Australia’s energy industry has welcomed the launch of the New South Wales (NSW) hydrogen strategy, saying it is a clear demonstration that the state government is serious about using hydrogen to meet its decarbonisation goals.

The strategy will see the provision of up to A$3bn ($2.24bn) of incentives and aims to halve the cost of green hydrogen production in the region from $A8.6/kg currently to under $A2.80/kg by 2030. It also aims to produce 110,000t/yr of green hydrogen from 700MW of electrolysers by 2030.

Andrew Forrest, chairman of energy firm Fortescue Future Industries, welcomes the strategy as key to his firm’s plans to increase production.

“NSW is taking a state leadership position, providing clear pathways for how renewable hydrogen can deliver for Australian businesses,” he says. “We are planning to deliver 15mn t of renewable green hydrogen to the world by 2030—increasing to 50mn t/yr thereafter.”

“We are planning to deliver 15mn t of renewable green hydrogen to the world by 2030” Forrest, FFI

The strategy aims to boost domestic demand as well as put in place infrastructure for export to overseas markets. Domestically, it will see the rollout of 10,000 hydrogen vehicles and 100 hydrogen refuelling stations. It also targets a 10pc blending target into the gas distribution network.

Building domestic demand was key in enabling the establishment of infrastructure in the early years of Australia’s hydrogen economy, says Rob Wheals, CEO of gas distribution operator APA.

“It is absolutely clear that Australia and NSW have a natural competitive advantage in hydrogen, and with billions of dollars already invested in gas infrastructure across the country, it makes sense to look at ways to use our existing energy infrastructure to support the state’s transition to a low-carbon future,” he says.

For the export market, the government will facilitate and fund port infrastructure assessments and streamline activities and investment decisions for international trade consortiums.

It will also market NSW as a location for hydrogen export investment and engage with potential domestic and offshore trade partners to establish international bilateral trade agreements and large-scale export capabilities.

The strategy is based on three interconnected policy pillars. The first of these is enabling industry development through improved planning procedures and evaluating how the grid can handle the estimated 12GW of additional renewables that will be needed to support production.

The second pillar concerns the development of hydrogen hubs, where industrial demand can be connected with supply to provide initial offtake certainty for nascent supply projects. As part of this, A$78mn will be provided for Australia’s first dual-fuel hydrogen-gas power plant.

A$3bn – Amount provided by NSW to support hydrogen

The third pillar will ensure the developments instigated by the first two are scaled up rapidly. This will see the expansion of hydrogen vehicles in government fleets and provide concessions in electricity network charges for green hydrogen projects that will cut production costs by A$1.33/kg. Exemptions from electricity infrastructure charges will also reduce production costs by a further A$0.8/kg, the strategy estimates.

The strategy will help set the state up as a global leader as countries look to capture early market share of the global export trade, says Leanne Olden from law firm Pinsent Masons.

“With the recent hydrogen strategies and roadmaps released by Western Australia and Queensland, it is important for NSW to ensure it is positioning itself in a fledging market,” she says.

The Australian government pledged A$565.8mn towards clean hydrogen earlier this year. And a number of state-funded hydrogen projects are already underway, including a green hydrogen project in Queensland. Australia’s Low Emissions Technology Statement—released in September 2020—aims to invest A$18bn in the next decade in five priority areas including clean hydrogen.

But industry association the Australian Hydrogen Council has called for the state government to do more to support the industry, including launching a A$1bn clean hydrogen fund.

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Author: Tom Young