Crunch time for South Australia’s bold green hydrogen play as bids close

Bids for South Australia’s bold plan to build a state-funded green hydrogen electrolyser and power plant at the steel city of Whyalla have closed, with Andrew Forrest’s new green energy play likely leading a hungry pack of local and international suppliers.

The South Australia government plan to pay nearly $600 million for a 250MW green hydrogen electrolyser, and a 200MW green hydrogen power plant, is a unique opportunity for the dozens of green hydrogen hopefuls keen to test the mettle of their technology offerings.

The response was so overwhelming that the state government extended the deadline for proposals from February to mid March. State energy minister Tom Koutsantonis is expected to make an announcement about the number of proposals received next week.

The Australian Financial Review on Wednesday wrote that Forrest’s Fortescue Future Industries had lodged a bid, although the company’s spokespeople refused to confirm that on the record, either to the AFR of RenewEconomy.

A spokesman for the company would only say that FFI “believes South Australia has a great opportunity” to be a leader in renewable energy production.

“South Australia has an abundance of readily available natural resources for a renewable energy industry, including some of the best wind and solar resources in the country,” the spokesman said in an emailed statement.

“The SA Government has been proactive in setting ambitious but achievable targets for a renewable and green hydrogen industry, which aligns with FFI’s mission to help the world step beyond fossil fuels.”

The South Australia government plan has surprised many, especially the hydrogen power plant which is not usually rated highly among the most efficient uses for green hydrogen.

However, the state leads the world in its share of wind and solar in the grid, averaging more than 70 per cent over the last 12 months, and more than 80 per cent from October through to the end of February.

It regularly goes more than 100 per cent renewables – the record is for ten days in a row – the excess currently exported to Victoria, or curtailed for network or economic reasons (some project owners seek to avoid negative prices).

A bunch of big new wind and solar projects, the new 800MW transmission link to NSW that is under construction, and a growing pipeline of gigawatt-scale wind and solar projects is anticipated to take the state well beyond net 100 per cent renewables before the end of the decade.

Much of that excess wind and solar power will be destined for the green hydrogen market, be it in creating green ammonia, supplying steel plants, or the Nyrstar smelters at Port Pirie, where a 440MW electrolyser is planned to meet both export and domestic supply needs.

The South Australia plan is to use this excess supply to provide cheap inputs into the Whyalla electrolyser and the power plant, providing useful back-up to the grid alongside the suite of big battery installations and other long term storage.

The green hydrogen power facility would be the first of its kind in Australia and likely the biggest of its type in the world.

But while its use as a power plant is not normally highly rated, given the inefficiencies of the conversion process, South Australia is used to proving doubters wrong.

At the time it announced plans for the 100MW/129MWh Tesla big battery at Hornsdale in early 2017, even the market operator at the time did not think that any big battery above 1MW was feasible in the grid.

Sam Crafter, who led the government team that secured the Tesla big battery contract, and now heads Hydrogen Power South Australia, told RenewEconomy in December that the hydrogen power plant could help fill in the gaps of wind and solar generation.

“There’s a lot of talk about use of hydrogen as power, and is it efficient. If you think about what the government is trying to achieve, which is having dispatchable power, and the electrolyser will also provide flexible load,” Crafter told RenewEconomy.