Last week, a gaggle of politicians and energy company representatives gathered at Bell Bay to release feasibility reports into two green hydrogen projects proposed at the port.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The two reports, which were partly funded with public money, drew stark contrasts between the economic feasibility of Abel Energy's project to make methanol from hydrogen, and Origin Energy's project to make ammonia from hydrogen.
While Origin's report raised doubts about whether its project would continue, Abel Energy's report was more optimistic.
It noted a trend towards significant demand for methanol both in Australia and overseas, where shipping companies are beginning to see it as a replacement for fuel oil.
There is demand in Australia too.
READ MORE: Crime scene declared in Coastal street
Customers that used to rely on domestically produced methanol now import about 100,000 tonnes per year for use in fuel refining and as an industrial chemical, after the last production closed in Australia in 2016, said Abel co-founder and chief executive officer, Michael van Baarle.
He said demand for methanol is growing so strongly that he is investigating whether to triple the capacity of Abel's proposed plant, from 75,000 tonnes per annum of methanol, to 200,000 tonnes per annum.
"The economics around it are very encouraging, so unless there's some fatal flaw that we can't foresee ... we are very confident of the pricing of our product," he said.
"We are moving into a front-end engineering design phase now having done the feasibility study, and as I said, we have actually decided to go significantly bigger because the demand [for methanol] is growing so strongly."
But the report from Origin Energy was different. Origin is proposing to construct a hydrogen plant that would produce 420,000 tonnes of ammonia per annum for export markets.
Its report highlighted the many stumbling blocks ahead of the project.
The biggest was the price of electricity, which would account for about 50 per cent of its operating costs.
"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.
A spokesman for Origin Energy downplayed the report.
"Everyone sees potential to create this industry there. That's what this report is intended to do - show it's technically feasible, and here's what you need to do to get to the next stage."
The two hydrogen projects that appear most likely to progress right now both use hydrogen to produce methanol - Abel's Bell Bay project, and the project by HIF Global outside Burnie.
HIF is seeking approval to begin construction of a very small plant in 2024.
Energy Minister Guy Barnett, who launched the two feasibility reports on Wednesday, said Hydro Tasmania would address concerns that electricity pricing might be too high to support some projects.
"We have always said that the increased energy required by proponents [of hydrogen projects] will be matched through increasing amounts of new on-island wind generation," Mr Barnett said.
"There are a range of new generation projects proposed for Tasmania that will increase renewable energy supply required for green hydrogen."
Those included a $123 million expansion of the Tarraleah Power Station that would double its capacity to 220 megawatts, a 750 megawatt pumped hydro project at Lake Cethana, and at least 1500 megawatts of new wind generation.
Mr Barnett also pointed out estimates by Hydro that show that, under certain conditions, green hydrogen can be produced in Tasmania up to 15 per cent cheaper than on the mainland.
"Scale economies are also likely to place downward pressure on the price of green hydrogen as production accelerates," Mr Barnett said.
Our journalists work hard to provide local, up-to-date news to the community. This is how you can continue to access our trusted content:
