Australia opens its A$2bn Hydrogen Headstart green H2 subsidy programme to developers

Applicants must register expressions of interest by 10 November to be eligible for production credits

Australian climate change and energy minister Chris Bowen.
Australian climate change and energy minister Chris Bowen.Photo: Getty

The Australian government has today opened its A$2bn ($1.28bn) Hydrogen Headstart subsidy programme, inviting developers to register their expressions of interest (EOI) as the first page of a two-stage application process.

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Only those applicants deemed to have the highest merits, under a ranking system, at this EOI stage will be invited to submit a full application for hydrogen production credits (HPCs), which will take the form of quarterly grants for a period of ten years, starting in 2027.

There is no set rate for the HPC — developers must nominate their own HPC value, which “should represent the difference between the expected sales price to each offtaker and the applicant cost of production (inclusive of a justifiable return on capital”, according to a consultation paper published in June.

As Hydrogen Headstart is intended to fund large-scale green hydrogen projects, “it is expected that at least two projects will be supported under the program”, according to an FAQ (frequently asked questions) document released today.
Australia explicitly states that there will be no additionality, or temporal/geographic correlation requirements (see panel below) for the production of green hydrogen under this scheme, which means that any exports to the EU would not be eligible for subsidies in future import auctions or count towards the transport and industrial use mandates that were yesterday signed off by EU ministers.

Each application’s merits will be assessed by the Australian Renewable Energy Agency according to five criteria:

  • Alignment to Competitive Round Objectives, including cost competitiveness and the potential of projects to lead to further decarbonisation
  • Capability and capacity, including the experience and expertise of applicants
  • Scope, methodology, deliverability and risk
  • Financial capability
  • Knowledge sharing, including “the extent to which the knowledge generated supports the development of new markets and supply chains”.

Developers must post their applications online under the EOI stage by 10 November, including a project plan, financial model, project budget and agreements with offtakers.

Climate change and energy minister Chris Bowen described Hydrogen Headstart as “the largest government investment in Australia’s developing hydrogen industry”.

“Hydrogen Headstart will move the dial on the technical and commercial viability of renewable hydrogen production in Australia,” he said.

For more details on the scheme and the application process, click here.
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Published 10 October 2023, 10:29Updated 10 October 2023, 10:29