Origin and Woodside Withdraw Hydrogen Projects

The Growing Challenges of Green Hydrogen in Australia

Executive Summary

• Project Withdrawals: Both Origin Energy and Woodside Energy have recently halted major green hydrogen projects, citing a combination of high costs, inadequate renewable energy capacity, and challenging market conditions.

• Sector Implications: These cancellations raise questions about the near-term viability of green hydrogen in Australia, highlighting significant obstacles in scaling production and attracting investment.

• Investment Shifts: With major players pulling back, attention may pivot to more established renewable energy investments, as companies reevaluate the economic and regulatory hurdles of hydrogen.

In-Depth Analysis

1. Origin Energy’s Hunter Valley Hydrogen Hub Cancellation

• Project Details and Context:

  • Origin’s Hunter Valley Hydrogen Hub (HVHH) on Kooragang Island was intended to power the Hunter region’s industrial activities and reduce fossil fuel dependence. Despite receiving $115 million in federal and state funding, Origin has opted to discontinue the project due to market uncertainties and the high costs associated with green hydrogen production.

  • Origin’s CEO, Frank Calabria, stated that the decision reflects the slow pace of hydrogen market development and persistent risks tied to cost and technology, prompting Origin to redirect its focus toward solar, wind, and battery storage.

• Implications for Hydrogen in Australia:

  • This move echoes Origin’s strategic shift away from hydrogen in favor of renewables with clearer near-term returns, which could signal a broader industry trend.

  • The decision leaves co-developer Orica searching for a new partner to sustain the HVHH project, underscoring the uncertainty facing other hydrogen ventures in Australia.

2. Woodside Energy Abandons H2Tas and Southern Green Hydrogen Projects

• H2Tas and Southern Green Hydrogen Project Details:

  • Woodside, Australia’s largest oil and gas company, recently shelved two significant green hydrogen projects: the 1.7 GW H2Tas project in Tasmania and the 600 MW Southern Green Hydrogen project in New Zealand.

  • The H2Tas project, located at Bell Bay, was designed to produce 107 tonnes of hydrogen daily, primarily for ammonia export to Japan. However, Woodside cited insufficient renewable energy resources, as well as environmental and regulatory challenges, as reasons for halting the project.

• Challenges Leading to Project Abandonments: