New South Wales (NSW) has announced a $45 million funding agreement to support the establishment of a giga-scale renewable hydrogen production plant on Koorangang Island, located in the Hunter region. This project, led by Origin Energy, aims to power the surrounding industrial hub while transitioning away from fossil gas, with the primary goal of producing 5,500 tonnes of green hydrogen annually for energy storage and industrial processes.
Orica, a prominent industrial giant and a co-developer of the project, is set to become the primary customer for the green hydrogen produced. Orica's Koorangang Island ammonia manufacturing plant is one of the largest industrial gas users in NSW, accounting for a substantial portion of the state's annual gas consumption, approximately 10-15 percent.
The ambitious plan for the Hunter Valley Hydrogen Hub includes the establishment of around 55 megawatts (MW) of electrolyser capacity by 2026, with a long-term vision to scale this capacity up to over 1 gigawatt (GW) within the following decade.
State energy minister Penny Sharpe emphasized the critical role of the Hunter region in NSW's industrial landscape, contributing a significant $50 billion to the state's gross product. Sharpe stated, “Projects like the Hunter Valley Hydrogen are vital to decarbonizing the industrial sector as we work towards a net-zero future.”
This substantial funding injection from the NSW government follows a previous commitment of $70 million from the federal government in July, highlighting the government's support for the development of hydrogen projects on a large scale. Origin Energy's general manager for Future Fuels, Ryan Willemsen-Bell, underlined the importance of government support in bridging the commercialization gap for hydrogen projects and demonstrating the feasibility of large-scale hydrogen production.
Willemsen-Bell expressed optimism about the project's potential to decarbonize ammonia manufacturing operations at Koorangang Island and position hydrogen as a future fuel option for various sectors, including mobility and heavy transport.
For Orica, this venture into green hydrogen aligns with its goal to reduce net operational Scope 1 and 2 emissions by at least 45 percent by 2030, relative to 2019 levels. The company has already taken steps to reduce greenhouse gas emissions at Koorangang Island, particularly from ammonia and nitric acid production, which are intermediaries in ammonium nitrate production.
Orica's innovative Tertiary Abatement Plant, supported by both the NSW government and the federal government's Clean Energy Finance Corporation, has significantly reduced carbon dioxide emissions. This plant, operational since November 2022, has already abated emissions equivalent to 250,000 tonnes of carbon dioxide. The next phase of emissions reduction at Orica's site involves the adoption of renewable hydrogen as a feedstock, replacing fossil gas.
The incorporation of green hydrogen into operations not only aligns with sustainability goals but also diversifies Orica's business and leverages its strategic location at the Port of Newcastle, offering unique access to a deep-water port on Australia's east coast.
Germán Morales, Orica Group executive and president Australia Pacific, expressed the company's commitment to supporting its customers while addressing greenhouse gas emissions. He highlighted the creation of future markets and the role of the Hunter Valley Hydrogen Hub in shaping a sustainable future for the region and beyond.
