South Australia disbands Hydrogen Power office as Whyalla project officially cancelled

The South Australia state government has disbanded its Office of Hydrogen Power following the cancellation of what would have been a world-first green hydrogen power plant and large hydrogen electrolyser facility at Whyalla.

The $600 million Hydrogen Jobs Plan was to come online in early 2026, and help the nearby Whyalla steelworks transition towards “green steel”, as well as providing another dispatchable generator to support the state’s transition towards 100 per cent “net” renewables by 2027.

The project – the flagship of the state’s broader green hydrogen plans – looked to be struggling to meet its timelines – like many projects in the nascent green hydrogen sector.

It was shelved following the financial collapse of the Whyalla Steelworks and the decision by the state government to seize control of the facility, and its funds were re-directed towards the rescue package for the facility.

State energy minister Tom Koutsantonis says the functions of two offices, the Office of Hydrogen Power South Australia and the Office of Northern Water Delivery, will be transferred to the Department for Energy and Mining under Machinery.

He said Sam Crafter, the head of Hydrogen Power SA has been appointed to a new role of State Lead, Whyalla Steelworks Industrial Transformation, that will work on securing the long- term future of the Whyalla steelworks.

“Whyalla is the focus of the single biggest economic support and stimulus package in South Australian history, and remains an intense focus for government through the administration of OneSteel Manufacturing and the subsequent transition to decarbonised iron and steel production,” Koutsantonis said.

The minister’s statement described the green hydrogen power plant as “deferred” but last month, the 200 MW green hydrogen power plant was officially withdrawn from the Australian Energy Market Operator’s pipeline of projects.

Last month, the 200 MW green hydrogen power plant was officially withdrawn from the Australian Energy Market Operator’s pipeline of projects.

There has always been a question mark over the economics of a green hydrogen power plant, given the state’s huge wind and solar resources, which are up to three times more efficient, but not necessarily dispatchable.

Last November, the state government announced it had signed a contract to buy “world first” green hydrogen turbines made by GE Vernova. It has since decided to seek a buyer of those machines, and Koutsantonis says the government expects to get most of its money back.

“We expect the vast majority of capital already expended (for the Hydrogen Jobs plan) will be recouped when we agree terms with an alternative operator for the four 50MW turbines ordered for the Hydrogen Jobs Plan, with a stipulation that they be operated in South Australia to provide additional generation capacity,” he said.

Given the soaring costs of gas turbines, and the long wait for new machinery, it is quite likely the state government should have little problem finding buyers, although where in the state remains to be seen.

South Australia is still working on the Port Bonython Hydrogen Hub, and Koutsantonis says projects such as the Zero Petroleum’s feasibility study for a sustainable aviation fuel production facility in Whyalla will continue.