According to a government analysis, Australia is no longer a global leader in the development of a clean hydrogen economy and urgently needs to advance critical projects.
The Australian Department of Climate Change, Energy, the Environment and Water’s State of Hydrogen Report compares the domestic hydrogen market to those across the world and examines the industry’s future prospects.
Despite having a “strong pipeline of announced hydrogen projects,” the report stated that Australia still lags behind many OECD countries in terms of projects actually being implemented.
Australia will need to speed up the implementation of the early initiatives outlined in the National Hydrogen Strategy if it wants to be a global leader in the hydrogen industry by 2030.
The paper highlighted new economic incentives and market-based regulations that are promoting the growth of hydrogen in the US, Canada, and Germany.
Australia may need to reevaluate the need for targets and incentives to guarantee its industry remains competitive, it added, given the growing international demand for hydrogen and developing competition.
According to S&P Global Commodity Insights’ Hydrogen Market Monitor, which was released on March 31, Australia and New Zealand are projected to produce 8.9 million mt/year of electrolytic or renewable hydrogen by 2030, trailing Europe’s 16.74 million mt/year output.
According to the Monitor, around 80.47 million mt/year of hydrogen is anticipated to be produced globally by 2030, mostly via electrolysis as well as fossil fuels with CCS and biomass.
Investments
Australia had 106 active, planned, or operational hydrogen projects as of December 2022, 64 of which had been disclosed since the end of 2021.
Australia’s hydrogen and ammonia projects are anticipated to be supported by over A$230-A$300 billion ($156-$203 billion) in total investments.
The research stated that a sizable number of the projects that have not yet received final investment choices have been going through development and financial restructuring for the past two to three years and are waiting for workable financing options.
With public funding totaling about A$1.02 billion, both the federal and state governments are seen investing in hubs, incentives, and research and development to lower the costs of hydrogen generation.
Via the “Regional Hydrogen Hubs” programme, the federal government is contributing A$526 million towards the creation of eight hydrogen hubs.
Going ahead, the paper notes that applications using clean hydrogen as a chemical feedstock and in the production of electricity will advance most swiftly by 2025, while those involving transportation, iron and steel, and industrial heat exhibited less velocity.
Costs
The analysis stated that higher costs for crucial components of clean hydrogen projects in 2022 compared to 2021 were the result of global supply chain challenges and rising demand for cleantech equipment like solar panels and electrolyzers.
According to statistics from ActewAGL Hydrogen Refuelling Station, with a pump price of A$10–15/kg hydrogen, costs of clean hydrogen generation vary depending on scale and location.
Although the electrolyser’s small scale (75 kW) is directly related to this cost, it also reflects high national production costs.
Frontier Energy’s Bristol Springs Project pre-feasibility study indicates that the project might attain a total cost of A$2.83/kg of hydrogen, it noted.
The Australian government’s efforts to modernise its electrical grid will probably help hydrogen production become more cost-competitive.
With the A$20 billion “Rewiring the Nation” effort, this initiative aims to achieve 82% renewable electricity by 2030.
According to S&P Global statistics, Platts rated Western Australia’s alkaline electrolysis-produced hydrogen at $2.51/kg on April 13, an increase of 16% from the previous month.
According to S&P Global data, the price of alkaline electrolysis-produced hydrogen in Japan (including capital expenditures) was $4.93/kg on April 13, down 9.2% from the previous month.
Green ammonia
The 10 MW electrolyzer project of Yuri Renewable Hydrogen to Ammonia passing final investment decision resulted in a considerable increase in the number of green ammonia projects submitted in Australia in the previous year, according to the report.
In September 2022, the Australian Renewable Energy Agency awarded a grant of A$47.5 million for the Yuri project in Western Australia, prompting developers Engie and Yara to make a favourable final investment decision.
Since 2021, co-firing of ammonia has evolved across the globe, with further trials in Japan, the US, and China currently under way, it added, highlighting Australia’s export potential.
Small-scale ammonia co-firing has been carried out in Japan by JERA and IHI Corporation, with the start of larger-scale co-firing (20% of heating value) expected in the middle to end of 2023, according to the statement.
