Australia outlines details of hydrogen subsidy scheme

Australia's federal government has outlined more details of the A$2bn ($1.33bn) Hydrogen Headstart programme first announced in May, revealing it will target 1000MW of electrolyser capacity by 2030 by paying a production subsidy to a select number of large-scale projects.

The minister for climate change and energy Chris Bowen released the scheme's consultation paper on 7 July with submissions to close on 3 August, identifying the government's preference for the money to go to at least two large-scale projects of at least 50MW electrolyser capacity. The largest Australian project to have reached a final investment decision (FID) so far is for 10MW.

Hydrogen Headstart will choose Australia-based projects producing hydrogen or derivative products made from hydrogen, such as ammonia, which must be produced using renewable energy and without carbon capture and storage. The scheme was first announced on 9 May with an aim to help the industry bridge the commercial gap between the cost of production and competitive pricing.

Successful applicants will gain a production credit on a per kilogramme basis, paid over 10 years to cover the price gap between production costs and sales price, with the final guidelines on applications to be released in late 2023 or early 2024. If the sales price "materially exceeds" required support within the decade, recipients must pay back an amount of the subsidy received in previous years.

"Hydrogen Headstart is an important priority that will keep Australia competitive and we must get the design right. This will help shape future policies and incentives," said the chief executive of peak representative body the Australian Hydrogen Council Fiona Simon.

Consultations for the review of the National Hydrogen Strategy, initially developed by the previous government in 2019, also opened on 7 July and close on 18 August. The review will examine actions implemented in the original strategy, as well as new opportunities not previously adopted.

Australia's plentiful solar and wind power sources have so far failed to materialise into commercial development of green hydrogen. Many in the industry have called for subsidies and incentives, concerned the country could fall behind other countries in the hydrogen export race.

Australia has around 40pc of all announced global hydrogen projects, with the Australian pipeline valued between A$230bn-300bn. But the government said by the end of 2022, only a single Australian project with a capacity of at least 10MW had reached a FID, while the EU boasts 1,400MW and the US 300MW of FID-approved capacity.

By Tom Major