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This article is part of our New Energy Insights series from our Energy, Infrastructure and Resources team. Stay tuned for regular updates and commentary on topical issues across the sector.
ARENA’s Funding Announcement
On 5 May 2021, ARENA announced that it had conditionally approved a total of $103.3 million in funding for three commercial-scale hydrogen projects.
ARENA’s funding has increased by $33.3 million from the $70 million planned when the funding round was first announced in 2019. This allows ARENA’s funding to support a third project, rather than two as initially planned.
The three successful projects that will be funded, after a competitive round of applications from names that included BHP and Woodside, are:
|Entity||Location||Technology to be funded||Function|
|$42.5M||Engie Renewables Australia Pty Ltd (French-owned)||Karratha, WA||
10 MW electrolyser
|Production of green hydrogen to be used in the production of ammonia for export.|
|$28.7M||ATCO Australia Pty Ltd (Canadian-based)||Warradarge, WA||10 MW electrolyser||“Gas blending”: This site will produce green hydrogen which will then be blended with natural gas in order to decarbonise the natural gas network.|
|$32.1M||Australian Gas Networks Limited (subsidiary of HK-listed Cheung Kong group)||Wodonga, VIC||10 MW electrolyser||Similar function to the Warradarge, WA site.|
ARENA has declared that these projects would be some of the world’s largest hydrogen electrolysers and focus on producing “green hydrogen”.
Environmental groups prefer green hydrogen which is made from renewable sources. Blue hydrogen is made from fossil fuels whose small carbon output is managed through abatement strategies.
How does the industry view this announcement?
The funding announcement is being welcomed as a good start in cultivating a more globally competitive hydrogen industry in Australia.
The chief executive of the Australian Hydrogen Council, Fiona Simon, said that the funding was a “boost that the industry needs to progress commercial, large-scale projects.“1
The Federal Energy Minister, Angus Taylor, hailed the announcement as a “huge step” in establishing Australia as a world leader in the hydrogen industry. He noted that the projects are estimated to create 8000 jobs and $11 billion in GDP by 2050.2
It is clear the funding announcement is being hailed as an exciting new opportunity that will help build the industry’s long-term commercial viability.
As the hydrogen energy market is an emerging market, there are significant gains to be captured by Australian firms as early entrants. This announcement sends a clear signal to the market that Australia is becoming a viable destination for investment in commercial-scale renewables generation.
However, it must be noted that this is just one announcement. The need remains for greater certainty around energy policy to assist businesses with making investment decisions. A stable regulatory framework will be crucial in attracting long term and more large-scale investment.
The need for significantly greater funding is required if Australia is to have a globally competitive hydrogen industry. There will be an advantage for countries that prioritise this technology early – whether Australia will be part of this and develop a ‘big’ hydrogen industry that provides local jobs at all stages of the production chain while at the same time contributing to Australia’s international emissions reduction commitments will, in significant part, be a function of government support of early large scale projects – as was the case with the Solar Flagships program for large scale solar projects in Australia.
The Hamilton Locke team advises across the project life cycle – from project development, grid connection, financing, construction, including the buying and selling of development and operating projects.
Matt Baumgurtel leads the Hamilton Locke Energy, Infrastructure and Resources team and specializes in renewable energy including energy storage and green hydrogen projects.
Alice Mason is a Lawyer specializing in Construction and Infrastructure within Hamilton Locke’s Energy Infrastructure and Resources team.