The federal government’s $2 billion Hydrogen Headstart program is now open for expressions of interest, with no significant changes made to the production credit scheme since the draft guidelines were published.
It is expected that up to three hydrogen electrolyser projects will receive funding to subsidise the difference between the cost of producing hydrogen from renewable energy and the market price of hydrogen.
The Expression of interest process will remain open until November 10, with shortlisted projects to be invited to make full applications in 2024. During this period, project backers will have the opportunity to finalise funding and offtake agreements.
The program will be administered by the Australian Renewable Energy Agency and will only support projects producing hydrogen from renewable energy. Projects must be new developments and must have a minimum electrolyser capacity of 50MW.
As a condition of funding, proponents will also be required to meet deliverables under a knowledge sharing plan which will include public release of technical and commercial designs, site visits, and regular release of operations and performance data.
Climate Change and Energy minister Chris Bowen said the program would help Australia be a global hydrogen leader by 2030.
“Large-scale production of renewable hydrogen is critical to Australia reaching our potential as a renewable energy superpower, adding $50 billion to our GDP and creating over 16,000 jobs by 2050,” Mr Bowen said.
“Australia already has the largest pipeline of renewable hydrogen projects in the world. Our regions have the resources, technical skills and key trade partnerships to drive growth in hydrogen and other clean industries, as well as the jobs that come with it.
“Hydrogen Headstart is about realising the potential of that pipeline and making sure Australia is in the race.”
Australian Hydrogen Council chief executive Dr Fiona Simon welcomed the launch of the program shortly after the government completed industry consultation on its design.
“We’re at a critical stage where we need to get large hydrogen projects off the ground so we can scale up to gigawatt capacity. Hydrogen Headstart can make a significant difference by providing production credits for projects that will produce renewable hydrogen or derivates at scale,” Dr Simon said.
“AHC is committed to working with the Federal Government as it refreshes the National Hydrogen Strategy, and continues its response to the US Inflation Reduction Act.
“This is the swift action we need to remain competitive across the global hydrogen industry and we hope for further investment in Hydrogen Headstart to support the large pipeline of hydrogen projects underway in Australia.”
When the draft eligibility criteria were released in July, it was expected that Hydrogen Headstart would open to expressions of interest between the final quarter of 2023 and the first quarter of 2024.
More than 100 submissions were received during the consultation, which saw peak bodies disagree over the program’s effectiveness at accelerating the development of Australia’s hydrogen industry if it supported the development of smaller hydrogen projects.
However, in the program documents published as the EOI opened on Tuesday, the initially proposed minimum requirement of electrolyser capacity of 50MW remains unchanged.
The federal government is currently reviewing the National Hydrogen Strategy to ensure the country is on a path to be a global hydrogen leader by 2030, particularly in light of the Inflation Reduction Act in the United States.
Mr Bowen has previously described the Hydrogen Headstart Program as an “early down payment” on the federal government’s response to the Inflation Reduction Act. Further announcements are expected by the end of the year.
