Australia views cost as primary impediment to hydrogen adoption

According to Canberra’s first status report on its hydrogen strategy, issued in 2019, three major challenges to developing the country’s hydrogen strategy are increasing demand for hydrogen and its derivatives, attaining low-cost production at scale, and lowering delivery costs.

The federal government and each of the country’s six state governments have each developed their own hydrogen programs as part of the energy transition away from fossil fuels and toward low-GHG fuels such as hydrogen. Australia is the world’s largest LNG exporter and the second largest supplier of thermal coal.

Global adoption of clean hydrogen will require persistent effort to overcome the three major challenges that industry faces globally, not just in Australia, including increasing demand, attaining low-cost hydrogen production at scale, and lowering delivery costs.

The Australian governments’ next focus will be on increasing Australia’s demand for hydrogen products, with the strategy outlining the steps necessary to accomplish this goal.

The private sector has committed more than A$1.6 billion ($1.14 billion) to hydrogen enterprises in Australia, with public sector investment expected to reach $1.27 billion by June 2021, according to the research. According to project releases, the scope of the projects might exceed 100MW by 2025.

Clean hydrogen generation in Australia is estimated to cost between A$2.30-5/kg in 2025, down from roughly A$5/kg now. It will cost an estimated A$2-4/kg in 2030, the paper stated. Capital costs and electricity costs are the primary cost factors. Renewable hydrogen production prices could decrease to A$2/kg by 2030 if electrolyzers and renewable energy become sufficiently affordable, the report stated.

The survey stated that the average size of operating electrolysers worldwide was roughly 1.1MW last year. However, the 20MW Air Liquide Plant in Canada began operations in early 2021 with a four-module polymer electrolyte membrane electrolyser. The 1.25MW project at Hydrogen Park in South Australia is Australia’s largest operational electrolyser. The Australian government has funded three electrolyser projects with a combined capacity of ten megawatts, which are scheduled to come online in the near future.

The report stated that the Australian government’s future priorities include assisting in driving down the cost of hydrogen production toward the A$2/kg target and continuing to engage internationally in order to develop export links.