Australia shortlists renewable hydrogen projects for funding amid budget cuts

The Australian Renewable Energy Agency has shortlisted seven renewable hydrogen projects for the second round of the Hydrogen Headstart program, according to a May 13 announcement, a day after spending cuts to the flagship initiative.

ARENA has invited the projects to submit full applications for funding from the program, which received a revised allocation of A$1 billion ($660 million) in the 2026-27 (July-June) federal budget announced on May 12, ARENA said.

"Renewable hydrogen is a complex, capital-intensive industry and progress takes time, but it is a critical enabler of industrial decarbonisation, particularly for hard-to-abate sectors," ARENA CEO Darren Miller said.

"What we're seeing are expressions of interest that are considered and well aligned to future market demand."

The shortlisted projects include Bell Bay Powerfuels, a 300 MW project in Tasmania; South East Queensland Power-to-X Project, a 150 MW project in Queensland; and Portland Renewable Fuels Project, a 220 MW project in Victoria, according to the announcement.

The renewable hydrogen end-use for the projects are methanol, sustainable aviation fuel, ammonia, urea and alumina, according to the government agency.

Australia reprioritized funding support for clean energy in the budget May 12, halving spending for Hydrogen Headstart, in a year wracked by energy shocks and cost-of-living increases.

Builds on existing support

Announced in the 2023-24 budget, Hydrogen Headstart aims to catalyze Australia's hydrogen industry to become a global leader in the emerging global trade for clean fuels, according to ARENA.

"Renewable hydrogen presents Australia with a significant economic and decarbonization opportunity," Miller said.

"Its potential to develop low-emission fuels for aviation and shipping, as well as key inputs for fertiliser could also help improve the nation's energy resilience in the longer term."

Round 2 of Hydrogen Headstart builds on ARENA's support for renewable hydrogen, with the Agency having already committed over A$1.2 billion to two projects in Round 1 and over A$396 million to 68 renewable hydrogen projects since 2017 through other funding programs.

Hydrogen Headstart's first round concluded last year, awarding A$1.2 billion to Orica's 50 MW Hunter Valley Hydrogen Hub and to Copenhagen Infrastructure Partners' 1,500 MW Murchison Green Hydrogen Project.

Under Hydrogen Headstart, projects seeking to produce renewable hydrogen or its derivatives can apply for a production credit delivered over 10 years to bridge the commercial gap between the cost of producing renewable hydrogen and market prices, it said.

Shortlisted applicants now have until early September to submit their full applications, it said. Following the assessment phase, a recommendation will be made to Chris Bowen, Minister for Climate Change and Energy, for approval of which projects will receive support.

Platts, a part of S&P Global Energy, assessed Australia renewable-derived ammonia delivered into Far East Asia, with high-capacity factors at $760.77/mt May 11, up 0.76% from a month ago.