ARENA awards AUD $432m production credits to Orica for 50MW green hydrogen hub
Almost a year after its utility partner walked away, Orica’s green hydrogen ambitions are back in motion thanks to AUD $432m ($283m) in production credits – but the project’s final approval is far from certain.
The Australian Renewable Energy Agency (ARENA) is backing Orica’s Hunter Valley Hydrogen Hub (HVHH) with 10-year production credits to close the cost gap with fossil fuels.
HVHH plans to install a 50MW renewable energy-powered electrolyser in Newcastle, New South Wales, and supply hydrogen to Orica’s existing 360,000 tonne ammonia plant on Kooragang Island.
Orica plans to “gradually” replace its current natural gas feedstock with green hydrogen to cut emissions from its ammonia and ammonium nitrate production.
In the first phase, the project will produce around 12 tonnes of hydrogen per day and cut natural gas consumption by approximately 7.5%, according to Orica.
The company says this could yield up to 26,600 tonnes of low-carbon ammonia annually.
© Orica
However, Orica still needs to take final investment decision (FID) on the project, despite backing from Headstart and other government sources. Orica says it has received “strong interest” from potential project partners.
The project suffered a setback last October when utility Origin Energy pulled out, citing no clear path to FID amid wider green hydrogen market challenges.
Orica said it will continue to assess its investment and partnership opportunities and work towards FID “in due course.”
In order to secure the ARENA funds, the company needs to satisfy conditions and show that it can meet contractual milestones.
Orica CEO Sanjeev Gandhi said the production credits bring the firm a step closer to realising the project.
Despite generous government support, several of Australia’s flagship hydrogen projects remain stuck in pre-FID limbo or have seen key partners walk away, like Origin at HVHH.
The repeated failure of public funding alone to bring projects to fruition raises questions about Australia’s hydrogen credibility and the effectiveness of its policy framework.
