Australian power and gas company Origin Energy Ltd has announced its decision to withdraw from the Hunter Valley Hydrogen Hub (HVHH) project and discontinue work on all hydrogen development initiatives, citing uncertainty surrounding the hydrogen market's evolution.
In a statement released Thursday, Origin CEO Frank Calabria noted that “the hydrogen market is developing more slowly than anticipated, and there remain risks and both input cost and technology advancements to overcome.” He emphasized that investments focused on renewable energy and storage would more effectively support the decarbonization of energy supply and ensure energy security in the near term.
Origin had been collaborating with chemicals group Orica Ltd on the HVHH project, which was planned for Kooragang Island in the Hunter region of New South Wales. The project had aimed for a final investment decision following NSW government planning approval received in May for its first phase, which involved the installation of an electrolyser with a capacity of around 60 MW. This initiative was designed to decarbonize part of Orica's nearby ammonia manufacturing plant and supply hydrogen for various applications, including mobility. The project had garnered support from both the Australian and New South Wales governments and was shortlisted for the Hydrogen Headstart program in December 2023, a key mechanism to bolster the country's hydrogen sector.
Orica has expressed its willingness to engage with interested parties and is keen to continue its collaboration with governmental ministers and agencies regarding the transition of its Kooragang Island plant and the broader Hunter Valley region.
Origin's exit is seen as a setback for the emerging hydrogen industry in Australia, which aims to position itself as a significant player in the sector. Just last month, Australia released its 2024 National Hydrogen Strategy, which includes ambitious production targets.
Additionally, the International Energy Agency's (IEA) annual hydrogen review highlighted that while numerous low-emissions hydrogen projects are achieving final investment decisions, challenges persist in the sector. In a related development, Norway's Nel ASA reported the loss of a significant potential order for alkaline electrolysers in the US following Hy Stor Energy LP's cancellation of its preliminary deal for the Mississippi Clean Hydrogen Hub project.
