ATCO scraps hydrogen project

ATCO Australia has scrapped plans to build what had been promoted as one of Western Australia’s first commercial-scale green hydrogen projects.

The Canadian company has spent four years working up its plan for the Clean Energy Innovation Park (CEIP), which was to be half-funded by a government grant.

The project, estimated two years ago to cost $53 million, was to be co-located with the Warradarge wind farm, south of Eneabba.

ATCO told Business News it still intends to explore a commercial hydrogen facility but believes it is more feasible to proceed closer to heavy industry where demand will justify the investment.

“While we were initially confident we could build CEIP at Warradarge, our ongoing assessment and market development found the benefits of being closer to the end-user of the renewable hydrogen was more commercially viable than locating the CEIP in a more remote location,” the company said.

ATCO disclosed its change of plan only after being approached by Business News.

It had intended to use renewable energy from Bright Energy’s Warradarge wind farm to power a 10-megawatt electrolyser to produce up to 4.3 tonnes of hydrogen daily.

The hydrogen would be transported via truck to gas network injection points.

ATCO secured a state government grant in 2020 to help fund its feasibility analysis while in 2021 the Australian Renewable Energy Agency approved a $28.7 million grant to ATCO and the Australian Gas Infrastructure Group for the project.

The two companies said at the time that the CEIP joint venture brought together their strengths to establish a commercial hydrogen sector in the state.

AGIG operates WA’s main gas trunkline, the Dampier Bunbury Pipeline, while ATCO operates the gas reticulation network in the South West.

The Mid West project was designed to build on work ATCO has been undertaking at Jandakot.

In June last year, it reached a notable milestone when it began blending small amounts of hydrogen into the City of Cockburn's gas network.

ATCO said that due to the change in project fundamentals for its Mid West project, it would not access the $28 million grant made available by ARENA.

The federal government agency had more success with another WA grant announced in 2021.

ARENA awarded $42 million to Yara Pilbara and Engie Australia to build a green hydrogen plant that is currently under construction on the Burrup Peninsula.

Featuring a 10MW electrolyser, it will be one of the world’s first industrial-scale renewable hydrogen production facilities.

In this case, the hydrogen plant (in which Mitsui & Co has bought a minority stake) will provide feedstock for Yara’s existing ammonia production facility.

While AGIG will not be involved in ATCO’s WA project, it is proceeding with a very similar development in Victoria.

It reached financial close last month on its $53.2 million Murray Valley hydrogen park.

This project is almost entirely government funded, after AGIG secured $51 million in grants and loans from ARENA, the Victorian government and the Clean Energy Finance Corporation.

The Murray Valley project also features a 10MW electrolyser, with the hydrogen to be blended into the local gas network.

Meanwhile, ATCO’s decision to scrap its Mid West project comes shortly after the company said it would defer work on another, much larger renewable energy development.

The company has deferred submitting the environmental impact statement (EIS) for the Central West pumped hydro project planned for near Bathurst in NSW.

“The project’s EIS is in the process of being finalised, however, we have decided to defer our EIS submission until some of the NSW government’s policy frameworks mature, and there is a clear commercial pathway for large civil projects like pumped hydro,” ATCO said.

“This will result in some deferment from our originally anticipated schedule, but we are working hard to ensure critical projects like CWPH are delivered affordably and promptly.”