Origin Energy on Thursday announced its intention to exit its potential hydrogen project in the Hunter Valley, the Hunter Valley Hydrogen Hub (HVHH).
In doing so, the ASX-listed company also confirmed its intent to cease work on all hydrogen development opportunities.
Explaining its decision, Origin chief executive Frank Calabaria said that while it believes hydrogen could play a “key role in the future energy mix”, the market is “developing more slowly than anticipated”.
“There remain risks and both input cost and technology advancements to overcome,” Calabria said.
“We have worked hard to evaluate the investment case for hydrogen and are grateful for the strong government support.”
Origin first announced plans for a potential hydrogen hub on Kooragang Island, in the Hunter region, in early 2022, with plans to progressively displace natural gas as a feedstock in nearby ammonia manufacturing as well as activate mobility and other use cases.
The project – which was undertaken in a joint development agreement with Orica last year – was shortlisted under the Australian government’s Hydrogen Headstart program, having previously secured Commonwealth and NSW grant funding program commitments.
At the time, Origin received $70 million in government funding to support the proposed project.
Now, Calabria has said that the change in tune reflects the “prioritisation of capital expenditure towards opportunities closely aligned to Origin’s strategy”.
“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,” he said.
“Origin has been closely following the global development of hydrogen technology and markets over the past four years and we have evaluated a range of options across several jurisdictions.”
However, the CEO acknowledged the “disappointment” that might come with the company’s decision.
“[We] 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,” Calabria said.
The Australian government describes hydrogen as “central” to its Future Made in Australia policy. Namely, its Department of Climate Change, Energy, the Environment and Water believes there is an opportunity to grow the Australian hydrogen industry sector.
“This will capture the significant economic, trade, export and investment opportunities that are becoming available,” it has said.
Earlier this year, PGIM, in its analysis of the energy transition, referred to hydrogen as a “speculative” innovation, noting that companies involved in areas like hydrogen can be characterised as “plucky upstarts challenging large energy incumbents”.
