Australia has seen its hydrogen project pipeline flourish to 106 operational or planned projects over the past year, with 64 announced—including 11 at gigawatt-scale—since the publication of the government’s 2021 State of Hydrogen report.

In the latest version of the report, published in mid-April, the government estimates that Australia’s hydrogen project pipeline could leverage investment capital of A$230–300bn ($153–200bn).

However, the vast majority of Australia’s ten operational green hydrogen projects are below 1MW in capacity, with the 1.25MW electrolyser at Hydrogen Park South Australia the largest.

A$1.02bn – Government support for hydrogen hubs

Similarly, when it comes to FID on projects with 10MW capacity or above, Australia trails the US, China, Germany, Sweden and Spain. Only a single project of that scale—the 10MW Yuri Clean Ammonia Project in Western Australia—had taken FID by the end of 2022.

While Australia was one of the first countries to publish a national hydrogen strategy, generous support schemes announced by the US and the EU prompted the government to announce a strategy review in February.

Canberra has already committed A$526mn towards the development of eight regional hydrogen hubs. Additional support from state governments brings total funding for hubs to A$1.02bn.

Export focus

Australia anticipates it will be a major exporter of hydrogen to demand centres in Europe and Asia. The report estimates that 12mn t/yr of low-carbon hydrogen could be exported globally by 2030, primarily from Latin America.

However, Australia is relatively advanced when it comes to setting up international cooperation on hydrogen. The government has established seven international clean energy partnerships—with Singapore, Japan, Germany, the UK, South Korea, India, and the US—all of which feature cooperation on hydrogen. The country also completed its first pilot shipment of liquid hydrogen to Japan in 2022 and is due to trial shipment of containerised green hydrogen to Indonesia by the end of this year.

The government is developing a guarantee-of-origin scheme accounting for lifecycle emissions and tracking renewable electricity, which must be aligned with international approaches to facilitate international trade, the report notes.

Domestic demand

Australia has 11 grey hydrogen projects in operation, producing nearly 500,000t/yr. Around 80pc of this hydrogen is used for ammonia production—further processed into fertilisers, explosives for mining and sodium cyanide for nickel processing and plastics—while the remaining 20pc is used for oil and gas refining.

While the country has seen rising demand for low-carbon hydrogen in mining, power generation and blending into gas networks, it has seen little progress on hydrogen-powered heavy-duty and light-duty transport.

The report also notes that Australia has fallen behind Europe on support for green steel projects. While Australia is the world’s largest iron ore producer, it manufactures only 5.5mn t/yr of steel and exports 900mn t/yr of iron ore for processing elsewhere. “There is potential to establish a new onshore iron ore processing industry, utilising renewable energy and hydrogen,” the report adds.

The government’s Australian Renewable Energy Agency in mid-April announced a combined A$50mn for two funding rounds supporting research and development for renewable hydrogen and low-emission iron and steel. The hydrogen round will be split into two streams, one focused on production and conversion into derivatives such as ammonia and the other focused on storage and distribution.

Security of supply

Electrolysers could be a potential bottleneck for Australia’s hydrogen ambitions, particularly for reducing cost of production below A$2/kg, according to the report.

Electrolysers cost $1,400–1,700/kW—and this figure is expected to fall as manufacturing capacity scales up—and have an efficiency of around 75pc, according to the report.

The report highlights Australian startup Hysata as a potential supplier of high-efficiency electrolysers. The company is already planning to establish 1GW/yr of manufacturing capacity by 2025, although it has not yet undertaken large-scale system trials, the report notes.

Global manufacturing capacity sits at nearly 8GW/yr, with Europe and northern Asia accounting for 65pc of supply. Australia’s project pipeline could require 28pc of the expected 60GW/yr electrolyser manufacturing capacity by 2030, although the report notes that “the impact of substantial industry support policies in some countries may have a negative impact on Australian industry’s ability to secure affordable electrolysers”.

It also highlights the availability of critical minerals and metals for alkaline and proton-exchange-membrane (PEM) electrolysers. While Australia and neighbouring countries in the Indo-Pacific region have “generally abundant” reserves of nickel, used in alkaline electrolyser manufacture, platinum group metals such as iridium— key for PEM electrolysers—are not produced in the region and may be at greater risk in the event of supply constraints.

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Author: Polly Martin