Queensland budget delivers $250 million to kick-start CleanCo

The Queensland Government has delivered on its promise to allocate $250 million to CleanCo, the new publicly owned electricity generation and trading company that has a mandate to build, own and operate new commercial renewable energy generation in Queensland.

The Queensland Government has also tipped $19 million to support the previously announced development of hydrogen export facilities in Gladstone, as the Government seeks to double-down on investments to make the State a major export hub for global gas supplies.

The Queensland Labor state government has used the budget to try and restore some of its clean energy and environmental credentials, after using the period following the aftermath of the Federal election to show its intention to back in coal and gas projects that had successfully roused voters in the hope of jobs.

The funding for increased hydrogen export capabilities is an opportunity for the government to head off concerns about the State’s heavy investments in fossil-fuel infrastructure by linking it with a fuel produced using renewable sources.

“Global demand for hydrogen is increasing, with the market expected to reach an astonishing US$155 billion by 2022 – only three years away.” Queensland treasurer Jackie Trad said in her budget speech.

“We want Queensland to be the home of this new industry.  In the same way as we’ve become a key player in LNG.”

“Our renewable resources of solar and wind, combined with the existing gas pipeline infrastructure and port facilities gives us a competitive edge for the future production and export of hydrogen.”

The first renewable hydrogen was exported from Queensland to Japan earlier this year, produced at the government-owned Redlands Research Facility located on the Gold Coast.

Australian energy experts recently told a media briefing that Australia is well placed to that advantage of significant growth in demand for hydrogen, driven by investments made by Japan and South Korea in new technologies including hydrogen fuelled vehicles.

The budget has also allocated funding for climate change related measures, including $20 million for the continued establishment of sea-walls to fight of sea-level rises in the Torres Strait, $2.7 million for a solar rentals scheme in Bundaberg and $4.8 million for a solar and battery storage program.

To improve the budget’s bottom line, the Queensland Government will slug the State’s petroleum producers with a significant increase in the royalty rate, rising from 2.5% to 12.5%, and is set to net the Government $476 million over the next four years.

Funding for CleanCo been secured in this year’s budget and will be delivered in two tranches, with $150 million to be committed in the 2019/20 financial year, and another $100 million provided in the following year. Funding will be provided to CleanCo as contracts for the construction of new projects are secured.

The funds will be used to support the construction of new large-scale renewable energy generation within Queensland. CleanCo will retain ownership of the power stations, and operate them on behalf of the Queensland Government.

“CleanCo will assist in the provision of a cleaner, more affordable, sustainable and secure energy supply for Queensland.” Trad said.

“Alongside the Government’s existing generation businesses, CleanCo will play a key role in the Government’s commitment to generate 50 per cent of the state’s energy from renewable sources by 2030.”

CleanCo has already been given responsibility for ownership and operation of some renewable energy facilities already owned by the Queenlsand Government, including the 507MW Wivenhoe power station, which includes pumped-hydro storage capability, the 385MW Swanbank E gas fired generator, and around 150MW of smaller hydro generation facilities.

CleanCo has been established by the Queensland Government drawing expertise within the sector, including through the appointment senior Infigen Energy leadership with Miles George as interim CEO, an Geoff Dutaillis as Executive General Manager for Transition.

The Queenland Government has also tapped the expertise of former ARENA CEO Ivor Frischknecht who serves on the CleanCo board, along with CS Energy board member Tracy Dare and CleanCo chair Jacqui Walters.

The State budget and the securing of funding for CleanCo come just days before final environmental sign-off for Adani’s Carmichael Coal mine. One last approval, the State Government’s sign off of the mine’s ground water management plan, stands in the way of the commencement of construction at the Adani mine, and is anticipated to be granted by 13 June.