Green hydrogen is coming - and these Australian regions are well placed to build our new export industry

At present, Australia is a long way from producing green hydrogen cheap enough to compete with fossil fuels, given we seem to have no appetite for taxing carbon pollution.

Does that mean it’s a non-starter? Hardly. It was only a decade ago sceptics ridiculed solar and wind as too expensive. They’ve gone awfully quiet as renewable prices fell, and fell, and fell – as tracked by the International Renewable Energy Agency. Now renewables are cheaper than coal. Battery storage, too, has fallen drastically in price. The same forces are at work on the key technology we need – cheaper electrolysers.

By 2040, the CSIRO predicts an 83% fall in electrolyser costs, according to its Gencost 2021-22 report. By contrast, gas-derived hydrogen with carbon capture is predicted to reduce in cost only slightly. That means green hydrogen is likely to capture much of the market for hydrogen from 2030 onwards.

My research with the Victorian Hydrogen Hub) shows as of next year, the lowest cost location for green hydrogen would be Far North Queensland ($4.1/kg) and Tasmania ($4.4/kg) due to high renewable resources.

But this picture will change. By 2030, northern Queensland’s coastal regions could be the Australian hydrogen powerhouse due to a combination of cheap solar and access to ports. Western Australia and the Northern Territory could also have similar advantages, though the modelling for these areas has not yet been done.

As solar energy and electrolyser costs continue to fall, new states could enter the green hydrogen economy. In CSIRO’s cost predictions, electricity from solar is predicted to become much cheaper than wind by 2040. This means sunny areas like central and northern Queensland ($1.7/kg) and inland NSW, Victoria and South Australia ($1.8/kg) could be the best locations for green hydrogen production.

In making these estimates, I do not consider supply chain and storage infrastructure required to deliver the hydrogen. Transport could account for between $0.05/kg to $0.75/kg depending on distance.

Comparing my modelling to price thresholds set out in the National Hydrogen Strategy indicates we can produce green hydrogen for trucking at a similar cost to diesel within four years. Fertiliser would take longer, becoming competitive by 2040.