New South Wales

New South Wales – Hydrogen Industry Policy Initiatives

In 2016, the New South Wales (NSW) Government released its Climate Change Policy Framework which outlined a long-term objective to achieve net-zero emissions by 2050.

NSW hydrogen reportIn March 2020, the NSW Government released its Net Zero Plan Stage 1: 2020-2030.  The Net Zero Plan includes an action to support commercialisation of hydrogen as an emerging and innovative technology for emissions reduction.

NSW Government funding support for hydrogen technology will be provided under the AUD$750 million Net Zero Industry and Innovation Program (‘Program’), which was announced by the NSW Minister for Energy and the Environment in early March 2021.

Funding for the Program focuses on three key areas, all of which can be accessed by hydrogen project proponents:

  • AUD$380 million to support existing industries to re-tool with low emissions alternatives
  • AUD$175 million to set up low carbon industries such as green hydrogen
  • AUD$195 million to research and develop new clean technologies

Detailed information on the Program, including specifics about each funding stream, key areas of focus and a registration of interest process (particularly relevant to hydrogen project proponents and potential users of hydrogen) can be found here.

A specific objective of the Program is to develop hydrogen hubs in the Hunter and Illawarra, which will be supported by at least AUD$70 million of grant funding. The development of green hydrogen hubs will also be supported by the NSW Renewable Energy Zones (REZs) under the Electricity Infrastructure Roadmap.

In May 2021, the NSW Government announced the development of a dual fuel capable hydrogen/gas power plant following conclusion of a funding agreement for the Tallawarra B project in the Illawarra region. The Ministerial announcement noted that under the funding agreement, the project proponent will offer to buy enough green hydrogen equivalent to over five per cent of the plant’s fuel use from 2025 (200,000 kg of green hydrogen per year) and will offset direct carbon emissions from the project over its operational life.

In July 2021, the NSW Government released its Future of Gas Statement. Amongst other things, the Statement notes that natural gas could be supplemented with alternative fuels such as hydrogen or renewable biogas, and that during the transition, existing distribution pipeline infrastructure has capacity to introduce new fuel blends up to technical operating limits.

In October 2021, the NSW Government launched the NSW Hydrogen Strategy. By 2030, the Government is aiming to be producing 110,000 tonnes of green hydrogen per annum from 700 megawatts (MW) of electrolyser capacity for under $AU2.80 per kilogram.

2030 Stretch Targets in the Strategy include:

  • Hydrogen price under AUD$2.80 per kilogram
  • 110,000 tonnes per annum of green hydrogen produced
  • 700 MW of electrolyser capacity
  • 12 gigawatts (GW) of renewable energy capacity
  • 10% hydrogen (by volume) gas network blending
  • 10,000 hydrogen vehicles
  • 100 hydrogen refuelling stations
  • 20% hydrogen vehicles in the NSW Government heavy vehicle fleet

In addition to delivering an already committed AUD$70 million to develop the State’s hydrogen hubs in the Illawarra and the Hunter, the strategy includes:

  • Exemptions for green hydrogen production from government charges;
  • A 90% exemption from electricity network charges for green hydrogen producers who connect to parts of the network with spare capacity;
  • Incentives for green hydrogen production; and
  • A hydrogen refuelling station network to be rolled out across the State.

The Strategy notes that it provides up to AUD$3 billion of incentives to commercialise hydrogen supply chains and reduce the cost of green hydrogen by an estimated AUD$5.80 per kilogram. Much of the legislation relevant to the Hydrogen Strategy is in the Electricity Supply Act 1995 (refer Energy Legislation Amendment Act 2021 No 34 [NSW] Schedule 1 Amendment of Electricity Supply Act 1995 No 94).

Following release of the State’s Hydrogen Strategy, the NSW Government released the NSW P2X Pre-Feasibility Study. The study was commissioned by the Office of NSW Chief Scientist & Engineer with the objective of assessing the technological pathways of different P2X industries and identification  of prospective locations for large-scale P2X production in NSW.

In January 2022, the NSW Government announced that LAVO Hydrogen Storage Technology would receive a AUD$5 million grant from the state’s Regional Job Creation Fund to support establishment of a manufacturing facility at Tomago, in the Hunter region of NSW.

In March 2022, the Governments of Queensland, New South Wales and Victoria announced an agreement to collaborate on the development of an east coast renewable hydrogen refuelling network by 2026, focusing on the freight corridor routes of the Hume Highway, the Pacific Highway and the Newell Highway. The initiative will commence with Victoria and New South Wales each providing AUD$10 million to build at least four renewable hydrogen refuelling stations between Sydney and Melbourne. The funding will also provide grants for the country’s first long-haul hydrogen fuel cell electric freight trucks.

In March 2022, the NSW Government noted that more than AUD$4 billion in potential investment proposals was received in response to Stage 1 (Expressions of Interest) of a competitive funding process for commercial-scale green hydrogen projects in NSW. Successful stage 1 applicants will be invited to submit a full application (Stage 2) in the second quarter of 2022.

On 28 April 2022, under the 2022 federal election caretaker arrangements, it was announced that the following two projects had received grant awards via the Commonwealth Government’s Clean Hydrogen Industrial Hubs Program – Hub Implementation funding stream:

  • Up to AUD$41 million for the Port of Newcastle’s Hydrogen Hub
  • Up to AUD$41 million for Origin Energy’s Hunter Valley H2 Hub

In May 2022, it was announced that 10 projects from the above mentioned competitive funding process (for commercial-scale green hydrogen projects in NSW) have been shortlisted to progress to the full application stage. The shortlisted projects cover a wide range of end uses, including heavy transport, agricultural products, industrial feedstocks, power generation, gas blending and export.

 

Updated: June 2022