On Thursday 25 February 2021, the Victorian Government released its Renewable Hydrogen Industry Development Plan (Plan). The Plan sets out the blueprint for how the State Government will support an emerging Victorian renewable hydrogen industry, connect the economy to renewable hydrogen opportunities and drive the clean energy transition.

Snapshot

  • Renewable hydrogen is a rapidly advancing technology with huge projected future market demand, both domestically and as an export product.
  • To establish and accelerate the development of the renewable hydrogen sector in Victoria, the Plan maps out a path forward across 3 focus areas:
    1. creating clear foundations and direction for the sector;
    2. leveraging Victoria’s natural advantages to scale and link the sector to the State’s economy; and
    3. setting appropriate Government policies and support programs to ensure Victoria leads the way in attracting investment in renewable hydrogen projects.

What is renewable hydrogen?

Renewable or ‘green’ hydrogen is most commonly produced by a process called electrolysis, where electricity is used to split water into hydrogen and oxygen molecules. When renewable energy is used for electrolysis, the hydrogen produced is known as renewable hydrogen.

As a zero greenhouse gas emitting and multipurpose energy carrier, renewable hydrogen can be used as an alternative fuel source across a wide range of sectors from industrial applications to transport, as well as in households and businesses.

Interest in renewable hydrogen as an export commodity has also rapidly increased, with countries like Japan and South Korea demonstrating substantial appetite for large-scale imports.

Key features of the Plan

For those interested in entering the green hydrogen sector in Victoria, key features of the Plan include:

  • A demonstration of the Victorian Government’s long term commitment to the sector, as the Plan sets out a number of considered action plans to grow opportunities at various stages of the hydrogen value chain, including production, distribution, use and export.
  • Two major grants programs expected to open in mid-2021 as part of a broader $10m funding allocation to accelerate the development of the hydrogen sector, being:
    • $6.2m for the Expanded Victorian Hydrogen Program to enable renewable hydrogen pilots, trials and demonstrations; and
    • $1m for the Hydrogen for Industrial Users Program to support businesses to take the first steps to switch to using renewable hydrogen through business cases and feasibility studies.
  • A push to drive investment primarily through the development of hydrogen hubs, particularly around the State’s Murray River, Western, South West, Central North, Ovens Murray and Gippsland renewable energy zones (REZs).

What are the targeted outcomes of the Plan?

The Victorian Government has identified 18 desired outcomes across 3 focus areas, each of which has been designed to indicate where the State needs to be in order to build a successful renewable hydrogen economy. These are summarised in the table below.

No. Desired outcome Activities being undertaken to reach outcome
Setting the foundation for renewable hydrogen

How Victoria can lay foundations and activate early enablers for a renewable hydrogen economy.

1.       Accelerate innovation through research and development.
  • Establish industry test beds, innovation clusters and precincts focused on hydrogen-enabled advanced manufacturing.
  • Expedite research and development in Victoria, including incubators and accelerators, by working with Commonwealth agencies.
2.       Create clear and fit for purpose safety standards and regulations.
  • Undertake a review of legislative and regulatory frameworks for safety and standards at national and international levels.
  • Collaborate with other regulatory authorities and standards-writing bodies to share learnings regarding safety, standards and regulation design and implementation.
  • Support studies to contextualise hydrogen projects in the regulatory framework and planning approvals processes.
3.       Ensure workforce skills and capabilities can pivot to an emerging hydrogen industry.
  • Collaborate with education institutions, trade unions, industry bodies and professional associations to map skills clusters and career pathways for a renewable hydrogen workforce.
  • Develop a strategic approach to developing workforce capabilities, particularly in regional areas.
  • Build capacity in training delivery and the vocational education and training workforce.
4.       Position Victoria as a leader in the hydrogen higher education space.
  • Promote expertise in research, training, skills and best practice for hydrogen to grow Victoria’s reputation as a leader in hydrogen education.
  • Work with Victorian universities and TAFEs to position Victoria to be the preferred international destination for hydrogen education.
  • Support the establishment of the Victorian Hydrogen Hub (VH2), working with Swinburne University and CSIRO through $10 million funding from the Victorian Higher Education State Investment Fund.
5.       Keep State-wide planning for hydrogen clear and consistent in order to optimise land use and infrastructure developments.
  • Ensure a coordinated and sustainable approach to resource planning across land and renewable energy use for renewable hydrogen, including within Renewable Energy Zones.
  • Optimise development of Victoria’s renewable energy resources for renewable hydrogen, including consultation with AEMO on its Integrated System Plan and Gas Statement of Opportunity, and local councils on planning and zoning.
  • Review hydrogen within a modern planning framework that considers multiple end uses, including commercial and industrial applications, stationary energy including gas and electricity and modes of transport.
6.       Ensure water is used sustainably in renewable hydrogen production.
  • Investigate the use of recycled or wastewater, stormwater, seawater and traditional sources of water for renewable hydrogen production, understand the demands of renewable hydrogen production for Victoria’s water resources, including identifying appropriate locations for sustainable production.
  • Collaborate with the water corporations to develop a long term, sustainable approach to integrating renewable hydrogen production into Victoria’s water management framework.
Connecting the economy

Connect Victoria’s advantages by building scale and linking emerging hydrogen hubs and clusters to converge into a coordinated industry.

