Australia’s federal government has provided further details about the A$2 billion Hydrogen Headstart program, aiming to target 1000MW of electrolyser capacity by 2030.
The program will offer a production subsidy to a select number of large-scale projects to bridge the cost gap between hydrogen production and competitive pricing. The government’s consultation paper emphasizes its preference for funding at least two projects with a minimum electrolyser capacity of 50MW. The chosen projects must produce hydrogen or its derivatives, such as ammonia, using renewable energy and without carbon capture and storage.
The Hydrogen Headstart program aims to support the development of a competitive hydrogen industry in Australia. By providing a production credit on a per kilogram basis for 10 years, successful applicants will receive financial assistance to cover the difference between production costs and sales prices. However, if the sales price exceeds the required support within the designated timeframe, recipients will be required to repay a portion of the subsidy.
The program’s guidelines for applications are expected to be released in late 2023 or early 2024. It is seen as a significant priority to maintain Australia’s competitiveness in the global hydrogen market. The successful design of the Hydrogen Headstart program will shape future policies and incentives, ensuring Australia remains at the forefront of the hydrogen industry.
Australia holds vast solar and wind power resources, providing a strong foundation for the development of green hydrogen. However, the commercialization of the industry has been slow, prompting calls for subsidies and incentives to avoid falling behind other countries in the global hydrogen export race. With approximately 40% of all announced global hydrogen projects and a pipeline valued between A$230 billion and A$300 billion, Australia has the potential to become a major player in the hydrogen market.
The Australian government’s decision to invest in large-scale projects and provide production subsidies is a significant step toward unlocking the country’s hydrogen potential. By leveraging its abundant renewable energy resources, Australia can position itself as a global leader in green hydrogen production. The Hydrogen Headstart program will not only drive economic growth and job creation but also contribute to reducing carbon emissions and fostering the transition to a sustainable and clean energy future.
