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ATCO abandons WA green hydrogen plan

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2023-07-27

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A significant commercial-scale green hydrogen project in Western Australia has been scrapped by Canadian infrastructure player ATCO, despite receiving funding support from the Australian government's renewables arm.

In May 2021, the Australian Renewable Energy Agency (ARENA) committed $28.7 million to finance a 10-megawatt electrolyser for gas blending at ATCO's Clean Energy Innovation Park in Warradarge, Western Australia.

The funding round, totaling $103 million, was considered a significant boost for the burgeoning green industry, which held the promise of delivering hydrogen to millions of Australian homes in the long run.

However, on Wednesday, ATCO announced its decision not to proceed with the project after discussions with ARENA and other stakeholders involved in the facility.

"While we were initially confident we could build CEIP (Clean Energy Innovation Park) at Warradarge, our ongoing assessment and market development found the benefits of being closer to the end-user of the renewable hydrogen was more commercially viable than locating the CEIP in a more remote location," ATCO stated.

The Warradarge wind farm, situated in Western Australia's mid-west region, nearly 300 kilometers north of Perth, played a role in the decision to abandon the project. ATCO expressed its intent to explore a commercial hydrogen facility but deemed it more feasible to identify opportunities closer to heavy industries where the demand would justify the investment.

As a result of this shift in project fundamentals, ATCO will not access the funding provided by ARENA. Nonetheless, the company remains optimistic about the future of the hydrogen economy in Western Australia, anticipating that as demand for renewable hydrogen increases, developing hydrogen plants across the state will become a reality.

The green hydrogen industry has experienced a reality check recently as the initial hype has waned due to its struggle to compete immediately with other sources of renewable generation. In May, the Australian government allocated $2 billion in its budget to reduce the cost of producing green hydrogen, a move aimed at boosting clean energy production.

To achieve its ambition of becoming a major global hydrogen exporter, Australia will need to invest $592 billion by 2050. BloombergNEF's green energy researchers estimate that $369 billion or 62 per cent of this investment is required for new wind capacity, with the remainder going towards solar, underscoring the substantial investment required to meet these goals.

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