7.       Allow gas networks to have a pathway to renewable hydrogen.
  • Develop a gas substitution roadmap to support gas efficiency, electrification, and increased use of hydrogen and biogas.
  • Undertake feasibility studies to understand the technical requirements of renewable hydrogen as a natural gas substitute, explore the potential for 100% renewable hydrogen in Victoria’s gas network.
  • Investigate opportunities to increase the security and reliability of our natural gas systems using hydrogen.
8.       Enable the export of renewable hydrogen.
  • Leverage Renewable Energy Zones to maximise renewable hydrogen production potential and develop expertise in transporting hydrogen domestically and internationally.
  • Assess potential of renewable hydrogen as an ammonia feedstock.
  • Participate in developing hydrogen certification schemes through the National Hydrogen Strategy working group.
9.       Advance the integration of renewably hydrogen with the transport sector.
  • Invest $20 million in a statewide trial to investigate solutions to achieve a zero-emission bus fleet, including hydrogen buses.
  • Develop an approach to hydrogen heavy transport and freight in Victoria, including optimal refueling infrastructure and exploring fuel security potential of hydrogen as a liquid fuel.
  • Release a Zero Emission Vehicle Roadmap setting out Victoria’s priorities for decarbonising the transport sector.
10.     Use hydrogen to support a secure, reliable and resilient electricity system.
  • Investigate hydrogen’s capacity to both improve the integration of renewable energy into Victoria’s electricity grid and increase reliability.
  • Explore opportunities to support off-grid, end of network and microgrid hydrogen trials, pilots and demonstrations.
  • Through the gas substitution roadmap, understand the role of hydrogen in strengthening the relationship between the electricity and gas networks.
11.     Prime the industrial sector for renewable hydrogen.
  • Allocate $1 million for business cases, grants and education for industrial users of hydrogen under the Accelerate Victoria’s Hydrogen Industry Program.
  • Work with industries to understand their needs and how hydrogen may be used, including switching from traditional hydrogen and natural gas.
  • Provide $31 million in grant funding to medium and large energy users for both capital works and energy demand management technologies through the Business Recovery Energy Efficiency Fund.
12.     Capitalise on Victoria’s advanced manufacturing capabilities.
  • Demonstrate Victoria’s hydrogen supply chain capabilities through a pilot project.
  • Map the renewable hydrogen supply chain in Victoria.
  • Establish a Victorian Hydrogen Technology Cluster Network and work with NERA to support the development of Regional Hydrogen Technology Clusters under NERA’s national program.
Leading the way

Support the development of the industry, from direct investment to supporting community awareness, aiming to position Victoria as a domestic and global renewable hydrogen leader.

13.     Enable pilots, projects and demonstrations.
  • Provide $6.2 million of grant support for hydrogen pilots, trials and demonstrations under the $10 million Accelerating Victoria’s Hydrogen Industry Program. This program forms part of the new, broader $108 million funding package to prepare Victoria for innovative and transformational renewable energy and hydrogen projects.
  • Work with ARENA and CEFC to ensure investment continues to support new Victorian renewable hydrogen projects.
14.     Ensure the community understands and trusts hydrogen.
  • Ensure a coordinated approach across the Victorian Government in cooperation with key stakeholders to build hydrogen community awareness and education.
  • Engage with potential early adopter communities to understand their ambitions for local benefits and community outcomes arising from hydrogen developments in their region.
  • Support the work of the Australian Hydrogen Council to develop community standards and benefits sharing guidelines and use community engagement techniques to involve the community in the decision making and benefit sharing guidelines.
15.     Use the Victorian Government’s purchasing power to strengthen the sector.
  • Support local content requirements in renewable hydrogen technology procurement as outlined through the Local Jobs First Policy.
  • Investigate potential for renewable hydrogen technologies for consideration in government procurement and work across government to identify the potential value and benefits of renewable hydrogen technologies in procurement.
  • Explore Power Purchasing Agreements for renewable hydrogen projects.
16.     Victorian Government to play a central role in coordinating across government and industry.
  • Develop a complementary approach to the design of future Victorian funding rounds to enable applicants to access both state and Commonwealth streams of funding for projects.
  • Ensure a coordinated approach to storing and sharing hydrogen information within government and industry where appropriate, such as the ‘HyResource’ module from CSIRO’s Hydrogen Knowledge Centre.
  • Track progress on measures of success and undertake five-yearly reviews of the Plan, to align with the setting of the next five yearly emissions reduction pledges.
17.     See Victoria become a renewable hydrogen leader as part of Australia’s hydrogen powerhouse ambitions.
  • Provide leadership in intergovernmental processes to ensure national consistency in regulatory frameworks governing the hydrogen industry.
  • Collaborate with all jurisdictions to establish Australia as a major player in the global hydrogen industry and to publish an annual state of hydrogen report.
  • Work with all jurisdictions to develop and communicate coherent policy and a  consistent national approach to workforce training and skills for the hydrogen economy.
18.     Promote Victoria globally as an attractive trade and investment destination.
  • Support and leverage Victoria’s global trade networks to build international demand.
  • Deliver renewable hydrogen investment attraction material to promote Victoria as an attractive investment destination.
  • Ensure renewable hydrogen is a fundamental part of Victoria’s new energy technologies sector, attracting investment and recasting our economy post COVID-19.

By Alison Dodd (Partner), Nick Baker (Partner), Heidi Asten (Partner) and Frank Li (Solicitor).

Alison Dodd
Alison Dodd
Partner, Melbourne
+61 3 9288 1870
Nick Baker
Nick Baker
Partner, Melbourne
+61 3 9288 1297
Heidi Asten
Heidi Asten
Partner, Melbourne
+61 3 9288 1710
Frank Li
Frank Li
Solicitor, Melbourne
+61 3 9288 1137