Australian utility and upstream firm Origin Energy has decided not to proceed with its planned hydrogen development project, the Hunter Valley Hydrogen Hub (HVHH), in Australia's New South Wales.
The decision to withdraw from the proposed 55MW HVHH and halt all hydrogen opportunities was made because of continuing uncertainty about the pace and timing of hydrogen market development, Origin said.
The firm said the capital-intensive project, intended to progressively replace gas as a feedstock in a nearby ammonia manufacturing plant, carried substantial risks.
Origin Energy had an initial agreement with Australian chemicals and explosives company Orica to take 80pc of the green hydrogen produced from the hub for Orica's 360,000 t/yr ammonia facility on Kooragang Island, near the city of Newcastle. Origin Energy and Orica in 2022 said they will study plans to develop the HHVH in Hunter Valley region of NSW, which is Australia's largest thermal coal-producing area.
"It has become clear that the hydrogen market is developing more slowly than anticipated, and there remain risks and both input cost and technology advancements to overcome. The combination of these factors mean we are unable to see a current pathway to take a final investment decision on the project," said chief executive Frank Calabria on 3 October.
Origin had planned to make a final investment decision on the project by late 2024.
The hub, which was estimated to cost A$207.6mn ($143mn), had been allocated A$115mn in state and federal funding and was shortlisted for production credits under Canberra's Hydrogen Headstart programme.
In July, Origin described the pace of development in the hydrogen industry as "slower than it had anticipated 12 months ago", said. The company expressed hopes that improved electrolysis efficiency would reduce the rising costs of production.
The decision is a significant setback for Australia's green hydrogen ambitions, following the July decision by Australian miner and energy company Fortescue to postpone its target of 15mn t/yr green hydrogen output by 2030.
