According to the media report, one of the country’s largest energy companies, Origin Energy, has decided to withdraw from plans to construct from Australia’s green hydrogen project, citing high production costs. Origin Energy green hydrogen project was one of the best upcoming projects.
The move is a setback for the federal government’s goal of fostering a green hydrogen industry in Australia. On Thursday, Origin announced it would not proceed with the Hunter Valley Hydrogen Hub project near Newcastle, which involved explosives manufacturer Orica and aimed to produce 5,500 tonnes of hydrogen annually using renewable energy.
In a statement to the Australian Stock Exchange, Origin CEO Frank Calabria explained that the company was “exiting” the project because the financials did not add up. Origin also indicated it would cease pursuing all hydrogen development opportunities.
As per the report, his announcement adds to the challenges facing Australia’s nascent hydrogen sector, following billionaire Andrew Forrest’s Fortescue, which recently cut jobs and reduced investments in hydrogen technology.
Green Hydrogen is one of the essential prospects to achieve net zero target and assist in eco friendly environment.
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Calabria acknowledged the potential of hydrogen in the future energy landscape but noted that the market is evolving more slowly than expected. “There are still risks and challenges related to both input costs and technological advancements that need to be addressed,” he said. “These factors prevent us from identifying a viable path for a final investment decision on the project.”
Federal Climate Change and Energy Minister Chris Bowen criticized Origin’s decision, calling it disappointing and a missed opportunity for Australia to lead in the emerging green hydrogen market. He emphasized that government incentives, including an $8 billion hydrogen head-start program, could attract significant private investment, the media report further added.
Bowen commended Orica for its continued involvement in the Hunter Valley project, stating that the company remains dedicated to manufacturing solutions for a low-carbon economy. He reiterated that green hydrogen leverages Australia’s unique strengths and is crucial for the future of manufacturing and industry, both regionally and globally.
While Origin has abandoned its hydrogen plans, it will redirect investments towards renewable energy assets, such as wind, solar farms, and battery storage projects. Calabria reassured stakeholders that the company is committed to its decarbonization strategy.
Initially, Origin aimed to produce green hydrogen to replace natural gas in Orica’s ammonia plant on Kooragang Island. However, concerns over production costs and market demand for the resulting ammonia led to the company’s decision.
