The Hydrogen Hub and Blending Skid operates directly behind the ATCO Hydrogen Refuelling Facility in Jandakot, Perth, Western Australia. Industry, governments and power companies believe hydrogen will play a key role in Australia’s energy future, despite challenges such as cost.Jessica Wyld/The Globe and Mail
The small town of Denham, population 723, meanders along the coast of the Indian Ocean, overlooking turquoise water that laps the white sand common in this part of Western Australia.
About 110,000 tourists swell the community every year, drawn by the region’s World Heritage listing, emus that stalk through squat coastal salt bushes, dolphins in nearby Monkey Mia and searing sunsets. Located 827 kilometres north of Perth, the Western Australian capital, and 129 km off the state’s main highway, drivers don’t accidentally pass through Denham.
For years, the town’s power supply has been generated by diesel, trucked in hundreds of kilometres from refineries down south, and a handful of wind turbines.
Now, in an Australian first, Denham has turned to renewable hydrogen.
Last Nov. 14, Horizon Power – the state’s electricity provider for regional and remote areas – turned on a demonstration hydrogen power plant in the coastal town. Powered by a solar farm plonked on red dirt at Denham’s northern outskirts, it uses desalinated water to produce hydrogen.
Gascoyne River
Carnarvon
Shark
Bay
WESTERN AUSTRALIA
Denham
Peron
Peninsula
Toolonga
Nature
Reserve
1
AUSTRALIA
NORTH WEST
COASTAL HWY
Perth
Sydney
50 km
JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: OPENSTREETMAP
Gascoyne River
Carnarvon
Shark
Bay
WESTERN AUSTRALIA
Denham
Peron
Peninsula
Toolonga
Nature
Reserve
1
AUSTRALIA
NORTH WEST
COASTAL HWY
Perth
Sydney
50 km
JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: OPENSTREETMAP
Gascoyne River
Carnarvon
Shark
Bay
WESTERN AUSTRALIA
Denham
Peron
Peninsula
Toolonga
Nature
Reserve
1
AUSTRALIA
NORTH WEST
COASTAL HWY
Perth
Sydney
50 km
JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: OPENSTREETMAP
When fully operational later this month, Horizon says the plant will use between 3,000 and 5,000 litres of water a day (the average consumption by four Western Australian households) for its two electrolyzers, making enough energy to power around 100 homes. Integrated with Denham’s existing power station, the plant is expected to offset the use of about 140,000 litres of diesel a year.
The pivot to hydrogen here underscores the rapid development of a sector that could change the landscape of Australia’s power supply – particularly for heavy industry. As states set ambitious climate goals and snub polluting coal that has powered the country for decades, they are turning to greener options, including renewable hydrogen.
Industry, governments and power companies believe the fuel will play a key role in Australia’s energy future, despite challenges such as cost. Combined, they are investing billions of dollars to make it happen.
Canada talks big about becoming a global hydrogen player. Last year, for example, it signed a collaboration agreement with Germany to kick-start a hydrogen economy. But Canada is a laggard.
The first challenge here is enticing project proponents away from incentives offered by the U.S. Inflation Reduction Act. Ottawa’s latest budget, for example, includes an investment tax credit for clean hydrogen production. But crucial regulations and actual projects in provinces eyeing the international market, such as Alberta and Newfoundland and Labrador, have yet to materialize.
Hydrogen isn’t universally embraced by energy experts, either, particularly those who saw excitement about the fuel 20 years ago dissipate when the economics precluded mass adoption. The Paris-based International Energy Agency (IEA) says hydrogen is now enjoying “unprecedented momentum” around the globe, though some analysts argue it’s being overhyped again.
Even so, Australia is proceeding full steam ahead.
Global hydrogen demand reached 94 million tonnes in 2021, or about 2.5 per cent of final energy consumption, according to the IEA’s 2022 hydrogen report. The IEA estimates that hydrogen demand could hit 115 million tonnes by 2030.
