South Australia picks developers for hydrogen project backed by more than half a billion in subsidies

The state of South Australia has selected engineering company Atco and industrial gases firm BOC Linde as preferred partners for a hydrogen project in Whyalla backed by A$593m ($374m) in subsidies through its Hydrogen Jobs Plan.

The two companies, chosen after a six-month evaluation of 29 proposals, are now responsible for building 250MW of electrolysers and a 200MW power plant, which the state government says will use 100% hydrogen-operated fast-startup turbines — although a supplier for any of this equipment has not yet been chosen.

While the South Australian government originally announced construction would start in 2024 and be completed by December the following year, operations are not scheduled to start until “early 2026”.

“This is a world-leading opportunity for South Australia, that has the potential to rival Victoria’s gold rush, the coal boom in Queensland, or Western Australia’s development of iron ore and gas,” said the state’s premier Peter Malinauskas.

“We have all the things the world will need to decarbonise – abundant copper and magnetite, the world’s best coincident wind and solar resources, world-leading renewable energy penetration and soon, the ability to harness this abundant clean energy in the form of hydrogen.

“We can use this clean hydrogen to firm our electricity grid, but more than that, we can use it to help reindustrialise the Upper Spencer Gulf, creating thousands of jobs in the process.”

Last month, the state and federal governments committed A$100m in support for the development of hydrogen export infrastructure at the Port of Bonython near Whyalla.

“Rather than trying to contain and move the hydrogen itself, we will produce and ship products made with hydrogen, advanced products—value-add products,” he said.

“But to do this optimally, we must be located near to the green electricity source. Some see this as a limiting factor, we see this as a genuine opportunity, forcing us to add real value to our hydrogen by using it… to make products that are already in growing demand, products for which demand can only increase as traditional manufacturers are squeezed out by ever more stringent regulations, higher carbon taxes and increased consumer resistance.”

“For us, it is important that we actually still produce steel competitively with hydrogen,” he said, although he added that markets such as the EU are putting additional costs on high-carbon products via mechanisms such as the carbon border adjustment mechanism, due to kick in from 2026.

“When we bring a green product across that border, it will not carry a tax, while anything else that’s produced or brought over that border will have a tax,” he said, adding that consumers and end-users are also expected to “eventually” be comfortable paying more for green products due to increased awareness of the impact of climate change.