to develop further,” Collyer said.

“These draft rules along with the changes proposed through the national hydrogen strategy, complement the various decarbonisation initiatives from the Victorian Government and work to enable the development of the national hydrogen industry.”

This rule change was requested by the Victorian Minister for Energy, Environment and Climate Change, The Hon. Lily D’Ambrosio and works towards facilitating the Victorian Government work program, such as the Renewable Hydrogen Industry Development Plan, Gas Substitution Roadmap, Towards 2050: Gas Infrastructure in a Zero Emissions Economy initiativeand Climate Change Strategy to reach net-zero emissions by 2050.

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