Four major energy companies are eyeing Bell Bay for large-scale green hydrogen production facilities, as government funding flows for research into making the Australian production process more cost-competitive.
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Fortescue Metals could make an investment decision on whether to proceed with a 250-megawatt hydrogen and ammonia production facility at Bell Bay in June.
Origin Energy is also assessing the viability of a similar-scale production facility, while Woodside is waiting to find out if it has been successful for an ARENA government grant for a 10-megawatt demonstration project at Bell Bay, potentially starting construction in September.
ABEL Energy is investigating the feasibility of a hydrogen and methanol plant.
Fortescue and Woodside have identified land in the Bell Bay Advanced Manufacturing Zone.
On Monday, the Bell Bay cluster was successful in receiving $200,000 from the Commonwealth-funded National Energy Resources Australia and the Tasmanian Government for research into the latest green hydrogen technology.
Bell Bay Advanced Manufacturing Zone chief executive officer Susie Bower said it would be crucial to ensure Tasmania's green hydrogen could be globally cost-competitive.
"At the moment it's $7/kg for hydrogen, but if we want to be competitive we have to get it around $1-$2/kg. The only way to do that is through improved technology," she said.
"So getting this funding and starting a technology cluster is the first step in bringing all of our smart people together to look at what advances in technology there are to bring that cost of production down."
The BBAMZ was one of 13 clusters to share in funding as part of the National Hydrogen Strategy - the only one in Tasmania.
Bell Bay has access to water resources and renewable energy, whereas other states such as Victoria and Queensland could rely on fossil fuels in producing hydrogen.
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Ms Bower said Tasmania's abundant renewable resources set it apart from other states and territories.
"From a green perspective, I think we're far advanced compared with other states, and with Woodside coming in the third quarter of this year to start construction - contingent on ARENA - then we're well placed," she said.
Production would initially target export markets, with it expected to take some time for Australia to develop a domestic market for hydrogen in transport and industry.
Energy Minister Guy Barnett said the seed funding for the BBAMZ would help to solidify opportunities in the industrial hub.
"The development of a hydrogen cluster around key hydrogen projects and infrastructure hubs, or in regions that will service those hubs will help to enhance local cohesion, capability, and efficiency in the hydrogen value chain," he said.
"This could mean that Tasmanian companies become better placed to supply new technologies, products and services in an emerging hydrogen industry."