The government's hydrogen strategy is in tatters, Labor has claimed, after TasNetworks confirmed that its application to upgrade a power line to George Town was rejected by the energy regulator.
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In its draft decision, the Australian Energy Regulator rejected the justification for the Tassie grid operator's $792 million project to upgrade the power links from Palmerston to George Town.
The AER said the reasons, or 'triggers', used by TasNetworks in its application to justify why the upgrades were necessary were "not sufficient".
The company must submit its revised proposal by November 30.
If it is rejected again, then TasNetworks will not be able to fund the upgrades through network charges to the Tasmanian public in their power bills.
The grid operator had argued that over 700 megawatts of anticipated new electricity demand in the Bell Bay area in the 2024-29 period was one of the justifications for the upgrades.
The Palmerston to George Town projects were proposed as a way to boost electricity supply to the companies proposing to build hydrogen projects at Bell Bay, where existing power capacity is limited.
But the AER's draft decision suggested the regulator doubts whether these projects will happen.
"We are of the view that the trigger definitions are not sufficient to allow us to objectively assess that the projects have been triggered," the draft decision read.
One of the companies proposing a hydrogen plant at Bell Bay earlier this year cut staff and closed offices in the state in an apparent signal it had either abandoned or delayed its project.
Speaking at a government business scrutiny committee hearing on Friday, Labor energy spokesman Dean Winter asked whether the regulator's draft decision was due to hydrogen proponents abandoning their plans in Bell Bay.
"The departure of that line into George Town on the assumption of 700MW load is I assume hydrogen proponents who have effectively left the state," he said.
"Can you confirm that TasNetworks and your government have conceded that the hydrogen action plan is in tatters, and that these projects like Woodside, FFI and Origin Energy are not going ahead?"
Energy Minister Nick Duigan rejected the question, saying the government was "very close" to finalising a deal with the federal government to introduce a green hydrogen hub.
"We are continuing to have extremely exciting and well-progressed talks with hydrogen proponents who want to set up in Bell Bay, and Woodside are one of those," he said.
In the same hearing, Hyrdo Tasmania chief executive officer Ian Brooksbank denied that he had ever told customers seeking extra power supply from the company that there was "no power at any price", as claimed by Mr Winter.
"The conversations with all proponents is around how Hydro Tasmania can support their ambitions," he said.
"At no stage did I say 'you cannot have any power at any price.'".
He confirmed that more than 10 industrial proponents had expressed an interest in purchasing more than 50MW of power from Hydro over the last two years.
