Energy giant Woodside has withdrawn its Tasmania hydrogen project from the federal environment approval process, a year after big hydrogen export ambitions for the Bell Bay site began to falter.
Two reasons caused Woodside to drop the H2Tas project, a spokesperson said.
The company was told the state Environmental Protection Authority would need a revised plan to satisfy extra environmental factors such as marine issues, and the company’s view on Tasmania as a hydrogen hub has changed.
“In Woodside’s view, electrolysis-based hydrogen production in Tasmania is currently challenging, driven by the lack of availability of new renewable energy generation,” the spokesperson said.
“If appropriate in the future, Woodside may propose to submit a new Notice of Intent for the revised H2TAS scope.”
The H2Tas project was for a hydrogen generating electrolyser of up to 300 megawatts (MW), capable of producing up to 107 tonnes per day of hydrogen,
The resulting ammonia, about 600 tonnes per day, was to be exported. The project has been waiting in the permit assessment queue for two years.
The original plan was to build, in phases, a 1.7 gigawatt (GW) hydrogen export facility in the industrial Austrak Business Park (Sydney), where Woodside locked in a long term lease in 2021.
The final investment decision was supposed to happen in 2023.
However bigger tax incentives in other countries and a change in state government strategy shattered export dreams last year, when the Tasmania government indicated hydrogen grants would be only for companies looking to make hydrogen purely for the domestic market.
The Liberal-led government was concerned that Tasmanians would end up paying higher power bills because of the huge electricity consumption needs of the Bell Bay hydrogen proposals. The electrolysis process used to split water into hydrogen and oxygen is notoriously energy-intensive.
That position helped to stall major projects from Woodside, Fortescue and Origin Energy, all of which were planning Bell Bay operations.
It was supposed to be the location of Fortescue’s first hydrogen plant, but the company couldn’t lock in an agreement on a low power price with the government. Origin paused its own 500 MW project in 2023.
The only major project in the zone that hasn’t been archived by its proponent is the Able Energy/Iberdrola one, a 260 MW electrolyser able to make about 105 tonnes per day.
Under the Liberals’ Hydrogen Action Plan, hydrogen was supposed to be produced from 2022, with exports from 2025.
An expanded plan for a Bell Bay Hydrogen Hub was supposed to be running by 2028. The project has pocketed $70 million and $230 million in establishment grants from the federal and state governments respectively.
Hydrogen boosters had hoped the Marinus Link transmission line between Tasmania and Victoria – still not at final investment decision stage – might be the nudge needed to get the Bell Bay projects moving again.
Renewables project developers are also likely to be crossing their fingers that something changes the economics back in favour of Tasmanian hydrogen as well, such as the proponents behind the nearby 224 MW Bell Bay wind farm.
In its half-yearly report to the stock exchange, Woodside said it has also canned a hydrogen project in New Zealand, and has turned its H2 Perth into a liquid hydrogen-only refuelling station, rather than offering ammonia as well.
While Woodside is dropping ammonia as an option in Australia, it is more bullish about the product in the US where federal and state governments have provided enormous tax and cash incentives to set up operations.
The company is hoping to buy ammonia maker OCI Clean Ammonia Holding BV as a ready-made lower carbon ammonia producer.
OCI’s infrastructure is under construction and will start production in 2025, and lower carbon ammonia in 2026 once its carbon capture and storage technology is finished.
Meanwhile HIF’s e-fuels plant — which will create 200 permanent jobs near Burnie — appears to be under threat from the federal conservative Coalition’s policy.
The plant had been shortlisted for funding through the Hydrogen Headstart program, but leader Peter Dutton recently announced that he would strip $7 billion from the Australian Renewable Energy Agency. This includes funding for the $2 billion Hydrogen Headstart program.
