South Australia

South Australia – Hydrogen Industry Policy Initiatives

In August / September 2017, the South Australian Government released two hydrogen-related reports: the South Australian Green Hydrogen Study and A Hydrogen Roadmap for South Australia.

The Green Hydrogen study was commissioned by the State Government to examine the role of hydrogen in decarbonising the South Australian economy and the cost and feasibility of producing renewable hydrogen in South Australia.

The Hydrogen Roadmap considered various options for developing a hydrogen economy and was intended to help guide the strategic development of a hydrogen industry in South Australia.

SA hydrogen reportBuilding on these releases, in September 2019, the South Australian Government released South Australia’s Hydrogen Action Plan. The Plan identifies domestic and export market opportunities for hydrogen produced using renewable energy generated in South Australia.

The Action Plan outlines 20 actions across five themes, with the objective of scaling up renewable hydrogen production for export and domestic consumption and enabling South Australia to become a world-class renewable hydrogen supplier.

The South Australian government launched the South Australian Hydrogen Export Modelling Tool and the South Australian Hydrogen Export Prospectus at the end of October 2020. The Tool provides an indicative view of hydrogen supply chain configurations that are possible by leveraging regional resources. The Prospectus identifies three hydrogen hub possibilities for South Australia – at Port Bonython, Port Adelaide and Cape Hardy/Port Spencer.

In November 2020, the state government allocated AUD$37 million from the 2020/21 State Budget to upgrade the existing Port Bonython jetty, to support the export potential of South Australia and the State’s ambition to become a significant exporter of green energy.

In March 2021, the Government of South Australia announced the signing of a Memorandum of Understanding (MOU) with the Port of Rotterdam Authority in the Netherlands to study the feasibility of exporting green hydrogen from South Australia to Rotterdam, Europe’s largest port. In December 2021 a pre-feasibility study was released showing South Australian hydrogen is expected to be competitive on the future hydrogen market in Rotterdam.

In October 2022, it was announced that several Australian and Japanese companies have signed statements of cooperation with the State Government to accelerate the development of the hydrogen industry in South Australia.

Investment in Hydrogen Projects 

Around AUD$15 million in grants and more than AUD$25 million in loans have been awarded to megawatt-scale hydrogen-related projects through South Australia’s AUD$150 million Renewable Technology Fund following its launch in 2017:

A further project, Trafigura’s Port Pirie Green Hydrogen Project, received an AUD$2.5 million grant in December 2021 from the state’s Jobs and Economic Growth Fund, to accelerate the Front-End Engineering and Design (FEED) for the project.

Port Bonython Hydrogen Hub

In May 2021, the South Australian government sought Expressions of Interest (EOI) from investors to develop State held land at Port Bonython to create a multi-user precinct. As part of the EOI process, the government facilitated a site planning exercise to determine land parcel offers to EOI respondents for development. In February 2024, the South Australian Government announced that it had signed Development Agreements with five Port Bonython Hydrogen Hub partners.

Master-planning commenced with active EOI respondents (known as project partners) in April 2023, estimated for an expected period of 18 months.  Consultation with the community will occur as part of the master-planning process and continue over the project life cycle.

The Australian Federal Government, through the Regional Hydrogen Hubs Program – Hubs Implementation funding stream, is providing up to AUD$70 million in funding support to the South Australian Government’s Port Bonython Hydrogen Hub initiative. This grant would be matched by the South Australian Government providing AUD$30 million towards the development of a hydrogen hub at Port Bonython, with a further AUD$40 million expected to be contributed by project partner developers. In September 2023, in a joint release, the Australian and South Australian Governments announced they had finalised a grant agreement to develop the Port Bonython Hydrogen Hub. The release noted that both governments are investing AUD$100 million to develop infrastructure at Port Bonython.

Regulation

In February 2021, the Governor of South Australia proclaimed a regulatory amendment declaring hydrogen to be a regulated substance under the South Australian Petroleum and Geothermal Energy (PGE) Act 2000 and was published in the Government Gazette.

Also in February 2021, the South Australian Department for Energy and Mining published an Issues Paper on proposed amendments to the PGE Act 2000. While the review primarily focused on enhancing existing provisions, the amendments would also expand the scope of the Act to cover pipeline transportation of future fuels such as hydrogen.

