Australia may announce more hydrogen project funding recipients after Murchison

Australia might announce additional funding recipients in the first round of its A$2 billion ($1.23 billion) Hydrogen Headstart program as it evaluates remaining bids, the Australian Renewable Energy Agency told Platts, part of S&P Global Commodity Insights, on May 28.

The potential for further funding comes as Australia works to revitalize its renewable hydrogen sector amid challenging market conditions, where developers have faced difficulties in getting offtake agreements and investments.

"ARENA is continuing to work with some of the shortlisted applicants under round one of the Hydrogen Headstart Program to satisfy a number of key conditions and development hurdles," ARENA's spokesperson said.

"Should these conditions be satisfied, there may be further funding recipients."

ARENA announced in March the first recipient under Hydrogen Headstart, allocating A$814 million to Copenhagen Infrastructure Partners' 1.5-GW Murchison Green Hydrogen Project in Western Australia.

Murchison was selected from a shortlist of six renewable hydrogen developers announced in 2023, which included BP Low Carbon Australia, HIF Asia Pacific, KEPCO Australia, Origin Energy Future Fuels and Stanwell.

Round two

ARENA's spokesperson said there was a chance the strategy for round two would be revised based on the lessons of the first round.

"ARENA is consolidating learnings from round one to inform the approach for round two," the spokesperson added. "Details on round two are expected in the second half of 2025."

Australia's renewable hydrogen sector has met headwinds since the shortlist was announced, with some shortlisted bidders reassessing their involvement.

Origin Energy said in October 2024 it had decided to exit the Hunter Valley Hydrogen Hub project in New South Wales, citing uncertainty around the pace and timing of the development of the renewable hydrogen industry, and difficulties in securing investment.

Stanwell said in February that it was reviewing its involvement in hydrogen initiatives after the Queensland government announced it would not provide further funding for its flagship Central Queensland Hydrogen Project (CQ-H2) for renewable hydrogen.

The Hydrogen Headstart program was initially announced in Australia's fiscal 2023-24 (July-June) budget with an A$2 billion fund. In the following year's budget, the government doubled the allocation to A$4 billion, signaling its continued commitment to developing the sector.

Platts, part of S&P Global Commodity Insights, assessed Queensland hydrogen produced via alkaline electrolysis (including capital expenditures) at $3.66/kg May 27, down 14.29% from a month ago.

Platts assessed Japan hydrogen produced via alkaline electrolysis (including capex) at $4.26/kg on May 27, down 19.01% month over month.