Australian energy utility Origin Energy has thrown its hat deeper into the ring for the promising green hydrogen sector, flagging plans for a huge 300MW electrolyser in Townsville and production of more than 36,000 tonnes of green hydrogen a year for the export markets.
Origin has also signalled its interest in building up to five big batteries, including at the site of Australia’s biggest coal generator, Eraring – which is due to close in 2032 – and at other sites including existing gas fired generators and a new solar farm in South Australia.
In its investor day presentation on Thursday, Origin says it is working with Japan’s Kawasaki Heavy Industries on the project in Townsville, and has already completed a feasibility study. It expects engineering and design work to begin this financial year.
It is also targeting a green ammonia project in Tasmania, this time of 500MW and 420,000 tonnes for the domestic and export markets, and plans to begin engineering and design work on that project next financial year.
CEO Frank Calabria says Australia is a likely supplier of renewable fuels given its renewable energy potential and geographic proximity to growing Asian markets. He says demand will be customer led, but Japan looks strong from the mid-2020s and other markets in Asia will emerge in the 2030s.
The Origin projects are the latest in a string of green hydrogen and ammonia projects across the country, as investors and developers wake to the opportunities of Australia’s supply of low cost wind and solar, the falling cost of electrolysers, and the anticipated demand as Asia countries pivot to meet their 2050 net zero emissions targets.
The potential of green hydrogen, both for domestic consumption and for exports, is one reason why Australian has risen to its highest ever ranking on EY’s renewable energy country attractivness index, at number 3 behind the US and China.
Along with green hydrogen, the other big technology mover is battery storage, with more than a dozen big battery proposals emerging or advanced in just the last few weeks, including from Neoen in Victoria, AGL in both Victoria and South Australia, and NSW underwriting four new battery storage proposals in its state.
Origin says it is looking at a potential big battery at the 2.88GW Eraring coal generator, the biggest in Australia and which is due to close in 2032. Origin says it is working hard to improve the flexibility of the generator’s four units to deal with the growing amounts of rooftop solar and large scale renewables.
This includes lowering its minimal generation to 210MW per unit when solar power is at its peak, and increasing its “ramp rate”.
It does not reveal the likely size of the big battery at Eraring, but says it is also considering batteries at three of its biggest gas generator plants – up to 300MW at Mortlake in Victoria, up to 200MW at Uranquinty, and an unspecified size at Darling Downs in Queensland, where there is also a solar farm nearby.
As we reported last week, it is also considering a 300MW solar and storage plant at Morgans in South Australia. It has not yet narrowed down the hours of storage, as that will depend on the market opportunities that it identifies.
“Australia’s coal fleet is ageing rapidly,” head of energy markets Greg Jarvis said. The focus was now on its “peaking fleet”, which includes battery storage, fast start gas generators and its pumped hydro assets.
Origin has talked about big battery investments for a while, yet remains the only one of the country’s big three gentailers yet to commit to a battery project or to operate one.
But it says it came close. Jarvis says Origin had proposed a 300MW big battery at Mortlake in the recent auction conducted in Victoria – and won by Neoen’s 300MW and 450MWh battery at Geelong. Origin made the final shortlist, and “learned a lot”, Jarvis said.
“I can see a massive role in batteries,” Jarvis said. “We see battery costs falling considerably … we just have got to make sure we pull the trigger at the right time. We’ll come to the market when the policies and the market presents itself.”
He noted that the Mortlake proposal was configured to meet the contracted SIPS service for AEMO, as well as arbitrage and FCAS services.
Calabria added: “We we very close,” he said of the Victoria auction. “It (future battery investments) will come down to what is supported by underlying contracts, rather than what is left for market services.”
He also said batteries would be focused on “moving electrons around” – suggesting longer duration storage for arbitrage. Jarvis said capital costs were a key factor, so batteries may focus on larger “capacity” with shorter storage duration, before adding more banks of batteries to increase storage duration. AGL has a similar strategy for its two big batteries in South Australia and Victoria.
However, a lot would depend on the shape of the market redesign being put together by the Energy Security Board, and what it comes up with in terms of grid service options for batteries. The FCAS market would be over-supplied as more batteries came on line.
Jarvis also said a potential expansion of Shoalhaven, put on the back-burner due to rising costs for such pumped hydro projects, could be a candidate for the NSW renewable energy plan that passed state parliament on Wednesday after a marathon 30 hours of debate.
