New South Wales

New South Wales – Hydrogen Industry Policy Initiatives

Net Zero Industry and Innovation Program

NSW hydrogen reportIn March 2020, the NSW Government released its Net Zero Plan Stage 1: 2020-2030.  The Net Zero Plan seeks to reduce emissions by 35 percent by 2030 and achieve net zero by 2050 and 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 Net Zero Industry and Innovation Program (‘Program’), which was announced in March 2021 (and is part of the Net Zero Plan Stage 1: 2020-2030).

Funding for the Program focuses on three key areas, which include support for hydrogen production and demand:

  • High Emitting Industries – AUD$305 million allocated to support major plant and industry upgrades to deliver significant emissions reductions
  • New Low Carbon Industry Foundations – AUD$475 million to build enabling infrastructure, increase supply chain capabilities, and supporting emerging clean manufacturing precincts in NSW (this amount includes a AUD$300 million increase in funding announced in February 2022)
  • Clean Innovation Technology – AUD$195 million supporting the development and continued innovation of emerging 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.

New South Wales Hydrogen Strategy

In October 2021, the NSW Government launched the NSW Hydrogen Strategy (the ‘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

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).

Incentives for Green Hydrogen Production

The Strategy provides incentives to commercialise hydrogen supply chains and reduce the cost of green hydrogen by an estimated AUD$5.80 per kilogram.

From March 2023, AUD$1.5 billion worth of electricity concessions for green hydrogen production became available for application. Notably, producers who connect to parts of the network with spare capacity can apply for a 90% exemption from network use of system charges. The exemption is available for the first 750 MW installed by 2030 for a period of 12 years. Additional exemptions to the Climate Change Fund, Energy Savings Scheme, Peak Demand Reduction Scheme and Electricity Infrastructure Roadmap help enable projects reach final investment decisions.

Another financial incentive, the Renewable Fuel Scheme (RFS), is a market-based certificate scheme with annual green hydrogen production targets that increase to 8 petajoules (PJ) or approximately 67,000 tonnes by 2030.

Hydrogen Hubs in NSW

A key objective of the Strategy is to develop hydrogen hubs in the Hunter and Illawarra regions, which will be supported by up to AUD$150 million of grant funding (an increase from the original announced amount of AUD$70 million). The development of green hydrogen hubs will also be supported by the NSW Renewable Energy Zones (REZs) under the Electricity Infrastructure Roadmap.

In March 2023, it was announced that approximately AUD$64 million of funding from the hydrogen hubs initiative was awarded to the first two projects – the Illawarra Hydrogen Technology Hub (AUD$28.5 million) and the Good Earth Green Hydrogen and Ammonia Project (AUD$35.8 million).

In September 2023, it was announced that AUD$45 million of funding from the hydrogen hubs initiative was awarded to the Hunter Valley Hydrogen Hub project. (Note: in October 2024, Origin released an update on the Hunter Valley Hydrogen Hub announcing its intention to exit this potential hydrogen development project; in its release, Origin notes it remains open to exploring commercial options for the Hunter Valley Hydrogen Hub)

In January 2024, the Committee for the Hunter released The Hunter Hydrogen Infrastructure Masterplan. Amongst other things, the document identifies the priorities that will speed up and scale the development of the Hunter hydrogen hub.

In October 2024, the Port of Newcastle announced the signing of agreements for Front End Engineering Design and Environmental Impact Statements for its Clean Energy Precinct (CEP) covering a range of common user infrastructure including electrical infrastructure, water services, general infrastructure, storage, berth infrastructure, and pipelines to berth. Renewables-based hydrogen and ammonia developments are intended as key elements of the CEP.

Hydrogen-powered Vehicle Trials

The NSW Government, in partnership with local and national industry suppliers, undertook a trial of a hydrogen-powered electric bus on the Central Coast during March-June 2023, to test the future fuel source and understand how this technology could be implemented across regional NSW. In December 2023, the NSW Government announced a six-month hydrogen bus trial in the Illawarra. In May 2024, the City of Newcastle announced it would undertake a 12-month trial of a rear-loading hydrogen fuel cell electric truck as part of its waste collection fleet: data from the trial would help inform the City of Newcastle’s future purchases of waste trucks.

Skills Training

The NSW Government has pledged AUD$25 million to establish a Hydrogen Centre of Excellence in partnership with the plumbing industry Climate Action Centre to provide vocational training for plumbers in specialist skills related to hydrogen. In July 2024, the NSW Government unveiled the design of the Hydrogen Centre of Excellence.

Reports and Other Initiatives

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 power to X (P2X) industries and identification of prospective locations for large-scale P2X production in NSW.

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 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 October 2022, the NSW Environmental Trust awarded AUD$6.3 million in grants to clean technology R&D projects to support emissions cuts in high-emitting or hard-to-abate industries, including AUD$1.5 million to Hysata to support development of their water electrolyser technology.

In February 2023, an announcement was made of a contribution of AUD$243,944 towards the Hunter Hydrogen Infrastructure Master Plan through the Regional NSW – Business Case and Strategy Development Fund.

In March 2023, the NSW Government released its Hydrogen Guideline document, which presents a guide to understanding hydrogen development and related supply chain activities under the NSW planning framework.

In February 2024, the NSW Government announced the signing of a Memorandum of Understanding between itself and Tokyo that aims to further enhance collaboration around the energy transition, focusing on hydrogen.

Commonwealth Regional Hydrogen Hubs Initiatives

In July 2023, in a joint release, the Australian and New South Wales Governments announced that a signed agreement had been reached for the Australian Government to invest AUD$70 million to develop a hydrogen hub in Newcastle, noting that Origin Energy in collaboration with Orica is progressing the development of the Hunter Valley Hydrogen Hub (see above Note on this project).

The October 2022-23 federal budget also included funding allocations of relevance to regional hydrogen hubs development, including an allocation of AUD$100 million to support the Port of Newcastle and the Hunter region of New South Wales to become hydrogen-ready.

 

Updated: November 2024