PM Morrison pledges A$82 mil to New South Wales hydrogen projects

The Australian government will provide A$82 million ($58.07 million) funding for two hydrogen projects in New South Wales, Prime Minister Scott Morrison announced April 28.

The funding comes ahead of federal elections May 21, with rising energy costs and fossil fuel development central debating topics among parties.

"The Morrison government is backing the future clean hydrogen industry in the Hunter [region] in New South Wales, which will utilize the region's strong resources and export capabilities to produce clean hydrogen for use both here at home and across the world," a government statement said.

Up to A$41 million would go to the Port of Newcastle's Hydrogen Hub initiative, while another A$41 million would be allocated to Origin Energy Future Fuels' Hunter Valley H2 Hub implementation project, the statement said.

The funding complements A$100 million committed in the 2022-23 budget to support prefinal investment decision activities and early works to make the Port of Newcastle's infrastructure hydrogen ready.

The Port of Newcastle Green Hydrogen project is being sponsored by the Port of Newcastle, Macquarie Group's Green Investment Group, and the Australian Renewable Energy Agency (ARENA).

The project plans to ramp up electrolysis capacity in phases, starting with 40 MW and proceeding to over 1 GW by 2030.

A feasibility study is currently looking at a broad range of potential use cases for green hydrogen in the Hunter region, including mobility, bunkering, energy production, and industrial uses.

The Hunter Valley Hydrogen Hub, meanwhile, is to use renewable electricity from Origin's portfolio as a feedstock for a grid-connected 55 MW electrolyzer.

"The Hunter has been an essential part of Australia's energy security for decades, and our investment today locks in the Hunter's clean energy future," Morrison said.

The New South Wales announcement follows an April 19 pledge by the federal government to invest A$140 million in two Western Australian hydrogen hubs.

Low-cost hub

S&P Global Commodity Insights' Platts Hydrogen Price Wall shows high production costs in Europe and Japan, implying that these markets are likely to import low-carbon hydrogen from cheaper hubs, such as Australia, the Middle East, and the US.

S&P Global assessed New South Wales hydrogen produced via alkaline electrolysis, including capital expenditure, at $9.34/kg April 27, up 58.3% from a month ago.

European hydrogen produced via alkaline electrolysis was assessed at Eur11.09/kg ($11.6/kg) April 27, down 7.43% from a month ago.