The New Zealand Hydrogen Opportunity

KEY CONCLUSIONS

1. International markets for green hydrogen are imminent Global demand forecasts for green hydrogen are high. Hydrogen is quite possibly the only decarbonisation solution for countries with scarce renewable energy resources and for sectors that have no other renewable energy alternatives.

2. New Zealand could become the world’s first large-scale producer of green hydrogen New Zealand has a key competitive advantage, as the renewable electricity available from 1 January 2025 could produce green hydrogen at an internationally competitive price point. This could enable New Zealand to be a world-leading exporter of green hydrogen. In addition, New Zealand’s abundance of low-cost renewable development options may support long-term growth.

3. Liquid green hydrogen or green ammonia? Green hydrogen can be delivered in different forms, with liquid hydrogen and ammonia the most likely. Both have advantages and disadvantages. While a New Zealand project could deliver either, the ultimate choice will be determined by end customers’ specific use case applications.

4. Focus required to support a hydrogen future There are a range of uncertainties that will influence the viability and timing of a green hydrogen opportunity in New Zealand. These include international government support, the certification of green hydrogen, technology developments, alternative fuels and consumer preferences. Given the extent to which growth is forecast, there is confidence that these issues will be overcome. The key issue will be timing.

5. Bridging the economic gap will require government support Hydrogen is projected to remain more expensive than conventional fossil fuel energy sources in the medium term. Bridging this cost differential will require significant government support through carbon pricing or other measures.

6. A hydrogen production facility can support a dry-year solution A green hydrogen plant can be designed to vary its production to suit conditions within the New Zealand electricity system. During dry years, production can be reduced, therefore providing dry year reserve. During times of energy surplus, production can be increased to capture renewable spill. This flexibility could offer a substantial and valuable contribution to support New Zealand's decarbonisation goals. Given its importance, a complementary piece of detailed analysis is being undertaken to quantify this opportunity.

7. The potential for transformational economic change New Zealand’s competitive advantage provides an opportunity to create an entirely new industry with long-term economic value. This industry could help decarbonise both international and domestic markets.