ORG ASX: Origin Energy abandons big hydrogen plans in blow to fuel’s future
Origin Energy has abandoned its hydrogen venture, dealing a setback to the Australian Labor government’s decarbonisation strategy. CEO Frank Calabria stated that the hydrogen market is progressing slower than expected due to challenges in input costs and technological advances. Energy analyst Saul Kavonic predicted more project cancellations, while concerns remain about the government’s subsidy and attracting private sector investment.
Origin Energy has abandoned its hydrogen venture in a major blow to a key element of the Labor government’s decarbonisation strategy, as the economics of clean hydrogen projects increasingly fail to stack up.Origin Energy chief executive Frank Calabria said the company would focus its efforts on renewable energy generation rather than hydrogen.“It has become clear that the hydrogen market is developing more slowly than anticipated, and there remain risks and both input cost and technology advancements to overcome,” said Origin chief executive Frank Calabria.
Saul Kavonic, senior energy analyst at MST Marquee, said Origin’s decision was another instance of what he predicted would be a long line of cancellations of green hydrogen projects in Australia. Santos is still exploring hydrogen among its growth bets.Hydrogen is created through electrolysis by splitting water into hydrogen and oxygen. Blue hydrogen, which is cheaper than green hydrogen, is created when gas is used as the power source.
“Government support in developing Australia’s hydrogen opportunity provides additional certainty for projects, however how they progress remains a commercial decision for the parties involved,” he said.Mr Kavonic suggested that the federal government’s $2/kg subsidy may need to more than double for the government to achieve its target of stimulating $50 billion worth of private sector investment in hydrogen.
But Japanese investors are wary. “The strongest appeal of Australian hydrogen will be its predictability of policy and its respect for the investor’s legitimate interest,” Tatsuya Terazawa, chairman and chief executive of The Institute of Energy Economics Japan, said.
Source Link : https://headtopics.com/au/org-asx-origin-energy-abandons-big-hydrogen-plans-in-blow-59812929
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