Australia to offer subsidies to accelerate green hydrogen production plans

The federal Australian government and regional governments, such as Western Australia, have established hydrogen strategies, but progress is developing large-scale projects has been hampered by the lack of demand for hydrogen, as well as gaps in both port infrastructure and recognised bottlenecks in electrolyser supply chains.   

The federal Australian government plans to ”bridge the commercial gap” for early projects by providing funding to offset the higher cost of renewable energy production. This is expected to help producers develop up to 1000 MW of electrolyser capacity by 2030 through 2 to 3 flagship projects. 

Ammonia and hydrogen projects

The program will use a competitive process to select large Australian-based projects producing either hydrogen from renewable energy or derivative products made from hydrogen produced from renewables, such as ammonia.

The programme is expected to open for expressions of interest in the first quarter of 2024. Successful applicants will be awarded 10-year long contracts from 2026-27.

One such project that could benefit is Norway-based ammonia producer Yara, which is currently developing a 10MW green hydrogen project with Engie Australia next to its world scale Karratha ammonia plant in the Pilbara, Western Australia. The first production of green hydrogen is scheduled to commence in 2024.

The Motorship notes that while the government announcement did not specify whether export-oriented projects would be prioritised, previous government hydrogen strategies have explicitly identified hydrogen or ammonia as significant potential export industries for the country.