Origin Energy has decided to abandon its involvement in a green hydrogen development project despite receiving substantial government financial support.
The project, known as the Hunter Valley Hydrogen Hub, was backed by $115 million from both state and federal governments in New South Wales. Despite these efforts, Origin concluded that the market for renewable hydrogen is not developing rapidly enough to justify continuing their investment.
Origin’s decision affects its joint venture with chemicals manufacturer Orica. The energy company cited two main reasons for its withdrawal: insufficient demand for renewable hydrogen and the investment risks associated with uncertain input costs and technological advancements needed to make the project viable. Origin’s chief executive, Frank Calabria, explained that the anticipated growth in the hydrogen sector has not occurred and that the company cannot currently see a viable path to making a final investment decision.
The planned $207.6 million project had received necessary planning approvals, with construction slated to start in mid-2025 for an initial launch by 2026. With the abandonment of the project, Origin plans to redirect its investment focus towards renewable energy and storage solutions considered more effective for achieving energy decarbonization in the near term.
Impacts on Partners and Government
Orica, still interested in the potential of hydrogen, expressed disappointment but remains committed to exploring future opportunities in the sector. Additionally, they are considering other ways to keep the Hunter Valley Hydrogen Hub project alive. The development was initially backed by $70 million from the Australian Government Regional Hydrogen Hubs Program and $45 million from the New South Wales Hydrogen Hubs Initiative. It was also shortlisted for further consideration under the Commonwealth’s $4 billion Hydrogen Headstart Program.
While disappointed, the government acknowledges the commercial nature of project decisions. Climate Change and Energy Minister Chris Bowen’s spokesperson emphasized the continued importance of renewable hydrogen for Australian manufacturing and industry, highlighting that government incentives are expected to unlock significant private investment going forward.
