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Energy and Emissions Reduction - Hydrogen

Dr Rosalie Woodruff MP

Dr Rosalie Woodruff MP  -  Thursday, 9 September 2021

Tags: Hydrogen, State Budget

Dr WOODRUFF - Minister, how much additional energy will be needed to produce hydrogen in Tasmania?

Mr BARNETT - Again, that's a one dimensional question. Let's try another approach. I'm happy to respond but let's see if the director of Energy Policy can assist the honourable member. I'm happy to come back to it if you don't understand. We'll just help you through this process.

Mr TERRY - It will depend on the size of the hydrogen plant as to how much energy it will require. If it's a 10-megawatt facility we don’t require much energy at all but if it's a 250 megawatts you'd require about 650 megawatts of installed wind capacity and you'd need to firm that through some dispatchable form of energy. It's all dependent on what size the hydrogen plant is. As part of the Marinus PACR, they model scenario sensitivities up to a 1000 megawatts for hydrogen. It's really dependent on the size of the plant.

Dr WOODRUFF - Two weeks ago Hydro said to Twiggy Forrest that according to him Hydro couldn't provide 250 megawatts of power for that project. You've just presented some numbers. I presume we're not looking at a small plant in Tasmania, otherwise it would be barely worthwhile going through the process. I presume that we're looking at substantial generation of hydrogen power. The number 650 megawatts is a lot bigger than 250 megawatts. Where would the additional energy come from? Can you rule out that it won't come from fossil-fuel-generated energy from the mainland or from the gas-fired Tamar Valley power station because that obviously wouldn't be green hydrogen?

Mr BARNETT - The director of Energy Policy has indicated that it depends on the size of the hydrogen manufacturing facility as to how much electricity is required, including that a substantial amount of wind will be required in addition to electricity, which would be firming of that wind energy. I'll pass to the director of Energy Policy to respond.

Mr TERRY - I don't have much more to add than my previous response. We have a 200 per cent renewable energy target which allowed for 2500 megawatts of new on-island renewable energy development and also factored in 500 megawatts of on-island load. There's plenty of capacity within that 200 per cent renewable energy target for both more generation and more on-island load. So, 250 megawatts within that 500 megawatt scenario is quite easily achievable.

Dr WOODRUFF - Mr Terry, the question I asked you was whether you would rule out importing fossil-fuel-generated electricity from the mainland or using the backup Tamar Valley power station to create green hydrogen?

Mr BARNETT - We have plans to deliver not just 100 per cent, which we hit November last year but 200 per cent by 2040. We have big plans to grow our renewable energy as in self-sufficient in clean electricity. That is primarily a combination of wind and hydro but also solar and perhaps there will be others - wave - and other opportunities including offshore.

To give you the figures for wind, we have 197 turbines, 564 megawatts essentially to date. In terms of approved yet-to-reach financial investment decision, 48 turbines, 263 megawatts; in terms of planning and environmental under assessment, there are some 252 turbines and 1546.8 megawatts. In terms of site selection and those that are looking at feasibility, offshore, for example, some 5000 megawatts. Over coming decades, we are talking about huge upside potential that can then be fed into a new renewable hydrogen production facility. We are very focused on on-island increasing in jobs, growing the economy, opportunity. All of this is delivering a cleaner environment.

Dr WOODRUFF - When will we stop using any fossil generated electricity in Tasmania? Where will we draw the line?

Mr BARNETT - We have a plan to go from 100 per cent to 200 per cent so that is our vision, that is our plan.

Dr WOODRUFF - Has the Government modelled the energy demand of green hydrogen production? Is that included in the Marinus business case?

Mr BARNETT - It's a two-part question. I'll pass at least the first part to Mr Terry. I think the second part relates to Marinus and the fact that they are complementary. We have big plans for the Marinus Link to progress. It is progressing in accordance with our plans and the federal government's plans.

We are very grateful to them for supporting this national infrastructure with funding through the design and approval phase through to 2023-24. Of course, that's for our surplus energy to be exported to the mainland on a fair cost allocation basis so that Tasmanians will not pay more than their fair share for that investment.

That is absolutely important. For the other aspect of the question, I'll pass to Sean Terry.

Mr TERRY - The Marinus business case was undertaken by TasNetworks. It was found to be both technically and economically feasible and it delivered net market benefits to the NEM.

It's now going through its regulatory investment test process through the AER. As part of that process it's modelled a whole range of sensitivities. One of those includes hydrogen both in and out of the RIT-T assessment. So even with hydrogen in or out, it still passes the net market benefits test. That's on the public record. That's part of their public assessment conclusions report so, yes. It was not part of the original business case. That was to show that Marinus was technically and economically feasible but it is part of the regulatory investment test that models sensitivity. I think I've modelled sensitivities on 300, 500 and 1 terawatt of hydrogen.

Dr WOODRUFF - Does sensitivities mean modelling?

Mr TERRY - Yes.