Hydrogen consumption in road transport
In kilotonnes, by vehicle segment, 2019-2021
35
Hydrogen demand
in road transport
has increased 60%
since 2020
30
25
Commercial
vehicles
20
15
Buses
10
5
Cars
0
2019
2020
2021
Note: Commerical vehicles include light commercial vehicles,
medium duty trucks and heavy duty trucks.
the globe and mail, source: international energy agency
Hydrogen consumption in road transport
In kilotonnes, by vehicle segment, 2019-2021
35
Hydrogen demand
in road transport
has increased 60%
since 2020
30
25
Commercial
vehicles
20
15
Buses
10
5
Cars
0
2019
2020
2021
Note: Commerical vehicles include light commercial vehicles,
medium duty trucks and heavy duty trucks.
the globe and mail, source: international energy agency
Hydrogen consumption in road transport
In kilotonnes, by vehicle segment, 2019-2021
35
Hydrogen demand
in road transport
has increased 60%
since 2020
30
25
Commercial
vehicles
20
15
Buses
10
5
Cars
0
2019
2020
2021
Note: Commerical vehicles include light commercial vehicles,
medium duty trucks and heavy duty trucks.
the globe and mail, source: international energy agency
Most of the increase in 2021 came from traditional uses in refining and industry. But the IEA says hydrogen is attracting more attention in the power sector, in which announced projects stack up to almost 3.5 gigawatts in potential capacity by 2030.
Back in Denham, Horizon’s demonstration plant aims to prove that reliable, baseload power generation can be achieved by converting renewable energy to hydrogen, then converting the hydrogen to electricity.
If the utility does prove that concept – and project manager Renato Pascucci is confident it will – then the plant will act as a blueprint for other remote sites.
Horizon’s coverage extends over about 2.3 million square kilometres, comprising some of the world’s most isolated power grids. When Horizon considered replacement options for Denham’s costly, aging system, it wanted something reliable and economical that prioritized alternative fuels and renewables.
Hydrogen is light, storable and energy-dense. When burned, it produces no direct greenhouse gas emissions, making it an attractive form of decarbonization. One way to produce hydrogen is to use renewable energy to power electrolyzers, which electrically separate water into hydrogen and oxygen. Hydrogen produced this way is referred to as renewable or green hydrogen.
The sun that beats down on Denham offers a prime resource to power those electrolyzers, and Mr. Pascucci says power from wind that gusts off the Indian Ocean may also be integrated into the plant.
Lessons learned by Horizon will be shared via a series of reports developed for the Australian Renewable Energy Agency, or ARENA, a federal government body that fronted almost $2.6-million Australian (about $2.3-million) for the Aus$8.9-million project. Western Australia’s government covered the rest out of its renewable hydrogen fund and economic recovery plan.
Darren Miller, chief executive of ARENA, told The Globe and Mail that demonstrations such as Denham speed up the adoption of green technology by smoothing the way for new ventures.
“One of the really valuable things about getting a project on the ground is you can actually go talk to the people who built it and really understand what they went through to get it up and running, what it costs and what the issues are,” Mr. Miller said.
Renewable hydrogen projects supported by ARENA are scattered across Australia.
There’s the Aus$87-million Yuri project to produce hydrogen at a liquid ammonia plant in Karratha, Western Australia. In Geelong, Victoria, there’s a refuelling station for heavy-fleet vehicles, while a similar project in Stuart, Queensland, will produce hydrogen for fuel cells in five ultraheavy electric trucks. Also in Queensland, mining giant Rio Tinto Group is conducting a feasibility study investigating the use of hydrogen to help decarbonize alumina refining at its Yarwun site in Gladstone.
Power generation additions
using hydrogen and ammonia
Capacity additions by region, in megawatts
Asia Pacific
North America
Europe
1,600
1,400
1,200
1.000
800
600
400
200
0
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
the globe and mail, source: international energy agency
Power generation additions
using hydrogen and ammonia
Capacity additions by region, in megawatts
Asia Pacific
North America
Europe
1,600
1,400
1,200
1.000
800
600
400
200
0
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
the globe and mail, source: international energy agency
Power generation additions using hydrogen and ammonia
Capacity additions by region, in megawatts
Asia Pacific
North America
Europe
1,600
1,400
1,200
1.000
800
600
400
200
0
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
the globe and mail, source: international energy agency
Western Australia’s government alone has spent more than Aus$170-million to develop its renewable hydrogen industry, including a Aus$50-million fund to stimulate demand for and investment in transport and industrial settings. For example, the Australian branch of Alberta-based Atco Ltd. recently received Aus$1-million to support the construction of a refuelling station in a southern suburb of Perth.
