The federal government will try and kickstart Australia’s large-scale green hydrogen sector with up to $814 million in production credits for a clean energy mega project 500 kilometres north of Perth.
The 1,500 MW Murchison Green Hydrogen Project being developed by Danish renewable firm Copenhagen Infrastructure Partners was announced as the first recipient of the Hydrogen Headstart program on Thursday.
The project, which includes a solar and onshore wind farm, desalination plant and green hydrogen production facility, is slated to begin a five-year construction from 2027.
It is ultimately aiming to export green ammonia, with stage one of the mega project is expected to produce 900,000 tonnes a year – equivalent to almost half of Australia’s current ammonia production from fossil fuels.
A final investment decision is expected by next year and the developers reaffirmed commitment earlier this year as several other project’s vying for the government’s production credits fell over amid lower-than-expected demand for the clean fuel.
Climate Change and Energy minister Chris Bowen on Thursday announced the Murchison Green Hydrogen Project had secured the inaugural funding from the Hydrogen Headstart project.
“Australia has one of the largest renewable hydrogen project pipelines in the world,” Mr Bowen said.
“This support is about unlocking that private capital to help realise our potential, not only to become a renewable energy superpower but create a Future Made in Australia with real jobs right now.”
Murchison, which is facing opposition from local residents over a loss of access to state owned land for the project, has claimed the first funding from the program, which has up to $4 billion to dish out over two rounds.
The program is being run by the Australian Renewable Energy Agency and was announced in the Albanese government’s first full Budget in 2023.
It aims to develop Australia’s fledgling green hydrogen industry, which would help catalyse other clean energy industries and offers an export opportunity.
“The Hydrogen Headstart Program commits funding to bridge the current commercial gap in the form of a production credit, meaning funding is only provided once projects are constructed and operational,” ARENA chief executive Darren Miller said.
“Enabling hydrogen projects through Hydrogen Headstart is essential to ensure our economic prosperity as the world transitions to cleaner forms of energy especially in hard to abate sectors such as ammonia, iron and alumina.”
High construction costs, lower than expected off take demand and wavering investment partners saw several of the projects shortlisted for round one fall over or face serious doubts last year.
The Albanese government is also offering green hydrogen production tax credits worth up to $6.7 billion over the next decade more widely under its Future Made in Australia program, but projects can’t double dip with Headstart.
Funding from Headstart is paid based on production volumes over a 10-year operating period. Murchison still faces several development conditions and must achieve commercial operation before any of the $814 million is released.
Thursday’s announcement means more than $1 billion still remains for round one of Hydrogen Headstart and at least one more successful project is expected to be announced soon
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