Australia is making progress on supply-side factors that will help it become a major exporter of clean hydrogen, according to the latest State of Hydrogen report from the country’s Department of Industry, Science, Energy and Resources.

The report found that clean hydrogen costs are expected to decline to between A$2-4/kg ($1.4-2.8/kg) by 2030. Green hydrogen costs could fall even further below that level after 2030 if electrolyser and renewable energy costs continue to fall.

Project announcements indicate the scale of electrolyser deployment could reach over 100MW by 2025. A number of gigawatt-scale projects have been announced and are expected to start operating in the second half of the decade. However, FiDs on these projects have not been made and are contingent on securing offtake.

100MW – Expected electrolyser deployment by 2025

This would require the creation of more demand than is currently seen in the market. “As is to be anticipated as a new industry develops, progress has been slower on demand-side indicators,” says the report.

“This is expected given the early state of the industry and the higher cost of clean hydrogen compared to chemicals and fuels currently being used.”

Creating demand

Many of hydrogen’s expected future uses—such as blending in gas networks and mobility—have only recently started trials in Australia. Power generation and chemical feedstock projects are advancing more quickly—but not yet at the rate required to generate sufficient demand for large developments, according to the report.

Exports are likely to be a major factor on the demand side and in terms of securing offtake. International supply chains and collaboration with demand-side partners will need to be in place before offtake can be secured.

“Like any new industry, it will take some time to build export supply chains and deliver activities to help scale up the industry,” the report says.

“For some uses of hydrogen, it will also take time for demand for hydrogen to build. Progress is expected to be slow at first but will increase as costs decrease and markets increasingly adopt new technologies. This is a natural part of industry development globally but will be accelerated through government support.”

Policy support

Such support includes specific project finance and the development of industrial hubs, but might go further in future, according to the report.

It cites the example of financing a project involving fertiliser producer Yara Pilbara Fertilisers and French utility Engie to produce green hydrogen at Yara’s ammonia facility in Western Australia. This project will see clean hydrogen used to make clean ammonia for export.

“Projects like these, and the Australian government’s A$464mn Clean Hydrogen Industrial Hubs programme will help drive the costs of hydrogen down faster, which will increase demand and improve these indicators,” says the report.

To support supply chain development, supply chain studies are underway with international partners such as Australian-German hydrogen supply chain study Hysupply.

Australia and South Korea also recently committed A$50mn each to a joint project to work on hydrogen and other low-carbon technologies, as well as critical minerals.

In addition, Australian and Japanese firms have signed a number of memorandums of understanding to develop hydrogen projects around the country.

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Author: Tom Young