The Australian Renewable Energy Agency will fund a new feasibility study into building a renewable hydrogen and ammonia production facility in the Western Australian town of Geraldton.
BP Australia will lead the project, that proposes to produce hydrogen from electrolysis powered by renewable energy and will partner with GHD Advisory to complete the feasibility study.
By supporting the study, ARENA hopes to increase understanding of the technical and financial challenges of a fully-integrated renewable hydrogen supply can, and how its financial opportunities can be achieved at large-scale.
ARENA will provide $1.71 million in grant funding towards a total feasibility study cost of $4.42 million.
The parameters of the study will consider an ammonia production facility that will purchase electricity from the main grid, with renewable supplies being purchased through a power purchase agreement.
The study will consider the viability of producing ammonia using renewable hydrogen as an alternative to using natural gas, and will look to assess the economic opportunities presented by renewable hydrogen production and a pathway to growing the Australian market.
A recent market study commissioned by ARENA found that a key barrier to the growth of an Australian hydrogen industry is a lack of domestic demand in the short term, until larger-scale demand for hydrogen can be grown through the expansion of hydrogen-to-power technologies and increased uptake of hydrogen transport options.
The study was completed in partnership with Dyno Nobel and identified ammonia production, which uses the bulk of Australia’s ‘brown’ hydrogen output, as a potential early off-taker for the renewable hydrogen industry.
The proposed project will be based in the Geraldton region, allowing it to take advantage of the ample access to solar resources in the region, as well as its established export infrastructure and would produce up to 20,000 tonnes of renewable ammonia each year.
“Australia is a key market for BP and other companies to progress their strategic developments for the future renewable hydrogen industry because of our abundant renewable energy resources and established trade partners,” ARENA CEO Darren Miller said.
“This study presents an important opportunity to support heavy industry to reduce its emissions. Early investments in feasibility studies like this will help us to realise the opportunity that renewable hydrogen represents and will ultimately help us to achieve our goal of producing renewable hydrogen and ammonia at a competitive price.”
BP Asia Pacific COO Frédéric Baudry said that the company expects renewable hydrogen to become a key part of its business into the future.
“BP believes that ‘green’ hydrogen, produced using renewable energy, will play an increasingly important role, particularly in parts of the world with high renewable energy potential, such as Western Australia,” Baudry said.
Federal energy minister Angus Taylor said that the project could progress a concept for a project by BP Australia that delivers as much as 20,000 tonnes of renewable ammonia a year, helping to drive down costs through scale.
“This project will build on the strong ammonia production industry that already exists in Western Australia. Utilising renewable hydrogen provides a fantastic opportunity for this industry to reduce emissions and sell a clean, in-demand product to global buyers,” Taylor said.
“If proven to be feasible, this project will help the Government to achieve our goal of producing hydrogen at a competitive price and have a positive impact on global emissions.”
BP Australia expects to deliver the outcomes of the feasibility study by February 2021.
The project is one of two hydrogen projects that received funding from ARENA on Friday, with a renewable hydrogen methane project near Roma in Queensland also securing $1.1 million in grant funding.
ARENA has established a $70 million funding round, which will target the deployment of large-scale hydrogen electrolysers to build Australia’s hydrogen capacity.
ARENA is approaching the end of its funding allocations and Angus Taylor has flagged that a future decision about any further extension of ARENA funding would “be addressed in the most appropriate budget context.”
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