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In a major hit to Australia’s reputation as a global hydrogen development leader, Origin said it was pulling out of the Hunter Valley Hydrogen Hub (HVHH) due to concerns over its commercial viability at this time.

While the Australian government is pouring millions into supporting hydrogen development, Origin joins the likes of Andrew Forrest’s FMG in pulling back their local investments in the sector.

Hydrogen supply chain

The HVHH, which had been shortlisted under the federal government’s Hydrogen Headstart program, was initially proposed to deliver a commercial-scale hydrogen supply chain in the Newcastle industrial and port precinct.

Located on Kooragang Island, Phase 1 of the project was designed to decarbonise part of ORI nearby ammonia manufacturing plant by replacing existing natural gas feedstock with hydrogen.

Some hydrogen produced would also have been made available as a fuel for buses and trucks, displacing the use of diesel.

Development uncertainty

Origin chief executive officer Frank Calabria said the decision to exit the HVHH reflected uncertainty around the pace and timing of development of the hydrogen market and the risks associated with developing capital-intensive projects of this nature.

“We have worked hard to evaluate the investment case for hydrogen and are grateful for the strong government support,” Mr Calabria said.

“[While] we continue to believe hydrogen could play a role in the future energy mix, it has become clear that the hydrogen market is developing more slowly than anticipated and there remain risks related to both input costs and technology advancements to overcome.”

“The combination of these factors means we are unable to see a current pathway to take a final investment decision on the project.”

Renewables preferred

“The decision to exit reflects the prioritisation of capital expenditure towards opportunities closely aligned to Origin’s strategy,” Mr Calabria said.

“Ultimately, we believe investments focused on renewables and storage can best support the decarbonisation of energy supply and underpin energy security over the near-term.”

“We acknowledge there will be some disappointment at this decision and are grateful for the opportunity to evaluate the feasibility of this project in conjunction with Orica and with the support of both federal and state governments, local representatives and the community,” Mr Calabria said.

Orica partnership

Origin announced plans for a potential hydrogen hub on Kooragang Island in early 2022, and the company entered into a joint development agreement with Orica in July 2023 to progress through front-end engineering and design.

The plan subsequently received NSW government planning approval and was targeting a final investment decision before the decision to cut it was made.

Origin said it now intends to cease work on all hydrogen development opportunities. ...