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Australia – A Hydrogen Powerhouse … in the Making!

Sandeep Chandra's picture
Director Hydrozen2050

Successful Entrepreneur, Owner of Solar company, examining Hydrogen Economy options, Blogger, Highly experienced Program Manager & Project Manager

  • Member since 2021
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  • Jul 6, 2021
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“Lucky country! – You’ve done it again!” Australia has a knack of getting lucky. Or is it that Australia makes its own luck? Regardless of how one sees it – Australia is well on its way to becoming a global HYDROGEN POWERHOUSE. With Hydrogen - a commodity that the world is lining up for now, Australia is all set to cash in

For decades Coal sustained the Australian economy. Then came Natural Gas, cleaner than coal and in great demand. And soon there will be HYDROGEN – 100% clean and in demand

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What is motivating Australia’s quest to be a global Hydrogen supplier? Two things – market pull and government push

Pressure is mounting on economies of the world to meet their respective commitments under the Paris Accord on Climate Change to reduce net GHGs to zero. The target may seem a distant 2050 but there are intermediate milestones along the way, significantly in 2030, that are forcing countries to find clean, green fuels to replace dirty fuel in order to meet these targets, fast!

HYDROGEN is a key energy vector that figures very highly in these quests, owing to its impeccable green credentials. With humongous projects in the pipeline for manufacture and supply of Hydrogen and Hydrogen-related fuels, Australia will soon be ready to stake its claim in the global top tier of Hydrogen powerhouses

Market Pull

Hydrogen will re-write the global energy map. Depending upon how one approaches, conservatively 17% (Statista) to optimistically 25% (BloombergNEF) of the global energy demand is expected to be met by Hydrogen by 2050

US Energy Information Administration, estimates global energy demand will be 700 (in 2030) rising to 900 (in 2050) quadrillion BTUs. This is equivalent to (using 1 BTU = 1.055 KJ, 1 kwh – 3600 KJ, 1 kg of H2 = 33 kwh) = 135 - 199 million tons by 2050

At $2 / kg of H2,, considered the holy grail target, this is equivalent to USD 400 BILLION in 2050. Key price drivers like advances in electrolyzer technology and increasing scale of Hydrogen production are trending in the right direction to achieve the holy grail of “H2 under $2

 

Credit – Australia’s National Hydrogen Policy - Range of possible Hydrogen demand to 2050

How much of this market ends up with Australia is the moot question? While most countries are setting out strategic plans of how Hydrogen will be consumed and applied, very few countries are actually thinking of how this demand of Hydrogen will be produced and supplied. Australia is and as a result looks well prepared as a future major supplier

Driving Australia’s export demand will be chiefly Japan, which expects to use 10 million tons of Hydrogen per year by 2050. Add, Korea demand which is expected to be nearly 2 million tons by 2030. Plus Germany and other Asian economies too will figure high in the list

Frenzy of Activity

If recent number of capital raisings on the Australian Stock Exchange related to Hydrogen and Hydrogen-fuel related projects is any indicator, then it clearly indicates that corporate Australia is in full swing with regards to Hydrogen investments. Here is a sample: (Disclaimer: see at bottom)

