Origin Energy announced plans on Thursday to withdraw from its potential hydrogen project in the Hunter Valley, the Hunter Valley Hydrogen Hub (HVHH).
In doing so, the ASX-listed company also confirmed its intention to cease work on all hydrogen development opportunities.
Explaining his decision, Origin chief executive Frank Calabaria said that while he believes hydrogen could play a “key role in the future energy mix”, the market is “developing more slowly than expected”.
“There remain risks and input costs as well as technological advances to overcome,” Calabria said.
“We have worked hard to assess the case for investment in hydrogen and are grateful for the government’s strong support. »
Origin first announced plans to create a potential hydrogen hub on Kooragang Island, in the Hunter region, in early 2022, with plans to gradually replace natural gas as a feedstock in the manufacturing of hydrogen. ammonia nearby, as well as enable mobility and other use cases.
The project – which was undertaken under a joint development agreement with Orica last year – was selected under the Australian Government’s Hydrogen Headstart program, after securing grant funding commitments from the Commonwealth and NSW.
At the time, Origin received $70 million in government funding to support the proposed project.
Today, Calabria said the shift reflects the “prioritization of capital spending toward opportunities closely aligned with Origin’s strategy.”
“Ultimately, we believe that investments focused on renewable energy and storage can best support the decarbonization of the energy supply and support energy security in the near term,” he said.
“Origin has closely followed the global development of hydrogen technology and markets over the past four years and we have evaluated a range of options across multiple jurisdictions. »
However, the CEO acknowledged the “disappointment” that could come from the company’s decision.
“[We] “We are grateful for the opportunity to evaluate the feasibility of this project in collaboration with Orica and with the support of federal and state governments, local officials and the community,” Calabria said.
The Australian government describes hydrogen as “central” to its Future Made in Australia policy. Namely, its Department of Climate Change, Energy, Environment and Water believes there is an opportunity to grow Australia’s hydrogen industry sector.
“This will capture the significant economic, trade, export and investment opportunities that are becoming available,” he said.
Earlier this year, PGIM, in its analysis of the energy transition, called hydrogen a “speculative” innovation, noting that companies involved in areas like hydrogen can be described as “brave young people challenging the big guys historical players in the energy sector.
