Australian Energy Firm Exits Major Hydrogen Project

Australia’s Origin Energy Ltd. is exiting its potential hydrogen development project in the Hunter Valley, the Hunter Valley Hydrogen Hub (HVHH).

The decision to exit the HVHH “reflects uncertainty around the pace and timing of development of the hydrogen market, and the risks associated with developing capital-intensive projects of this nature,” Origin said in a statement.

Origin announced plans for a potential hydrogen hub on Kooragang Island in early 2022 with the hydrogen produced intended to progressively displace natural gas as a feedstock in nearby ammonia manufacturing as well as activate mobility and other use cases, according to the release.

Origin entered into a joint development agreement with Orica in July 2023 to progress through front-end engineering and design, received New South Wales government planning approval and was targeting a final investment decision. The project was shortlisted under the Australian Government’s Hydrogen Headstart program, having previously secured Commonwealth and New South Wales grant funding program commitments. First hydrogen production was targeted for 2026.

Origin CEO Frank Calabria said, “We have worked hard to evaluate the investment case for hydrogen and are grateful for the strong government support. We continue to believe hydrogen could play a role in the future energy mix. However, it has become clear that the hydrogen market is developing more slowly than anticipated, and there remain risks and both input cost and technology advancements to overcome. The combination of these factors means we are unable to see a current pathway to take a final investment decision on the project”.

“The decision to exit reflects the prioritization of capital expenditure towards opportunities closely aligned to Origin’s strategy. Ultimately, we believe investments focused on renewables and storage can best support the decarbonization of energy supply and underpin energy security over the near-term,” Calabria continued.

“Origin has been closely following the global development of hydrogen technology and markets over the past four years and we have evaluated a range of options across several jurisdictions. We acknowledge there will be some disappointment at this decision and are grateful for the opportunity to evaluate the feasibility of this project in conjunction with Orica, and with the support of both federal and state governments, local representatives and the community,” he concluded.

Origin said it remains open to exploring commercial options for the HVHH. Further, the company intends to cease work on all hydrogen development opportunities.

Located on Kooragang Island, Phase 1 of the project aimed to decarbonize part of Orica’s nearby ammonia manufacturing plant's existing natural gas feedstock with hydrogen. Some hydrogen produced will also be made available as a fuel for buses and trucks, displacing the use of diesel.

The first stage of the Hunter Valley Hydrogen Hub was expected to produce up to 5,500 metric tons of hydrogen per year.

Origin also intended to make hydrogen available to transport customers, displacing the use of diesel in buses and trucks. The project was designed with the potential to be scaled up to support further domestic decarbonization and future export development, given proximity to the Port of Newcastle’s Clean Energy Precinct and deepwater port.

Sydney-based Origin Energy is a major integrated electricity generator as well as an electricity and natural gas retailer.

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