Demand for Tasmanian green hydrogen is growing and the state is uniquely positioned to deliver, but there are still numerous stumbling blocks that could prevent the various proposed projects at Bell Bay from progressing, according to a feasibility report on one of the projects released yesterday.
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The report by Origin Energy, an ASX-listed company that is planning to build a plant at Bell Bay to produce about 420,000 tonnes of ammonia from hydrogen, stated that the cost of electricity would be one of the biggest factors in its investment decision.
"The cost of electricity generation ... [has] the largest material impact on the levelised cost of ammonia, and these are not yet at a level that supports the project progressing," the report read.
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Ammonia, which can be made from hydrogen, is thought to be among the best forms to transport hydrogen around the world due to its compactness and relative stability.
Origin went on to state that while its project was "technically feasible", certainty was needed around the cost of power provided by Hydro Tasmania, as well as the development of wind generation and transmission projects by the state electricity producer and Tasnetworks.
Energy Minister Guy Barnett said Tasmania and Bell Bay were uniquely positioned in Australia as a place that could produce green hydrogen.
This was because Tasmania can generate electricity up to 15 per cent cheaper than mainland alternatives, and - with its big hydro generation capacity - is less reliant on intermittent renewable power sources such as wind and solar.
He also said there were a range of projects that could expand Hydro Tasmania's hydro generation capacity, including a pumped hydro project, and the expansion of one of its existing hydro power stations.
Origin's report was published yesterday along with a more optimistic feasibility report by Abel Energy, whose co-founder and chief executive officer, Michael van Baarle, said he was considering boosting the scale of his proposed methanol plant from the current 75,000 tonnes per annum, to 200,000 tonnes per annum.
Mr van Baarle said a final investment decision on his project, Bell Bay Powerfuels, would be taken next year.
He was positive about the global demand for methanol, which can be produced by synthesis from hydrogen and carbon dioxide.
"The demand for it has been so strong, that the biggest question we get asked by customers is, 'when can you make your next one, how quickly can you do that? How quickly can you build it up?'," he said.
He expected most of the initial demand for methanol to come from the shipping sector, where ships are expected to move away from fossil fuels in the coming years.
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But he said he also saw demand from Australian industrial clients - Australia's last methanol production plant closed down in 2016. The country currently imports about 100,000 tonnes of methanol per annum for use as a feedstock in fuel refineries and other chemical industries.
Mr van Baarle said Abel has a corporate goal of increasing its methanol production to one million tonnes by 2030.
Other companies have different goals in the hydrogen sector than Abel and Origin.
Tasmanian mining company, Grange Resources, is hoping to reduce carbon emissions and costs by powering its processing plant near Burnie with hydrogen instead of natural gas.
Dian Olwagen, quality and processing improvement manager at Grange, said his company was expected to publish a feasibility study on that project soon.
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