S&P Global Platts launches hydrogen price assessments for Australia

S&P Global Platts, the leading independent provider of information, benchmark prices and analytics for the energy and commodities markets, started publishing five separate price assessments for hydrogen in Australia from Aug. 16, in a move aimed at bringing transparency to the nascent market.

With Australia expected to become a hub for production and exports as the industry develops in the country, an Australia-based hydrogen price will allow exporters of the fuel to benchmark their product and give buyers a reliable price level to make procurement and investment decisions, Platts said.

The launch adds to Platts' existing basket of hydrogen price assessments in North America, Europe and Japan.

The prices will provide much-needed clarity on the cost of hydrogen production which will help in the future market development, said Ankit Sachan, hydrogen analyst with S&P Global Platts Analytics.

"Australia is at the forefront of hydrogen investment and infrastructure development and is set to play a vital role in the decarbonization and clean energy future of the Asia-Pacific region," he said.

Well-established downstream demand, government support, development of internationally consistent policies and regulatory framework and considerable investments are being made around developing hydrogen and "if all goes well hydrogen markets can be a reality," Sachan added.

There are 128 assessments in total that reflect all aspects of the daily cost of hydrogen production using different technologies, mainly proton exchange membrane (PEM) electrolysis, alkaline electrolysis, steam methane reforming with carbon capture and storage (CCS), coal gasification with CCS, and lignite gasification with CCS, Platts said.

For both PEM and alkaline electrolysis, daily hydrogen prices will be published for the following states: New South Wales, Queensland, South Australia, Tasmania, Victoria and Western Australia.

Daily hydrogen assessments for steam methane reforming with CCS will be published for Western Australia, based on coal gasification for New South Wales and Queensland, and for lignite gasification for Victoria.

First price assessments

Hydrogen in South Australia produced using alkaline electrolysis, including capital expenditure, was assessed at $1.9215/kg on Aug. 16.

In Japan, hydrogen produced via alkaline electrolysis including capital expenditure was at $4.6211/kg on Aug. 17, down $0.026, or 0.6% from the previous assessment.

Hydrogen in Queensland produced via coal gasification with carbon capture and storage was priced at $0.9431/kg on Aug. 16, while hydrogen in Western Australia produced via steam methane reforming with carbon capture and storage and including capital expenditure was priced at A$4.4991/kg.

Hydrogen projects, policy

Australia has major green hydrogen projects in the pipeline. InterContinental Energy and its partners' proposed 50 GW renewable hydrogen project in Western Australia's Western Green Energy Hub, the world's largest renewables project, plans to produce renewable hydrogen from sea water by 2030. InterContinental is also part of the consortium developing the 26 GW Asian Renewable Energy Hub in Western Australia, which is currently facing environmental hurdles.

Hydrogen Energy Supply Chain's (HESC) pilot project, which commenced in 2018, is another prominent project. It is owned by Kawasaki Heavy Industries and partners. This project plans to ship liquid hydrogen from Latrobe Valley in Victoria to Kobe in Japan later this year or early next year.

Japan, South Korea and Germany have developed national strategies for the introduction of hydrogen into their energy mix, and are working with Australian companies on research and development or piloting production and transportation of hydrogen.

The Australian government's 2019 National Hydrogen Strategy says the development of hydrogen could enhance Australia's energy security, and build an export industry "valued in billions."

Variable and non-variable parameters

The Australian price assessments would, for the first time, include hydrogen produced via coal and lignite gasification, which are technologies being used by companies like HESC.

Coal and lignite prices used for the assessments will be based on the Platts FOB Newcastle daily assessments, and take into account the differences in energy intensity and prevalent price spread between coal and lignite.

Another key component of the prices are variations in electricity costs across different states, which will be based on daily average Australian spot power prices from the National Electricity Market and the Wholesale Electricity Market, both operated by the Australian Energy Market Operator.