Origin Energy, an Australian utility, has declared its plans to exit the hydrogen sector and shift its focus towards renewable energy and energy storage. The decision is attributed to the “uncertainty surrounding the speed and schedule of hydrogen market advancement.”
Announced on October 3rd, Origin Energy disclosed its decision to discontinue the development of the Hunter Valley Hydrogen Hub, citing the “risks linked to the construction of capital-intensive projects of this kind.”
Initially introduced in 2022, the hub was designed to be fueled by a mix of grid-connected electricity, solar PV facilities, and wind farms. The project was planned for development on Koorgang Island, situated north of Newcastle in New South Wales.
Origin had envisioned hydrogen as a potential substitute for natural gas in the local ammonia production process and as a fuel for transportation. In July 2023, Origin and Orica signed a collaborative agreement to progress through the initial engineering and design stages.
In May 2024, the utility obtained planning consent from the New South Wales government and was moving towards a prompt final investment determination. The initiative gained national acknowledgment by being selected as a finalist in the Australian government’s Hydrogen Headstart initiative, with prior pledges of grant support from both the Commonwealth and New South Wales.
Origin Energy also mentioned that while it remains receptive to investigating potential business avenues for the Hunter Valley Hydrogen Hub, it currently plans to halt all activities related to hydrogen development.
Even though the company has withdrawn from the hydrogen sector, CEO Frank Calabria of Origin Energy maintains his belief that hydrogen could have a place in the future energy landscape. However, he acknowledged that the market is progressing at a slower pace than originally expected.
Calabria stated, “The progression of the hydrogen market has proven to be slower than expected, with persistent challenges related to input costs and technological advancements. Due to these factors, we are unable to identify a viable path to make a final investment verdict on the project.”
“In the end, we are of the opinion that investments directed towards renewable energy and storage offer the most effective means to facilitate the decarbonization of energy supply and uphold energy security in the short term.”
Origin’s shift away from hydrogen another blow to Australia’s ambitions
Origin Energy’s decision to withdraw from the hydrogen market represents another setback to Australia’s ambition to establish itself as a hydrogen powerhouse. Recently, Province Resources, an Australian mineral exploration firm, also put on hold its HyEnergy project—a multi-gigawatt green hydrogen initiative powered by solar and wind energy in Western Australia.
Province decided to halt the project because of insufficient government backing, noting that the government did not provide the necessary tenure for the project under conditions deemed suitable by Province and potential collaborators, or in the best interests of the company’s shareholders.
Given the early stage of the hydrogen market and its slower-than-anticipated growth, substantial investments will be essential to support its development and foster its advancement.
Nonetheless, this does not imply that hydrogen will be excluded from the future energy landscape. Australia is actively seeking to encourage investments through its recently revised National Hydrogen Strategy, which emphasizes solar PV as a key component in green hydrogen production. Origin has the potential to significantly contribute to green hydrogen production by expanding renewable energy generation capacities to support electrolyzer operations.
Origin’s solar PV and energy storage ambitions
Origin is advancing in its solar PV project portfolio, with the most notable being the Yarrabee Solar Farm in New South Wales. The initial phase is expected to generate 450MW, with the possibility of expanding to 900MW. Additionally, the project has received planning approval for a 25MW Battery Energy Storage System (BESS).
Origin is in the process of constructing the 450MW Salisbury project situated in New South Wales. This addition to their portfolio came about through the acquisition of Walcha Energy in February 2024, contributing an additional 1.3GW to their renewable energy project pipeline.
As indicated by PV Tech earlier, Origin Energy has affirmed its dedication to expanding its solar PV project pipeline and is actively exploring several potential solar farm development initiatives, amounting to approximately 1,600MW in total.
In August, the company stated that it would persist in monitoring the schedule for potential transmission network developments and necessary upgrades to facilitate the projects.
This decision was made as Origin Energy halted the progress of its 130MW Morgan and 74MW Carisbrook solar PV projects citing “unfavorable conditions.” The company explained that the development of these projects was hindered by the belief that they may not yield a satisfactory return on investment.
PV Tech readers are likely familiar with Origin Energy’s significant presence in the Australian energy storage sector, evidenced by its numerous utility-scale project proposals.
As reported by Energy-Storage.news, the Eraring battery energy storage project in New South Wales received approval for its second stage development, showcasing one of Origin Energy’s initiatives in the energy storage sector.
