Australia is ready to fast-track commercial-scale green-hydrogen projects, according to the nation’s renewable-energy agency.

The Australian Renewable Energy Agency (Arena) said it has received 36 expressions of interest for its A$70m ($49m) Renewable Hydrogen Deployment Funding Round, which aims to help drive down the cost of green-hydrogen production to under $2 per kg through commercial-scale electrolyser projects.

The combined projects, worth more than $2.1bn, would have almost 500MW of electrolysis capacity — with the size of individual projects ranging from 5MW to nearly 80MW. The world’s largest electrolyser currently in operation is 10MW.

Arena, an independent agency of the federal government, is aiming to support at least two large-scale renewable hydrogen projects with its latest round of funding, with a preference for projects larger than 10MW.

Arena chief executive Darren Miller said he was excited to see such strong interest in green hydrogen.

“This is an important step for the sector and it looks like we have many companies now ready to start building large-scale renewable hydrogen projects across a range of industries and end uses,” he said.

“The fact that we’ve received expressions of interest for projects totalling over A$3bn [$2.1bn] in cost and almost 500MW in size shows that we’re beginning to see companies embrace making hydrogen through renewable means.

“While we’re only at the early stages of renewable hydrogen production in Australia, much like our role in making large-scale solar competitive, Arena aims to help bring down the cost of hydrogen, build Australia’s skills and capacity, create jobs and activity in regional areas and help Australia achieve our emissions reduction objectives.”

Arena will now assess the 36 expressions of interest to create a shortlist to be invited to submit a full application, with the government body looking to award the funding by the end of the year.

The agency has already committed A$55m in funding to renewable hydrogen, including A$22.1m towards research and development projects, as well as feasibility studies into large-scale projects and smaller-scale demonstrations looking at renewable ammonia, power to gas and hydrogen mobility.

“Preliminary feasibility outcomes indicate there is a significant commercial gap and it is expected that grant and concessional funding will be required for hydrogen production facilities in the short to medium term,” Miller added.

It also noted that projects selected in the current funding round would also be eligible to be considered for further financing from the Australian government-owned Clean Energy Finance Corporation (CEFC) under the CEFC’s A$300m Advancing Hydrogen Fund.

Why hydrogen is important for the energy transition

Hydrogen is a zero-emissions fuel that can be used for energy storage, heat production, long-distance transport, and to decarbonise polluting industrial processes such as steel and cement production. Hydrogen can either be burned to generate energy or turned into electricity directly using a fuel cell.

More than 95% of the hydrogen produced today is derived from unabated fossil fuels (natural gas or coal), resulting in nine to 12 tonnes of CO2 emissions for every tonne of H2. This is known as grey hydrogen.

However, 'green hydrogen' can be produced with zero emissions by using renewable electricity to split water molecules into H2 and oxygen inside a machine called an electrolyser; a process known as electrolysis.

Or the CO2 emissions from natural-gas-based H2 production can be captured and stored, resulting in what is known as blue hydrogen. Strictly speaking, this would be classed as low-carbon hydrogen as not all the CO2 from the production process can be captured.