The Worley report commissioned by the Australian Renewable Energy Agency projects capital costs for green hydrogen could fall 68% by 2035 through standardised, digitised plant design. BloombergNEF’s own electrolyser price survey found system costs have instead risen by a median of 57% since 2022, the opposite direction the roadmap assumes, and the report itself excludes electricity costs, which account for roughly 70% of the levelised cost of hydrogen.
ARENA’s newly commissioned roadmap identifies 24 separate levers developers could pull to reduce green hydrogen project costs, from modular, standardised equipment packages to AI-assisted staffing, and estimates that digitised construction and standardisation alone could cut capital expenditure by 68% by 2035, with original equipment manufacturers capable of stripping out a further 32%. The largest single lever identified, buying the cheapest available electrolyser equipment, is estimated to deliver a 15% capital cost reduction on its own. James Boyle, Australian program lead at Mission Possible Partners, called the underlying technoeconomic work credible and granular, but was direct about what it does not do. “Is it going to help you secure a data centre or an end customer? No. So to my mind it doesn’t solve the issues the market is facing,” he said, adding that the report “doesn’t address the elephant in the room which is electricity costs.”
That omission is significant given how the cost of producing hydrogen actually breaks down. Industry figures commonly cited by engineering firms including Worley itself put capital expenditure at around 30% of the levelised cost of hydrogen, with the remaining 70% attributable to operating costs, the large majority of which is the electricity consumed by electrolysis. A roadmap that addresses the smaller share of that total while explicitly excluding the larger one, as ARENA’s report does by stating its estimates exclude the costs of finance, operation and short-term supply chain impacts, is a genuine contribution to reducing one identifiable cost category, but it leaves the dominant driver of whether green hydrogen can compete on price largely untouched. The report’s own framing, that cost reduction is achievable going forward in contrast to the cost increases seen since 2020, is also worth weighing against recent independent data. BloombergNEF’s electrolyser price survey found system costs, the input 2020-era forecasts assumed would fall steadily through manufacturing scale, instead rose by a median of 57% since 2022, a trend that runs directly counter to the learning curve the ARENA roadmap is modelling forward from 2025.
The tension in the report’s largest cost lever, cheaper equipment, is also more specific than a simple procurement choice. Boyle’s read of “buy the cheapest equipment available” was blunt: “which I interpret to mean Chinese electrolysers.” China’s electrolyser manufacturing base has expanded rapidly enough to produce sustained price competition among more than 350 domestic manufacturers, driving alkaline electrolyser prices down by roughly 70% since 2021 in a contest analysts have described as pushing companies to sacrifice margin simply to protect market share, with widespread expectations of significant consolidation as the majority of that manufacturing base operates at a loss. That price advantage is real, but so is the compliance gap Boyle flagged: “Chinese electrolysers still don’t comply with ISO standards, so there are some reasons people still don’t buy them.” A capex lever built substantially on equipment that does not yet meet the international standards Australian and other Western developers typically require is a lever with a caveat the report’s headline percentage does not carry.
Australia’s policy environment provides the second half of the picture Boyle and Climate Energy Capital director Tim Buckley both point to as the more binding constraint than technology cost. The federal Hydrogen Headstart program, designed to bridge the gap between the cost of producing renewable hydrogen and what buyers are willing to pay through a decade of production credits, concluded its first round in July 2025 with $1.25 billion committed to two projects, $814 million for Copenhagen Infrastructure Partners’ 1,500 megawatt Murchison Green Hydrogen project in Western Australia and $432 million for Orica’s Hunter Valley Hydrogen Hub. The 2026 to 2027 federal budget then reduced funding available for the program’s second round to $1 billion, widely reported as roughly halving what had been expected, and South Australia separately shelved a half billion dollar green hydrogen fund of its own. Those cuts lend concrete support to Buckley’s argument that political commitment, not just technology cost, has been the binding constraint on Australian projects reaching financial close.
One of Buckley’s other specific claims is harder to square with the record as it stood at the time this reporting circulated. He argued that “no one’s building anything in Australia” and that “nothing has got to financial investment decision,” pointing to the Australian Renewable Energy Hub’s retreat from ammonia export toward a role simply supplying power to mining companies as evidence of the broader retreat. Orica’s Hunter Valley Hydrogen Hub, however, reached a final investment decision on July 1, 2026, backed by its $432 million Hydrogen Headstart allocation, with construction targeted to begin the same year and first production expected in 2029 from a 50 megawatt electrolyser producing around 4,700 tonnes of hydrogen annually to displace roughly 7.5% of the natural gas feedstock used at Orica’s existing ammonia plant in Newcastle. That is a real project that has cleared the specific hurdle Buckley cited, even as its scale, a few thousand tonnes of hydrogen a year against gigawatt-scale ambitions once attached to projects like the 15 gigawatt Australian Renewable Energy Hub in the Pilbara, illustrates just how far Australian hydrogen has retreated from its earlier framing as a large-scale export industry toward smaller, industrially integrated projects displacing a single customer’s existing gas use.
The comparison Buckley draws to China’s trajectory also deserves the same scrutiny applied to ARENA’s own cost claims. His view that China is “3 to 5 years away from commercial scale and deployment,” with a trigger point being when China builds “the next 10 green hydrogen plants” beyond what he characterises as first-of-a-kind pilot testing, is a reasonable read of where Chinese deployment currently sits, but it should be read alongside the same overcapacity dynamics driving the low equipment prices Boyle flagged. A manufacturing base large enough to serve a market many multiples the size of what is currently being ordered is evidence of scaled production capability, not proof that the underlying green hydrogen projects those electrolysers would supply are themselves commercially proven at the volumes China’s factory capacity implies.
Envision’s 350,000 tonne per year green ammonia plant in Inner Mongolia, cited as evidence of Chinese commercial progress and already exporting to Korea and Japan, is a genuine, operating facility, but the company’s own target of reaching cost parity with grey ammonia by 2028 is a forward projection rather than an achieved benchmark, and it depends on many of the same electricity cost and financing variables that Boyle identifies as the unresolved issue in Australia’s own roadmap. Buckley’s proposed alternative, tapping cheaper Chinese, Japanese or Korean capital and technology rather than building an independent Australian supply chain, is a coherent response to a market where electrolyser costs have not fallen the way ARENA’s own report assumes they eventually will, but it is a strategy premised on Australia becoming a capital taker in a technology it once positioned itself to help lead, a repositioning the report’s optimistic capex trajectory does not account for and that its own reviewers say it was never designed to resolve.
