Will it or won’t it? South Australia hedges bets on world-leading green hydrogen plan

South Australia – already a world leader in the integration of wind and solar on a gigawatt scale electricity grid – appears to be hedging its bets on its commitment to another world-first, a massive green hydrogen electrolyser and hydrogen power plant.

The two facilities, a 250 megawatt (MW) electrolyser and a 200 MW power plant, are due to be built near Whyalla and are part of the state Labor government’s promised Hydrogen Jobs Plan, and rely on a $600 million commitment from the government.

The facilities are supposed to be up and running by early 2026, but that now seems an unlikely timeline, particularly given the uncertainty created by concerns over the financial viability of Whyalla steel works owner GFG Alliance, controlled by Sanjeev Gupta.

In the past week, state premier Peter Malinauskas has repeatedly refuse to guarantee the government’s $600 million investment in the new hydrogen power plant and storage facility, because of delays in payments by GFG Alliance.

“We’ve got to keep an eye on what’s going on in the steelworks,” Malinauskas said earlier this week, before flying to the city on Tuesday for meetings with local leaders.

“If we produced a hydrogen facility without the steelworks being a customer of the hydrogen — because GFG doesn’t invest in the steelworks or, worse still, found itself in even more challenging financial circumstances than it is currently in — then we put ourselves in a precarious position.” 

Renew Economy reached out to the Office of Hydrogen Power to seek clarity about the state of the project and its contracts.

“The Government of South Australia’s Whyalla Hydrogen Power Plant project is in the final stages of the early contractor involvement (ECI) stage with ATCO Australia, BOC and Epic Energy,” a government spokesperson said in an emailed statement.

“The outcome of this ECI phase will result in final construction contracts and a project update. 

“As part of ECI the Government of South Australia has secured an agreement with ATCO Australia to contract GE Vernova for four LM6000VELOX aeroderivative gas turbines.

“Commissioning for the project currently remains scheduled for 2026.” 

GFG last year delayed by two years a $500 million upgrade to install an electric arc furnace at the steelworks that is crucial to the transition to green steelmaking.

The power plant, which will be capable of running at 100 per cent green hydrogen, but may not necessarily do so from the outset, could be an important part of the state’s portfolio of dispatchable generation necessary to support its grid as it reaches its target of “net” 100 per cent renewables by 2027.