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 of the electricity currently used to power the Tiwai Point aluminum smelter, depending on its scale, should the smelter close in 2024.
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.
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Meridian Energy chief executive Neal Barclay said the counterparties’ proposals made it clear that large-scale production and export of green hydrogen or green ammonia in Southland was technically feasible and commercially sound.
Both counterparties were in discussions with customers about buying the large volumes that the Southland plant would produce, Barclay said.
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 Murihiku Rūnaka and Ngāi Tahu 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.
Hokonui representative and Ngai Tahu lead for the green energy programme, Terry Nicholas, said green hydrogen was pivotal for the future of Southland-Murihiku and for Ngāi Tahu.
“We will be looking for a partnership that works to benefit our future generations, the community we are a part of, and the wider national interest,” Nicholas said.
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 per cent 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 NZ Aluminum smelter at Tiwai consumes about 13% of the country’s annual electricity.