  • Fortescue Metals recently allocated $400M to produce green Hydrogen for use in steel-making (green steel) and towards developing a pipeline of 300GW of green energy and green Hydrogen at its Pilbara plant, WA
  • Santos, Glencore, Boral and others – and others — $50M funding from Australian government to create blue Hydrogen and capture CO2 using CCS (Santos and Glencore) and for manufacturing of aggregates (Boral) — Jun 2021
  • ATCO received $29 million from Australian Renewable Energy Association (ARENA — a Government entity) to develop its Clean Energy Innovation Park Project (CEIP) –Australia’s first commercial scale green hydrogen supply chain, with 10MW electrolyser producing 4.0 tons/day of Hydrogen, along with storage and delivery to the gas network
  • Province Resources (ASX:PRL) tied up with French renewables company Total Eren to evaluate a green hydrogen project of up to 8GW — May 2021
  • Verdant Earth Technologies raised $2M pre-IPO, and is involved in two major Hydrogen projects — one to setup the largest green Hydrogen plant on the East Coast of Australia and two, tying up with Darwin Port to develop it into a green Hydrogen export hub for exports into Asia — Apr 2021
  • Infinite Blue Energy (ASX: IBE) raised $6M with a vision to become the first zero-emissions or green hydrogen company to list on the Australian Stock ExchangeApr 2021
  • Global Energy Ventures (ASX:GEV) is a unique player which is positioning itself as a Hydrogen carrier by designing special ships that could carry compressed hydrogen exports — March-2021

Government Push

In November 2019, Australian Government released its National Hydrogen Strategy. This envisioned Australia as creating a clean, green, innovative Hydrogen industry and positioning Australia as a significant exporter by 2030

A key element of Australia’s approach will be to create hydrogen hubs – clusters of large-scale demand - eg at ports, in cities, or in regional or remote areas - to provide the industry with its springboard to scale. Hubs will make the development of infrastructure more cost-effective, promote efficiencies from economies of scale, foster innovation, and promote synergies from sector coupling

Government Support

The Government has planned the establishment of the Hydrogen industry in a phased manner — scaling up then large scale

  • Scale-up Activities — support for pilots and demonstrators, develop demonstrator hubs, assess supply chain needs, develop supply chains for hubs
  • Scale-up Support — drive technology development, develop industry expertise, promote foreign collaboration, develop country-to-country agreements
  • Large Scale Activities — identify signals that large-scale markets are developing, scaling up in response, enable domestic markets
  • Large Scale Support — financing clean Hydrogen supply chains, policies to attract private investment, policies for domestic demand, provide long-term governance structures
  • Overall Support — responsive, light-touch regulation, harmonizing standards and developing schemes to track and certify origin of clean Hydrogen

Hydrogen Hubs and Large Projects

  • Western Australia — The Asian Renewable Energy Hub, is a 26 GW hub of Solar and Wind currently under development in the Pilbara region and expected to bolster the Australia’s ambitions to become a world-leading exporter of the zero-emissions fuel
  • Norther Territory — Darwin singled out by the government as the ideal location for a future clean hydrogen hub, to receive $275m in government cash to make it a reality to produce clean Hydrogen alongside carbon capture, use and storage (CCS/CCUS)
  • Darwin is also being developed as a green Hydrogen hub with superlative-laden terms — world’s biggest solar PV plant (10GW), world’s biggest battery system (30GWh) and world’s longest high voltage direct current (HVDC) transmission cable link (4,500 kms) from Darwin to Singapore
  • Queensland — The sunshine State is developing a 3GW electrolyzer based green Hydrogen plant in Gladstone and expects to ship this to Japan upon project culmination. Besides this, the Government has strategic tie-ups with Japanese corporates and Universities in Japan
  • South Australia — SA is in overdrive with regards to Hydrogen and Hydrogen-related fuel projects. From a 75MW electrolyzer, 40 tons/year of green Ammonia project for shipment to Japan, in the Eyre Peninsula, a 50MW, 25 tons/day of green Hydrogen electrolyzer project, world’s largest co-located wind, solar, battery and hydrogen production facility in Crystal Brook, called the “Hydrogen SuperHub” plus other mini demonstrators, SA is well-positioned to enhance its and Australia’s credentials as a green place
  • Victoria – With strong Renewable Energy Targets (RETs), they are setting up in Latrobe Valley, the World’s first fully integrated Hydrogen Supply Chain to demonstrate a full supply chain starting from Hydrogen production and ending with its transportation to Japan, using a 15GW wind and solar plant, powering electrolyzers at an initial capital cost of around $22 billion
  • New South Wales — Jemena Western Sydney Green Gas Project — A $15 million facility to co-funded by the ARENA, is a demonstrator project to inject and store a small percentage of hydrogen (less than 2% by volume) into part of the Jemena Gas Network, Australia’s largest gas distribution network

