Posted on 07 Oct 2024
Australia-based Origin Energy says it is exiting its potential hydrogen development project in New South Wales, Australia, citing market uncertainty.
The company first announced plans for the so-called Hunter Valley Hydrogen Hub, to be located at Kooragang Island, in early 2022. In July last year, the company inked a joint development agreement with Orica to progress to front-end engineering and design.
Early this year, the developers had secured planning approval from the New South Wales (NSW) government.
On Thursday, Origin said it is planning to exit the project due to the “uncertainty around the pace and timing of development of the hydrogen market” and the associated risks of developing the capital-intensive project.
“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,” says Origin ceo Frank Calabria. “The combination of these factors mean we are unable to see a current pathway to take a final investment decision on the project.”
“The decision to exit reflects the prioritisation of capital expenditure towards opportunities closely aligned to Origin’s strategy,” the ceo continues.
Calabria, however, notes the company continues to believe in hydrogen’s potential role in the future energy mix.
Kallanish understands the hub was expected to initially deliver 55 megawatts of electrolyser capacity by 2026, scaling up to 1 gigawatt over the next decade. It was estimated to cost AUD 207.6 million ($141.3m), with construction slated to start mid-next year.
Last month, energy majors Shell and Equinor shelved their respective blue hydrogen projects in Norway, due to market uncertainty.
Source:Kallanish