Dr WOODRUFF - Thank you. Minister, Australia is in the process of developing a hydrogen certification scheme based on the European certifHy scheme. Green hydrogen certification under certifHy refers to hydrogen generated by renewable energy with carbon emissions 60 per cent below the benchmark emissions intensity threshold. That threshold is currently set at 36.4 carbon dioxide equivalent cubic megajoules which means 36.4 grams of carbon dioxide equivalent per megajoule to the power of three.

The international renewable energy agency IRENA defines green hydrogen as producing less than 190 grams of carbon dioxide per kilowatt hour. They also note that only a few countries have average carbon dioxide emissions below per kilowatt hour about or below that threshold. They note that hydrogen produces using energy from the grid rather than from onsite generation can meet that requirement. This can be resolved by electricalisers being ramped down.

Sorry, this is a bit technical but I know there are smart people who can understand this. It can be resolved by electricalisers being ramped down or being turned off when the power mix in the grid is above a certain threshold of carbon dioxide emissions.

My question is, in supplying grants and developing connection agreements, will your Government require hydrogen producers to have systems in place to make sure that hydrogen production remains green - including, if necessary, a guarantee that electrolysers will be ramped down or turned off when the power mix in the grid is above those thresholds of carbon dioxide emissions, so that we can maintain a green hydrogen brand?

Mr BARNETT - I appreciate the question. For context, prior to the launch of the National Hydrogen Strategy we had number of energy ministers' meetings around the country. On behalf of Tasmania, I argued strongly for a certification scheme to ensure that renewable hydrogen was recognised and was part of the National Hydrogen Strategy. That was launched a few years ago in Perth, Western Australia, with Professor Alan Finkel, who designed that strategy in consultation with others. I was there with other energy ministers and the federal energy minister, Angus Taylor.

Since then we have been working with the Commonwealth and other states and territories to ensure that there is a certification scheme that recognises the hydrogen Guarantee of Origin scheme and that it would appropriately recognise Tasmania's renewable energy.

That's our policy and it has been stated consistently at the energy ministers' meetings in those national forums, month in, month out, to give certainty to businesses looking to invest in Tasmania that their product will have a competitive advantage. We want Tasmanian businesses to stamp their product or service as 100 per cent clean electricity. We are at 100 per cent now and heading to 200 per cent, so we have big plans. This will be an opportunity to encourage investment into Tasmania because of our brand, because of what we have to offer with 100 per cent: stamp your product 'made with 100 per cent clean electricity'.

This is already starting to bring opportunity to Tasmania. Our energy policy was one of the key reasons for the Liberty Bell Bay investment by Sanjeev Gupta. I am absolutely pleased to say it's already working, and it will deliver further investment, development, jobs and opportunity, and a cleaner world. We now have a commitment with the Clean Energy Regulator to develop an interim Tasmanian Guarantee of Origin scheme. We are hoping that we will be close to achieving that by the end of this year.

I will now pass to Shaun Terry to speak further to that matter.

Mr TERRY - I don't think I will be able to go into all the detail in your question, but it is certainly something we can look at in the design of the accreditation scheme.

We have been working closely with DISA, the federal department and the Clean Energy Regulator. We have been strong in our advocacy for getting Tasmania's baseline renewable energy. So, that's the installed capacity; I think it was 1990 baseline levels. They currently aren't recognised for the purposes of the renewable energy target, but we've been working with the federal government to make sure that the installed capacity that we already have is recognised for any hydrogen accreditation scheme.

Dr WOODRUFF - Thanks. the key thing is to peg it to the international certification agreed. That way we have the best opportunity of being authentic with our brand and attracting people on the basis of that.

Mr TERRY - That's right. We are pushing very hard for an accreditation scheme, because we have a competitive advantage around green hydrogen. A lot of other green hydrogen schemes will actually use offsets and blue hydrogen.

Dr WOODRUFF - Minister, I was asking about certification process for our green hydrogen industry before. I have a question about the guarantee from Origin that is supplied to hydrogen producers. I am wondering how it will work in practice if high, or any, volumes of fossil fuel energy are imported into Tasmania's grid through an existing or future interconnector: how could the hydrogen producer be certain that they are not using fossil fuel energy at any particular point in time?

In other words, is the scheme being designed to prevent hydrogen producers from having fossil-fuelled energy supplied to them? Or, is it being designed to allow them to have a green certification despite the fact they may well be supplied with fossil-fuel derived energy at certain points in time.

Mr BARNETT - Thank you for the question. I will pass to Sean Terry.

Mr TERRY - It is a good question. We are still working through the design to be honest. We are working closely with the clean energy regulator. In the key features of the design, there will be some traceability of the source of the energy but there will also be some independent assessment; it may be the Clean Energy Regulator, it may be that creditor. We are still working through those schemes.

From Tasmania's perspective we will be advocating strongly because of our green hydrogen credentials that it is a robust accreditation scheme. From our perspective, we want any hydrogen to be recognised as green hydrogen. We are prosecuting a strong argument that it has to be a well-designed scheme. That is not to say there won't be other forms of hydrogen, there will be. There will be blue hydrogen, brown hydrogen, but as long as an accreditation scheme properly recognises and is well designed to have the traceability independent assessment - they are some of the issues we are working we through at the moment.