Gas companies dominate shortlist for ARENA green hydrogen funding

Gas companies have dominated the shortlist of companies seeking a share of $70 million in federal government funding to expand Australia’s renewable hydrogen production capacity.

The shortlist was announced by federal energy and emissions reduction minister Angus Taylor on Monday, with seven companies under consideration for a slice of $70 million in grants under ARENA’s Renewable Hydrogen Deployment Funding Round. At least two will receive funding, with projects to start construction in 2022.

The list includes a number of gas companies and major industrial firms, which will likely see the funding used to develop renewable hydrogen as an alternative to natural gas supplies, including the blending of hydrogen in mains gas networks. Details of the projects were not provided.

The seven shortlisted companies are APT Management Services, ATCO Australia, Australian Gas Networks Limited, BHP Billiton Nickel West, Engie Renewables Australia, Macquarie Corporate Holdings and Woodside Energy.

Combined, the shortlisted projects are requesting more than $200 million in grant support to undertake projects worth more than $500 million. This suggests that the list will be narrowed down to a final group of two or three projects that will share the $70 million in funding that is available.

The projects propose to use renewable hydrogen in a range of end-use purposes, including transport, renewable ammonia production, power and industrial use. The use of renewable hydrogen in these sectors presents an opportunity to reduce greenhouse gas emissions in areas were substantial cuts have so far been elusive.

“A thriving renewable hydrogen production sector will not only help our heavy industry and transport sectors to reduce emissions, but will provide the platform for Australia to export renewable energy and reduce emissions beyond our borders,” ARENA CEO Darren Miller said.

The ARENA grants are targeting projects that will build new large-scale electrolyser capacity, allowing renewable hydrogen to be produced from wind and solar electricity. ARENA will support projects with an electrolyser capacity of at least 10MW, representing some of the largest renewable hydrogen production facilities in the southern hemisphere.

“The Government is committed to building a world-class hydrogen industry and this ARENA funding round is central to that,” Taylor said.

“This strong interest from industry reinforces Australia’s untapped potential in hydrogen and today’s announcement moves us closer to realising that potential.”

“This round, along with the Clean Energy Finance Corporation’s (CEFC) $300 million Advancing Hydrogen Fund, will be key to bringing down the production costs of hydrogen and making the technology commercial,” Taylor added.

ARENA announced in June that it had received 36 initial applications for hydrogen grant funding, well exceeding the amount of funding available to be awarded, and represented more than $3 billion worth of projects.

The seven shortlisted projects will be invited to submit a full funding application to ARENA to kick-start the potential negotiation of a funding agreement.

“Our ultimate goal is to bring the price of renewable hydrogen down to be competitive with other forms of energy and be at the forefront of renewable hydrogen production. The best way to help build a hydrogen industry is to support projects that will help demonstrate the technology at scale, and share the lessons learned to help the industry as a whole reduce risk and costs as well as increase efficiency,” Miller added.

Several of the proponents have been previous recipients of ARENA funding for renewable hydrogen projects. ATCO received a $1.66 million ARENA grant towards the creation of a renewable hydrogen demonstration facility, which included a working example of hydrogen being used as energy storage and an alternative to natural gas to fuel household appliances.

Australian Gas Networks received a $1.28 million ARENA grant to investigate the blending of hydrogen in mains gas supplies in South Australia and Victoria.

The strong interest in the ARENA funding round has highlighted the significant amount of interest in Australia to drive new investments in an emerging renewable hydrogen industry.

The National Hydrogen Strategy prepared by chief scientist Dr Alan Finkel estimated that Australia’s zero-emissions hydrogen sector could grow to become an $11 billion a year industry in Australia by 2050.