South Australia is at the forefront of the decarbonisation movement, generating almost 70% of its electricity from renewable sources. It is expected to exceed the government’s target of 100% renewable electricity generation long before the 2030 target and has already managed to meet 100% of operational demand from renewable energy alone for 180 days in 2021.

However, the state also faced a problem. overproductionIn late 2021, when a storm knocked over a power line used to export excess energy to the neighboring state of Victoria. The situation has forced Australia’s energy market operator to shut down most of the state’s solar power and even ask consumers to use more energy.

The state’s partnership with Tesla and Neoen to build the world’s first large-scale battery manufacturing facility in 2017 cemented its position as a global leader in renewable energy generation and storage. Since then, the government has approved several large-scale energy storage projects, including larger batteries and pumped hydro plants.

World’s largest hydrogen power plant

The new hydrogen plant, fully funded by the South Australian state government with an investment of AUD 600 million (US$ 415 million), is scheduled to be operational in 2025. The plant will absorb excess renewable energy from the grid and produce hydrogen using a 250 MW electrolysis unit that will be stored on site. In the evenings and during periods of low renewable energy levels such as winter, the stored hydrogen will be converted back into electricity using a 200 MW generator or fuel cell unit.

While hydrogen is not as efficient as batteries for short-term energy storage and distribution, it has the potential to be useful in the long term as a backup power source for a fully renewable grid during prolonged energy droughts.

The government also sees the project as an opportunity to stimulate the local hydrogen market by supplying excess hydrogen to companies that want to use it in various fields including transportation, clean steel, local gas supply, manufacturing and export.

Therefore, the South Australian government’s bold move to fully fund the world’s largest hydrogen power plant poses a challenge that could prove the advantages and disadvantages of hydrogen as a grid-level electricity storage solution. Bids for the project will be submitted next month, and with such a short timeline, a hydrogen-based supply chain could be commissioned in just two years.