Hydrogen Price Race in Australia

Abstract

Abstract In December 2018, the Council of Australian Governments set a vision (Australia Hydrogen Strategy) for a clean, innovative, safe, and competitive hydrogen industry that benefits all Australians and will be a major global player by 2030. This study will summarize the current and forecast uses and volumes of hydrogen along with estimating the potential future range of hydrogen prices and prices’ key drivers across Australia seven territories. The seven hubs are the basis to understand the range in hydrogen prices combined with the technologies available to produce hydrogen across Australia. These seven hubs are planned as a springboard to large scale production, although hydrogen projects can be outside these hubs as well. The impact of the drivers and price assessment across the green and blue hydrogen technologies were studied. Hydrogen price ranges were calculated and are based on the levelized cost of hydrogen (LCOH) for the different electrolysis technologies as well as, steam methane reforming, black coal and lignite gasification with carbon capture and sequestration. The price is equivalent to a Free on Board (FOB) or at wellhead price. The model was built to replicate the Commonwealth Scientific and Industrial Research Organization (CSIRO) LCOH for the mentioned technologies, which was then used to model the price for green and blue hydrogen across the seven states and territories. Since the model is based on LCOH it does not incorporate additional costs such as transport or company overheads and market forces such as supply and demand. A comparison of the hydrogen price for various generation methods across the states and territories of Australia was generated and analyzed. The key observations from the results include: 1) there is neither a leading technology nor a leading territory for the low or high hydrogen price; 2) variations in energy commodity prices are directly linked to the hydrogen price and the main factor to consider with green hydrogen production; 3) decreases in costs suggest efficiencies in technology across the green and blue hydrogen industry are starting to be realized; 4) short-term volatility is expected as the industry develops but over the longer term the price should stabilize towards the lower end of the range. With Japan is a strong partner aiming to reach hydrogen cost of A$3/kg., Australia must reduce the hydrogen production cost as much as possible to keep its competitive advantage amongst competitors. This paper will describe the hydrogen price calculation process, the variables, and considerations for each of the seven Australian territories to become the top producer and exporter of the region.