Australian green hydrogen project scrapped due to transport costs, pumped hydro on hold

Canadian gas giant Atco says it has scrapped plans for one of the first commercial scale green hydrogen projects in Australia, despite strong funding support from the government’s renewable agency, and has also put a proposed pumped hydro project in NSW on hold.

Atco had planned to build a 10MW green hydrogen electrolyser next to Bright Energy’s 180MW Warradarge wind farm in Western Australia (pictured above), fuelling the plant with renewable energy and producing 4.3 tonnes of green hydrogen a year.

It was one of three green hydrogen projects chosen by the Australian Renewable Energy Agency in 2021 to share in a total of more than  $103 million in grants for what it said at the time were among the largest green hydrogen electrolyser projects in the world.

But Atco’s $53 million Clean Energy Innovation Park – also known as the Mid West project – has been scrapped because it would involve trucking the hydrogen to points where it can be injected into the gas network.

Atco has now decided that this is not viable and says it will relinquish the $28.3 million grant promised by ARENA.

Atco, which operates the gas reticulation network in the south-west of the state, is involved in the solar -powered hydrogen refuelling station at Jandakot near Perth, known as the Clean Energy Innovation Hub.

The use of green hydrogen in Australia’s economy has been much hyped, but some of the original touted uses are likely to fall by the wayside, particularly given the rise of battery electric vehicles, and the decision by many big miners to choose battery electric over hydrogen for haulage trucks.

There are also questions about the viability, and the wisdom, of using green hydrogen at scale in gas pipelines.

Atco says it is still confident green hydrogen can be delivered, but says it needs to be located closer to heavy industry where the green hydrogen can be used.

“While we were initially confident we could build CEIP at Warradarge, our ongoing assessment and market development found the benefits of being closer to the end-user of the renewable hydrogen was more commercially viable than locating the CEIP in a more remote location,” the company said in a statement.

“Atco still intends to explore a commercial hydrogen facility however believes it is more feasible to identify opportunities closer to heavy industry where demand will justify the investment.

“We are confident that as the hydrogen economy in Western Australia grows and demand for renewable hydrogen increases, developing hydrogen plants across the state will become a reality.”

Meanwhile, Atco has also revealed that it has put a proposed pumped hydro project near Bathurst in NSW on hold while it seeks clarity over the state government’s policy frameworks.

The 325MW, eight hour (2,600MWh) Central West project was to start construction as early as 2024. But pumped hydro – because of escalating civil engineering costs that have plagued the much larger Snowy 2.0 project – is proving hard to do.

In the first tender for long duration storage held by NSW, the only winner was an eight hour battery, to be built next to a solar farm in the south-west of the state by German energy giant RWE.

It is thought that pumped hydro will need greater and more direct government support, like Snowy 2.0 and the Kidston pumped hydro project in Queensland which is mostly funded by a federal government agency.

Atco says it has deferred submitting the environmental impact statement (EIS) for the pumped hydro project, but says it is still hopeful it can go ahead.

“The project’s EIS is in the process of being finalised,” it said in a statement.

“However, we have decided to defer our EIS submission until some of the NSW government’s policy frameworks mature, and there is a clear commercial pathway for large civil projects like pumped hydro.

“This will result in some deferment from our originally anticipated schedule, but we are working hard to ensure critical projects like CWPH are delivered affordably and promptly.”

Note: Story updated to make clear pumped hydro project not located in an REZ.