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Australia warms to green hydrogen amid Japanese demand

* Stanwell targets 3 GW of electrolyser capacity by 2030

* Norway’s Yara targets 1 GW of electrolyser capacity by 2028

* Costs, shipping pose hurdles

MELBOURNE, May 27 (Reuters) - Australia could supply Japan with one million tonnes of “green” hydrogen a year by 2030, project developers predict, if costs can be lowered sharply and transport challenges overcome.

Momentum is building for such projects as businesses look to take advantage of Australia’s vast land area and abundant sunshine and wind to power electrolysers, split water and make hydrogen without recourse to climate-harming fossil fuels.

The Australian government says the industry could add A$11 billion to the economy by 2050 and potentially as much as A$26 billion, depending on how quickly global demand grows.

“The green hydrogen opportunity is real and it’s possibly closer than we think,” said Stephen Quilter, executive general manager strategy and energy futures at Queensland state-owned Stanwell Corp.

Stanwell is working with Japan’s biggest hydrogen supplier, Iwatani Corp on a project that aims to start shipping liquid green hydrogen to Japan in 2026.

Their goal is to scale up to 280,000 tonnes a year by 2030, using 3 gigawatts (GW) of electrolyser capacity.

The partners are in talks to bring in two other power utilities, a trading house and shipping expertise in Japan, and an Australian gas major, Quilter said at the Australian Energy Week conference on Wednesday. He did not name the other companies that might be involved.

In Western Australia, Norway’s Yara International SA and France’s Engie SA this month won support from the government for a project to produce ammonia from green hydrogen.

They plan to start producing up to 625 tonnes of green hydrogen and 3,700 tonnes of green ammonia a year in 2023 with a 10 megawatt electrolyser. By 2028, they aim to scale up to 1 GW of electrolyser capacity.

At the same time Yara is working with Japanese power joint venture JERA to supply green ammonia for power plants.

While enthusiasm is growing for hydrogen, there are big hurdles to making it competitive with fossil fuels.

Electrolyser costs need to drop by 80% to 90% and renewable energy costs need to halve to reach the government’s target of “H2 under A$2” per kilogram, said Australian Renewable Energy Agency Chief Executive Darren Miller.

Shipping super-chilled hydrogen also poses major technical hurdles.

“The world has a long way to go where we can prove up a viable liquid hydrogen transport system,” said Jeremy Stone, a director of Japan’s Electric Power Development Co (J-Power), which is producing hydrogen from brown coal and is set to ship the world’s first cargo of liquid hydrogen from Australia to Japan this year. (Reporting by Sonali Paul. Editing by Mark Potter)

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