“We’ve got a great deal of experience in terms of scaling up industries to be globally significant. We did that in iron ore, we did that with [liquefied natural gas], and so now we see an opportunity for Western Australia to do it in hydrogen,” the state’s Hydrogen Minister, Roger Cook, told The Globe.
Over the other side of the country, Queensland is also using its natural resources experience to ramp up a renewable hydrogen sector.
Minister for Energy, Renewables and Hydrogen Mick de Brenni told The Globe that hydrogen for domestic use and export presents a “significant industrial opportunity” for the state, particularly with established trading partners such as Japan and South Korea, which are clamouring for clean fuel options.
“The opportunity for us to take Queensland sunshine, and export it to those countries to help them decarbonize and meet global net zero targets, is something we’re heavily backing,” Mr. de Brenni said.
Last year, Queensland joined the states of Victoria and New South Wales in plans to establish a network of hydrogen refuelling stations on Australia’s east coast for freight transport. The first one will open soon near the Port of Brisbane, in Queensland’s capital city.
While states race for slices of the renewable hydrogen pie, Mr. de Brenni believes there will be enough space for many players in the sector, because global demand will outstrip supply for a while yet.
Renewable hydrogen is heavily backed by taxpayer dollars, and Mr. Cook predicts the Western Australian government’s role will continue until around 2030. But he expects to see a greater flow of private capital once hydrogen hubs start operating and the sector finds its footing.
With policy-makers around the world now focusing on renewable hydrogen, the sector is more promising than ever before, says Lein Mann Bergsmark, the senior hydrogen analyst at data firm Rystad Energy. Add in private equity companies, hedge funds and sovereign wealth funds that are prioritizing green energy, and “it’s like a renaissance,” she said. “That’s why I’m so confident that it’s different this time around.”
Europe currently produces the most green hydrogen, but that’s changing, Ms. Mann Bergsmark said. “There’s a lot of potential in Australia.”
The economic opportunity around renewable hydrogen extends further than the product itself – and one Australian company has placed a huge bet on electrolyzer manufacturing.
At the back of the Perth airport, in a warehouse sandwiched between a Qantas airlines freight terminal, a DHL outlet and a rental car parking lot, Fortescue Future Industries (FFI) is working to develop electrolyzers big enough to power mines in the state’s north.
FFI is one of a sprawling mass of companies owned by Andrew (Twiggy) Forrest, who made billions on iron ore. He’s now Australia’s second-richest person, and has turned his attention to renewable hydrogen.
“There really isn’t a choice about it, we need to turn to fuels which do not destroy the planet,” he told The Globe.
FFI wants to use renewable hydrogen to help decarbonize Fortescue’s mining and shipping fleet, including trucks, drill rigs and trains, and become a leading supplier to other companies eyeing similar goals. It aims to overhaul the global energy game by displacing fossil fuels with affordable – and therefore profit-improving – green energy.
Cameron Smith heads up the FFI electrolyzer project. In 2020, his team went to the world’s largest electrolyzer manufacturers, searching for equipment that could provide more than 10 gigawatts of annual capacity. But electrolyzers they found simply weren’t big enough, so FFI decided to manufacture its own.
Mr. Forrest developed his multibillon-dollar iron ore empire by taking a risky gamble on low-grade deposits and putting his faith in new technologies to make them commercially viable. It worked, and his propensity to give it a go and see what happens is now being reflected in FFI’s renewable hydrogen play.
“One of our chief scientists set up an electrolyzer and said, ‘It’s not that hard.’ And Andrew said, ‘Great, we’re going to manufacture electrolyzers,’” Mr. Smith recalled.
Across the continent from the Perth prototype facility, in Gladstone, Queensland, FFI will soon start up the world’s largest electrolyzer manufacturing facility. Powered by renewables, its initial capacity of two gigawatts a year will double current global production of green hydrogen. FFI wants to produce 15 million tonnes of the stuff per year by 2030.
Mr. Smith acknowledged that hydrogen is not the only decarbonization solution. But even if it comprises 12 per cent of the future energy mix, he said, that places demand at more than 900 million tonnes a year.
“That’s a big, big, big number. But we’re not really afraid, I guess, of big numbers,” he said. “We’ve got to build out the green energy system. Hydrogen is part of that system.”