ARENA commits over $100m for hydrogen plants

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On behalf of the Australian Government, the Australian Renewable Energy Agency (ARENA) has today announced that it has conditionally approved $103.3 million towards three commercial-scale renewable hydrogen projects, as part of its Renewable Hydrogen Deployment Funding Round.

The three successful projects are:

  • Engie Renewables Australia Pty Ltd (Engie): ARENA will provide up to $42.5 million towards a 10 MW electrolyser project to produce renewable hydrogen in a consortium with Yara Pilbara Fertilisers at the existing ammonia facility in Karratha, Western Australia;
  • ATCO Australia Pty Ltd (ATCO): ARENA will provide up to $28.7 million towards a 10 MW electrolyser for gas blending at ATCO’s Clean Energy Innovation Park in Warradarge, Western Australia;
  • Australian Gas Networks Limited (AGIG): ARENA will provide up to $32.1 million in funding for a 10 MW electrolyser for gas blending at AGIG’s Murray Valley Hydrogen Park in Wodonga, Victoria.

To support these projects, ARENA has increased the funding envelope, originally $70 million, by $33.3 million. In total, these three projects have a combined project value of $161 million.

At 10 MW, the electrolysers in these hydrogen plants will be among the largest so far built in the world.

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The projects will also play a significant role in supporting commercial-scale deployments of renewable hydrogen in Australia and help progress Australia’s pathway to achieving the Australian Government’s goal of ‘H2 under $2’.

Engie will use renewable hydrogen to produce ammonia at the Yara Pilbara Fertilisers site, while ATCO and AGIG’s projects will use renewable energy to produce renewable hydrogen for gas blending into existing natural gas pipelines.

Last year, ARENA launched the funding round to support Australia’s first commercial scale hydrogen projects to fast track the development of renewable hydrogen in Australia.

The funding round called for expressions of interest from large scale hydrogen electrolyser projects across Australia to drive the commercialisation of key component technologies and facilitate cost reductions for producing renewable hydrogen. ARENA received 36 expressions of interest from across Australia, and following an initial assessment, seven projects were shortlisted and invited to submit full applications.

After an extensive assessment process, three projects were selected for funding. Engie, ATCO and AGIG must now satisfy a number of development conditions and achieve financial close before funding is released. ARENA will continue to work with the companies to achieve this.

ARENA CEO Darren Miller said renewable hydrogen presents an opportunity to help reduce emissions globally and locally, transform our energy system, and create a new export industry for Australia.

“We’re excited to have chosen three projects we believe will help kickstart renewable hydrogen production in Australia at a large scale. One of the projects will see clean hydrogen used to make ammonia for export and the other two will blend clean hydrogen into our gas pipelines to help decarbonise our natural gas networks.

“Our hydrogen industry in Australia is in its infancy, so the lessons learned from these three projects – and the entire funding round – will be important in driving our future hydrogen economy.

With more than $100 million in funding, we’re hoping to build some of the biggest hydrogen electrolysers in the world, with the ultimate goal of bringing down the cost of hydrogen produced using renewable energy and growing our skills and capacity to meet future global demand for hydrogen,” he said.

“We have been very impressed with the response to the round and I’d like to thank all of the companies that submitted applications. With the round stimulating interest in the sector, we can see a number of well-progressed feasibility studies and large projects emerging. Australia is well placed to become a major player as the clean hydrogen market develops,” Mr Miller said.

ARENA has been active in the clean hydrogen sector since 2016 and has already committed over $57 million to hydrogen projects including $22.1 million towards 16 R&D projects, as well as feasibility studies into large scale projects and smaller scale demonstrations looking at renewable hydrogen production, power to gas and hydrogen mobility.

Energy Networks Australia (ENA) has welcomed the funding commitment, with ENA chief executive officer Andrew Dillon stating it showed the federal government’s commitment to a clean energy future in Australia.

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“New energy sources such as hydrogen need to be deployed if Australia is to reach net zero emissions and investing in these technologies is a step towards achieving that goal,” he said.

“Investment in Australia’s emerging hydrogen industry is vital to continue the work transitioning to a clean energy future. Hydrogen creates a logical path for decarbonising our current gas supplies and blending in the existing gas networks is a key early step to developing a hydrogen export industry. 

“Already, gas networks have been leading the way to demonstrate the role of green hydrogen for domestic use, with two projects already operational and more being commissioned in the coming weeks.”

Mr Dillon said renewable gas had an important role in a zero-emission energy future to ensure the transition was affordable and customers continued to have energy choices.

“Many Australians love cooking with gas and hydrogen is the pathway for this to continue as we decarbonise,” he said.

“The Gas Vision 2050 report outlines the industry’s response to reaching net zero emissions andhas found this can be reached with hydrogen at half the cost of electrification.”

Mr Dillon congratulated Engie Renewables Australia and ENA member organisations ATCO Australia and Australian Gas Networks Limited (AGIG) on their successful applications.

“Networks are innovating and investing to bring their business into the renewable energy future. Funding such as this will only fast track projects which will enable networks to continue to use utilise their gas infrastructure which is the lowest cost option to reach net-zero emissions from the energy sector by 2050.”

Australian Hydrogen Council CEO Dr Fiona Simon also welcomed the announcement, stating it will put Australia on the map as a key trading partner.

“This type of investment is the boost that the industry needs to progress commercial, large-scale projects. This investment should be matched with good policy to encourage demand and improve the economics of producing hydrogen, which will ultimately increase supply of hydrogen,” Dr Simon said.

“The global call for decarbonisation has put hydrogen on the table as a way to reduce emissions across many industries. Australia has all the raw ingredients in place with our solar and wind power capacity, and export experience.

“Momentum for hydrogen is building and we will continue working with the Federal Government and ARENA to support objectives set out in the National Hydrogen Strategy.”