Conclusion

The popular saying goes – “well begun is half done”. It aptly applies to Australia. With its resources, and skills and backed by a well-intentioned government, Australia has setup itself to take advantage of increasing global momentum for clean Hydrogen and turn into a major energy export. This will potentially generate thousands of new jobs and billions of dollars in economic growth between now and 2050, whilst simultaneously helping to reduce GHGs emissions in Australia and the world

Disclaimer

Author is not a shareholder in any of the stocks mentioned in this article and cannot in any way whatsoever be held responsible for any action you take based on information below or in the linked web pages)

References

  1. Keynote address at CEDA 'Future Direction in Energy Technologies' event, Sydney | Ministers for the Department of Industry, Science, Energy and Resources
  2. The Hydrogen Rainbow and the Pot of Gold (medium.com)
  3. Hydrogen use needs to hit 212 million mt by 2030 for net-zero: IEA | S&P Global Platts (spglobal.com)
  4. Australia’s National Hydrogen Policy - Range of possible Hydrogen demand to 2050
  5. S2.1-P.E.Franc,HydrogenCouncil.pdf (europa.eu)
  6. EIA projects nearly 50% increase in world energy usage by 2050, led by growth in Asia - Today in Energy - U.S. Energy Information Administration (EIA)
  7. South Korea’s Hydrogen Strategy and Industrial Perspectives | IFRI - Institut français des relations internationales
  8. Fortescue to produce green hydrogen from 2023, and targets green steel | RenewEconomy
  9. Pot of Gold? Yes, but only at one end of the Hydrogen Rainbow | by Sandeep Chandra | May, 2021 | Medium
  10. Hydrogen boom: Infinite Blue Energy closes pre IPO round and announces major offtake - Stockhead
  11. ATCO receives $28.7m from arena for green hydrogen production
  12. Verdant Earth Technologies eyes strategic green hydrogen alliance with Australia’s closest port to Asia (msn.com)
  13. Sweetman Renewables aims to be one of the largest green hydrogen players - Sweetman Renewables
  14. Lion Energy (ASX:LIO) eyes green hydrogen market - The Market Herald
  15. 4 ASX hydrogen shares powering forward in 2021 (fool.com.au)
  16. Global Energy Ventures targets hydrogen shipping opportunities in Europe | TradeWinds (tradewindsnews.com)
  17. Queensland Hydrogen Projects
  18. Hydrogen Projects in South Australia - Renewables SA
  19. Australia’s National Hydrogen Strategy | Department of Industry, Science, Energy and Resources
  20. Hydrogen Insights 2021 - Hydrogen Council
  21. Asian Renewable Energy Hub
  22. world’s biggest battery system (30GWh) and world’s longest high voltage direct current (HVDC) transmission cable link (4,500 kms)
  23. Hydrogen and Hydrogen-related fuel projects
  24. Hydrogen Supply Chain

 

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Matt Chester's picture
Matt Chester on Jul 6, 2021

What is motivating Australia’s quest to be a global Hydrogen supplier? Two things – market pull and government push

This is great framing, Sandeep-- we've seen many technologies have either that push or pull but still fall short, but an emerging space that has both happening simultaneously can overcome some more challenging hurdles, for sure. 

Do you think there are specific lessons from Australia's early days in this space that supporters in other countries can/should learn and apply to their regions? 

