Hydrogen Energy Supply Chain – Pilot Project

June 21st, 2022

Hydrogen Energy Supply Chain (HESC) – Pilot Project

The purpose of this pilot project, located in the Latrobe Valley, is to demonstrate an integrated hydrogen supply chain encompassing production, storage and transportation in delivering liquefied hydrogen to Japan.

Main proponents:

Kawasaki Heavy Industries (KHI), Electric Power Development Co. (J-Power), Iwatani Corporation, Marubeni Corporation, Sumitomo Corporation, AGL.

 Main end-use classification:

Export potential – liquefied hydrogen

 Status:

Project completed – hydrogen production from the coal gasification and hydrogen refining facility in the Latrobe Valley began in January 2021; operations commenced at both Victorian sites in March 2021. The HESC – Pilot Project phase was completed in January 2022.

 

 Estimated cost:

Expected at around AUD$500 million in Australia and Japan
Other involvement:

 

 Production details:

Hydrogen production – One to three (1-3) tonnes during the Pilot Project phase

 Location:

Victoria, Australia

 Announced funding:

AUD$50 million – Victorian State Government

AUD$50 million – Australian Commonwealth Government

Project description

This purpose of the pilot project is to demonstrate an integrated hydrogen supply chain encompassing production, storage and transportation in delivering liquefied hydrogen to Japan. The pilot project integrates coal gasification and gas-refining, hydrogen gas transportation and liquefaction, liquefied hydrogen storage and loading, shipbuilding and operation of a specialised liquefied hydrogen carrier.

The Hydrogen Energy Supply Chain (HESC) project is being developed in two phases:

  • the pilot phase – demonstrating at pilot scale a fully integrated hydrogen supply chain between Australia and Japan over a one-year period.
  • the commercial phase – targeted for the 2030s (with potential for 225,000 tonnes of liquid hydrogen production per annum), depending on the outcomes of the pilot phase, regulatory approvals, community feedback, hydrogen demand trends and successful development of carbon capture and storage (CCS) technologies.

Key elements of the HESC pilot project include:

  • coal gasification and gas-refining facilities adjacent to the AGL-owned Loy Yang A power station in the Latrobe Valley region of Victoria, Australia. The facility will use 150 tonnes of coal from the Loy Yang mine to produce 1-3 tonnes of hydrogen during the pilot phase.
  • the hydrogen gas will be transported in a high-pressure road tube trailer to pilot hydrogen liquefaction and loading facilities under construction at BlueScope’s existing industrial site at nearby Western Port (Port of Hastings). The existing birth at the BlueScope site is suitable to allow the safe loading of liquefied hydrogen. No new dredging or other waterworks are required. The liquefaction facility will liquefy the hydrogen gas by cooling it to -253°C and reducing it to 1/800th of its gaseous volume.
  • the hydrogen will be liquefied at the Port of Hastings, loaded and shipped to Kobe, in Japan, by a specially developed hydrogen marine carrier built by KHI, for which the naming (‘Suiso Frontier’) and launch ceremony was held in December 2019. The Suiso Frontier is the world’s first marine carrier to transport liquid hydrogen. It is approximately 116 metres long and 19 metres wide and will use a cryogenic storage tank with vacuum insulation to contain the liquid hydrogen. Installation of the storage tank occurred in March 2020 and the carrier underwent operational testing successfully in the coastal waters of Japan in October 2020, with the first voyage from Japan to Australia towards the end of 2021.
  • the liquefied hydrogen will be unloaded and stored at Kobe in Japan.

J-Power announced that hydrogen production from the coal gasification and hydrogen refining facility in the Latrobe Valley began in January 2021. In March 2021, it was announced that operations had commenced at both Victorian sites.

In December 2021, it was reported that the Suiso Frontier had left Japan to pick up its first cargo of liquefied hydrogen in Australia. The carrier arrived in Australia on 21 January 2022 to begin loading for the return journey to Kobe.

In January 2022, the Suiso Frontier left Hastings with its cargo of liquid hydrogen which (in February 2022) was unloaded at the receiving terminal in the port of Kobe, Japan. This marked the completion of the HESC – Pilot Project.

A completion of pilot project report has been published by the project. A Marine Species Report has also been released by the project.

After the pilot project, the project consortium will assess the feasibility of ‘scaling up’ operations to produce and export larger quantities of liquefied hydrogen on a commercial scale.

For funding purposes, the pilot project is split into different delivery pathways – a Japanese funded portion and an Australian funded portion:

  • Australian portion – coordinated by Hydrogen Engineering Australia (HEA), a consortium including KHI, J-Power, Iwatani Corporation, Marubeni Corporation, Sumitomo Corporation and AGL. This portion covers the refining of the hydrogen gas at the Latrobe Valley pilot facility, transportation of the hydrogen gas to the Port of Hastings, the liquefaction of hydrogen gas and its loading onto the marine carrier. The Australian Commonwealth and Victorian State Governments are contributing to this portion.
  • Japanese portion – coordinated by CO2-Free Hydrogen Supply Chain Technology Association (HySTRA), acting on behalf of KHI, J-Power, Iwatani Corporation, Shell, Marubeni Corporation, ENEOS Corporation and Kawasaki Kisen Kaisha (“K” LINE). This portion covers the conversion of brown coal to hydrogen gas at the Latrobe Valley pilot plant, the transportation of the liquid hydrogen by marine carrier to Japan and its unloading at Kobe port. The Japanese Government is contributing to this portion.

The pilot project is expected to generate a relatively small quantity of carbon emissions during its planned one-year operation. In June 2020, the project announced that carbon offset arrangements for the pilot project have been finalised.

If the pilot project is to proceed to a larger-scale commercial-stage, targeted for the 2030s, carbon capture and storage (CCS) technologies would need to be employed.  The CarbonNet CCS project is currently investigating CCS opportunities for CO2 injection sites in the Bass Strait, offshore Victoria.

Key Milestones

April 2018: Announcement that the Hydrogen Energy Supply Chain Pilot Project would move from concept to construction, including announcements of AUD$50 million funding contributions from each of the Australian Commonwealth and Victorian State Governments.

November 2018: Planning Scheme Amendment is granted for a pilot-scale hydrogen liquefaction and loading terminal at the Port of Hastings.

February 2019: The Environment Protection Authority Victoria (EPA) approves an application from J-Power Latrobe Valley Pty Ltd for an RD&D Project.

February 2021: J-Power, the operator of the project’s coal gasification and hydrogen refining facility in the Latrobe Valley, announces that production of hydrogen commenced in January 2021.

January 2022: The Suiso Frontier arrives in Australia to load its first cargo of liquefied hydrogen for return transport to Kobe.

February 2022: HESC – Pilot Project phase completed.

 

Updated December 2022