In June 2021, in response to submissions received to the Issues Paper, a draft Bill to amend the PGE Act 2000 was released for public comment with submissions closing on 25 June 2021. A (June 2021) Discussion Paper details the regulatory changes that were proposed.

The draft Bill was introduced into Parliament on 25 August 2021; however, it did not progress before the changing of Government in March 2022. Under the current government, a new draft Bill to amend the PGE Act 2000 was publicly consulted on between 28 October and 25 November 2022. Submissions received will be considered by the Department for Energy and Mining to finalise the draft Bill for introduction to Parliament.

The hydrogen generation licensing provisions included in the draft Bill of 2021 were removed and will now be included in the South Australian Government’s proposed separate Hydrogen and Renewable Energy Act (see below). However, pipeline transportation of hydrogen, exploration for natural hydrogen and underground storage of hydrogen will still remain in the amended PGE Act.

Hydrogen and Renewable Energy Act

In May 2023, the South Australian Government commenced consultation on the Hydrogen and Renewable Energy Bill, which proposes a new framework to regulate hydrogen and renewable energy projects within the state.

The proposed Hydrogen and Renewable Energy Act (HRE Act) seeks to introduce a ‘one window to government’ licencing and regulatory system for the lifecycle of all large-scale hydrogen and renewable energy projects in South Australia.

The South Australian government is working closely with First Nations groups to ensure the informed, early and ongoing participation of Aboriginal people is a key factor in achieving the development of a globally significant and sustainable renewable energy and hydrogen sector in South Australia.

The proposed Hydrogen and Renewable Energy Act will include:

  • Objects of legislation that place development in the context of net environmental benefit, environmentally sustainable practices, and circular economy outcomes.
  • Processes to enable the government to work together with Aboriginal people in the development of the sector.
  • A competitive process, focused on pastoral land and state waters, to determine where South Australia should host renewable energy projects, and where proponents will compete for licences and land tenure subject to transparent criteria.
  • A new, dedicated planning pathway that increases transparency and proponent certainty, whilst retaining appropriate controls to ensure that regulation of projects meets community expectations.
  • New licensing arrangements for hydrogen and renewable energy projects to enable regulation of the whole project life cycle, avoid land-banking activities and facilitate the capture of resource data.
  • New financial assurance requirements to ensure land is rehabilitated and returned to pre-existing conditions.
  • Provisions that enable coexistence of land uses and support fair outcomes for owners of land, communities and other pre-existing land rights and uses.

Consultation on the draft Bill occurred until the latter part of June 2023, with a range of consultation materials available online at https://yoursay.sa.gov.au/hrebill.

In November 2023, the South Australian Government announced that the Hydrogen and Renewable Energy Act 2023 had passed both Houses of the South Australian Parliament.

Hydrogen Jobs Plan and the Office of Hydrogen Power SA

In June 2022, in the 2022-23 State Budget, the South Australian government’s ‘Hydrogen Jobs Plan’ was announced.  The commitment includes $593 million to build a green hydrogen power station, electrolyser and storage facility near Whyalla. The project includes:

  • 250MWe of electrolysers
  • 200MW of power generation
  • hydrogen storage

The Office of Hydrogen Power South Australia was established to oversee the design and delivery of the Hydrogen Jobs Plan, including the early procurement, contracting and construction stages.

A six-week market sounding process calling for design and delivery concepts for the construction of the hydrogen facility closed in July 2022. A subsequent Request for Proposal (RfP) process, which closed on 14 March 2023, sought submissions to deliver the base case as well as alternative options.  In October 2023, a consortium comprising ATCO Australia and BOC was announced as the preferred hydrogen delivery partner, with the consortium having committed to an Early Contractor Involvement (ECI) agreement with the State Government which would progress detailed project and engineering design, procurement of critical equipment, finalise contracting arrangements, and cost estimations. It was also announced that the Government has entered an ECI agreement with South Australian energy infrastructure company EPIC Energy to develop an integrated pipeline and hydrogen storage solution. In February 2024, the South Australian Government announced the nomination of GE Vernova as the preferred supplier for the project’s (100% run) hydrogen turbines for power generation.

From 1 March 2023, the Port Bonython Hydrogen Hub was incorporated into the Office for Hydrogen Power SA, as well as hydrogen industry development functions.

In August 2023, the South Australian Government launched two publications that map and promote the capability of local businesses to service the state’s green hydrogen industry:

 

Updated: February 2024