Australian companies in the mix for b Southland hydrogen plant

Australian companies in the mix for $5b Southland hydrogen plant

Australian companies Woodside Energy and Fortescue Future Industries are counterparties in final stage negotiations to become lead developer of the prospective world’s largest green hydrogen plant in Southland.

It is proposed Contact and Meridian Energy will select the lead developer for the Southern Green Hydrogen project after more detailed proposals, due by late-August.

A hydrogen plant could potentially provide an alternative use for all the electricity currently used to power the Tiwai Point aluminum smelter, depending on its scale, should the smelter close in 2024.

A Meridian Energy spokesperson said the project was not contingent on the smelter closing.

READ MORE:
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* ‘Huge interest’ in Southland green hydrogen, but talks not yet down to price

German-NZ Green Hydrogen alliance co-leader professor Sally Brooker​ said the announcement of the counterparties was most exciting because it showed that the project was commercially viable, Brooker said.

“That’s probably the best news out of all of this – at no point are the wheels falling off this with commercial entities going, ‘on no we’re not having a bar of that’,” Brooker said.

“… to me that says it’s not only climate change activists and sustainability advocates who are driving this, it’s actually the sensible way forward in a commercial sense too.”

A green hydrogen plant in Southland would use renewable electricity, primarily from Meridian’s Manapouri hydro scheme, to split water into hydrogen and oxygen, with the hydrogen used as a fuel.

One of the biggest challenges for the project would be investment, but internationally there was a lot of interest, Brooker said.

“It’s going to be an economically transformative project. But it needs to be done sustainably.”

Meridian and Contact Energy have announced Woodside Energy and Fortescue Future Industries have entered final stage negotiations to become lead developer of the world's largest green hydrogen production facility in Southland. [File photo]

GETTY IMAGES/Getty Images

Meridian and Contact Energy have announced Woodside Energy and Fortescue Future Industries have entered final stage negotiations to become lead developer of the world’s largest green hydrogen production facility in Southland. [File photo]

Being a large plant, potential consent would be time-consuming, she said.

Brooker felt this project had a massive advantage being closely aligned with iwi and Murihiku Regeneration.

Hokonui representative and Ngāi Tahu lead for the green energy programme, Terry Nicholas, said green hydrogen was pivotal for the future of Southland-Murihiku and for Ngāi Tahu.

“Southland will be a renewable energy engine room for New Zealand, I’ve got no doubt about that.”

Nicholas has been closely involved with the project. Nicholas had been led to believe the plant and wider infrastructure could cost $5 billion.

Hokonui Runanga executive coordinator Terry Nicholas says Southland will be a renewable energy engine room for New Zealand. [File photo]

Kavinda Herath/Stuff

Hokonui Runanga executive coordinator Terry Nicholas says Southland will be a renewable energy engine room for New Zealand. [File photo]

Four Southland sites – which Nicholas could not divulge – had been identified, none of which were the Tiwai smelter.

The project could create 5000 direct and indirect jobs, he said.

Meridian Energy chief executive Neal Barclay said both counterparties were in discussions with customers about buying the large volumes that the Southland plant would produce.

Contact Energy chief executive Mike Fuge said Woodside Energy and Fortescue Future Industries demonstrated the technical capability needed to develop the project in time to capture “early mover advantage in emerging global markets”.

“The final two counterparties have the capability, experience and motivation to make this project happen at pace. Importantly they have both mapped realistic pathways for taking this project to commercial operation,” Fuge said.

The next stage of the process will be iwi interests working with Southern Green Hydrogen and the remaining potential developers to ensure the best possible outcome is achieved, a Southern Green Hydrogen statement says.

In mid-2021 Contact Energy and Meridian Energy announced they were looking for partners to develop the world’s largest green hydrogen plant in Southland, after a feasibility report noted a green hydrogen plant had the potential to earn hundreds of millions in export revenue and help decarbonise economies here and overseas.

The report says Southland, largely because of its access to renewable energy, has the potential to be at the forefront of the growing green hydrogen market.

However, Parliamentary Commission for the Environment Simon Upton earlier this year warned a large green hydrogen factory could create more problems and emissions than it solved.

If made from renewable electricity, hydrogen is a low-carbon source of energy and could one day be used for metal-making, shipping and aviation. But it relies on an inefficient process: up to 30% of energy is lost in the manufacture of green hydrogen.

Therefore, renewable electricity might be more effectively used to electrify vehicles and boilers in the next decade, Upton wrote in a letter to ministers.

The Tiwai smelter consumes about 13% of the country’s annual electricity.

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