The government of New South Wales (NSW) is to spend up to A$3bn ($2.2bn) on incentives that it hopes will turn the Australian state into a green hydrogen “export superpower” by the end of the decade.
NSW’s hydrogen strategy, which was unveiled in October, was officially signed off on Friday after the state parliament in Sydney passed the Energy Legislation Amendment Bill that underpinned its funding.
In its H2 strategy, the state introduces eight “stretch targets” that it hopes to achieve by 2030:
1) To produce 110,000 tonnes of green hydrogen per year
2) To utilize 700MW of electrolyser capacity
3) To “dramatically reduce the cost of green hydrogen” to under $A2.80 ($2) per kilo — from an estimated A$8.60 today
4) To install 12GW of renewable energy
5) To build 100 hydrogen refuelling stations
6) To have 10,000 H2-powered vehicles on its roads
7) For 20% of the state government’s heavy vehicle fleet to run on hydrogen
8) To blend 10% hydrogen into the state’s gas networks (by volume)
“Achieving these stretch targets will transform NSW into Australia's largest consumer of green hydrogen, create up to 10,000 new jobs and position the State to become a hydrogen export superpower,” the strategy says.
“To get there, this Strategy provides up to $3 billion of incentives to commercialise hydrogen supply chains and reduce the cost of green hydrogen by an estimated $5.80 per kg. With this Strategy, we will support industry to adopt green hydrogen, develop hydrogen hubs at our major ports, build a hydrogen refuelling network for heavy vehicles along major highways, create a market led framework to drive demand for green hydrogen and waive a wide range of taxes and charges to dramatically reduce the cost of green hydrogen.”
The waivers include exemptions from government electricity levies — which are charged on customers to increase renewables capacity, fund decarbonization objectives and reduce the cost of infrastructure — and a 90% reduction in transmission and distribution charges for electrolysers installed by 2030 for a period of 12 years (but only where the network has spare capacity).
The strategy claims that it will create up to 10,000 new jobs by 2030, and may reduce the operating costs of trucks in the state by up to A$103.1m by 2030, while similarly cutting the costs of running buses by up to $234.8m compared to internal combustion engines. And producing green steel by replacing fossil fuels with green hydrogen “could deliver up to an additional A$20m in annual revenues… [for] every percentage point increase in industry output relative to current levels”.
These figures appear to assume massive reductions in the cost of electrolysers and electricity, with a high carbon price increasing the costs of fossil fuels.
The A$3bn of state funding includes $70m to establish hydrogen hubs in the Hunter and Illawarra regions, A$78m for the offtake of green hydrogen at the planned 316MW natural gas/hydrogen-fired Tallawarra B power station.
Most of the gigawatt-scale green hydrogen projects announced in the country to date have been in Western Australia, which has vast tracts of unpopulated sun-drenched lands. NSW, by contrast, is the third most densely populated state in the nation, only surpassed by the tiny Australian Capital Territory and small Victoria, so it has less available land for wind and solar farms.
And according to the Global Wind Atlas and Global Solar Atlas, NSW is also less windy and less sunny than Western Australia.
Multi-gigawatt green hydrogen projects have also been announced in sparsely populated Queensland, the Northern Territory and South Australia, while the only facility of a comparable size so far announced in New South Wales is an early-stage 1GW project at the port of Newcastle, which would probably have to be powered by offshore wind.