Sandeep Chandra's picture
Sandeep Chandra on Jul 7, 2021

Australia stands out because Federal and State Governments here worried about job losses in coal and gas sector and large Corporates with huge millions in sunk costs in gas pipelines and ports need to pivot into Hydrogen for respective political and profit reasons

Regardless of the reason, I believe the coming Hydrogen theme can be a great leveler. Countries that have been heavily dependent upon imported fuels to drive their economies have an opportunity to become fuel creators and exporters. Sun and Wind are everywhere and countries like Chile, Kazakhstan and some countries in North Africa are great examples where steps are being taken to marshal these resources for Hydrogen production for own and export purposes

Australia has put in a blueprint, although unique to Australian situation, that has important considerations that just depending upon export market will not be sufficient. Domestic infrastructure and market development will be needed ahead of or at least in tandem to export market development

Matt Chester's picture
Matt Chester on Jul 7, 2021

Regardless of the reason, I believe the coming Hydrogen theme can be a great leveler. Countries that have been heavily dependent upon imported fuels to drive their economies have an opportunity to become fuel creators and exporters

This is a tremendous point-- how much was the 20th century driven by which countries had fossil fuel reserves and which did not? If the hydrogen economy can even approach a fraction of that influence, what country wouldn't want to position itself to be ready to take advantage of that-- especially when not dependent on luck of the draw of whether those energy resources just happen to be under their feet? 

Jim Stack's picture
Jim Stack on Jul 7, 2021

Sandeep, I don'I want to burst your hydrogen bubble but most experts agree that hydrogen is 8x more energy intensive to make and use and store than Solar PV. H2 is just an energy carrier and not an energy source. Read the view of H2 from one of the richest and inventive men, Elon Musk. 

  So in the long run I think Australia will see it is making a poor choice.  

   

Matt Chester's picture
Matt Chester on Jul 7, 2021

What about where hydrogen can provide opportunity to store energy from excess solar? There are some things hydrogen can do that traditional energy storage in batteries cannot

Sandeep Chandra's picture
Sandeep Chandra on Jul 8, 2021

Spot on! 

We have seen in many instances - perhaps the first co-incidentally occurring in South Australia in 2018 (?), then in UK in Dec 2019 and even in Latvia in Jul, 2020 - where Solar and Wind produced so much energy during daytime that spot prices of electricity went negative! There were no takers! It is in these instances grid guys and Solar & Wind owners are all better off diverting this extra energy into Electrolyzers to produce H2. When your main input is free or really cheap there is certainly a business case. Green H2 is all about that anyway. It is an arbitrage opportunity - pure and simple - make when low, sell when peak

Matt Chester's picture
Matt Chester on Jul 8, 2021

Does that suggest that the hydrogen producers, the ones owning the elecrolyzers, would be best suited to b the same people who own that renewable equipment? Or is the business case still there for the hydrogen producers to be independent and simply only operate during those times when the renewable prices plummet? 

Sandeep Chandra's picture
Sandeep Chandra on Jul 9, 2021

Anyone undertaking to produce H2 ought to have offtake contracts in place prior. When writing such contracts there will naturally be an assumption of the input cost (cost of Solar/Wind). So the question who be best able to exploit the situation is dependent upon the offtake agreement the producer enters into. That way the field is open to both types of entities, Solar/Wind guys getting into H2 production as well as IHPs (Independent H2 Producers - my term :-)

Sandeep Chandra's picture
Sandeep Chandra on Jul 8, 2021

Jim, while making green Hydrogen we are NOT competing with Solar PV. Problem emerges when one faces excess Solar (and Wind), say, excess over PPA contracted quantities that the grid wouldn't want. Only then this excess is diverted to generate H2. H2 generated may be stored locally in tanks, or compressed and shipped out or pumped into gas grids. Batteries are ok for storage too but only when dealing with small amounts. Just a case in point, the amount of energy the largest battery in the world today, Elon Musk's Tesla, near Adelaide, South Australia stores up to 129 MWh. Now this amount of energy in equivalent H2 terms is a mere 221 m3 at 350 bar (see my blog Hydrogen by Numbers). Finding this space locally is trivial, compared to Tesla's Big Battery that is spread over hectares! SA Big Battery Myth Busted

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