Despite billions being pumped into trying to kickstart Australia’s hydrogen industry, department officials concede reaching profitability may be a long way off.
Jo Evans, the deputy secretary of the Department of Climate Change and Energy, said costs were still too high for hydrogen production.
“There’s no way they'll make a profit at those costs,” Evans told Australia’s Joint Standing Committee on Trade on June 23.
“They do need to come down, and other costs need to come down before they’re going to be truly competitive. But we don’t know exactly at what point they will be able to make a profit,” she said.
“There’s still a cost gap between the cost of producing hydrogen and what the market appears willing to pay, and you’re seeing that in a whole range of different places.”
Evans said the department anticipated costs to ultimately drop over a 10-year period and for the industry to be competitive but noted that government support was still needed in the meantime.
The Australian federal government’s $2 billion Hydrogen Headstart program, announced in May, was partly a reaction against European and U.S. efforts to kickstart their own industries, particularly the Biden administration’s Inflation Reduction Act, which offers US$3 per kilogram of hydrogen in tax credits.
“The context overall has become more competitive. And so in that context, Hydrogen Headstart is a part of the consideration about what more we need to do to make sure there’s a good probability of success for Australia to become a renewable energy superpower,” she said.
Hopes That Hydrogen Can Be Solution to Net Zero Challenge
Generating hydrogen is a critical piece in the net zero energy puzzle for governments keen on phasing out coal-fired power stations and not building nuclear energy plants.An energy grid powered by renewables requires enormous amounts of storage—and billions of dollars and materials—to provide the extra backup electricity needed when the wind or sunlight is unavailable.
