Frontier Energy’s Bristol Springs project in Western Australia’s South West region could be one of Australia’s lowest cost producers of green hydrogen.

The Pre-Feasibility Study completed by Xodus Group found that a Stage One solar farm with a capacity of 114 megawatts could power a 36.6MW alkaline electrolyser to produce 4.4 million kg of green hydrogen per annum at the low all-inclusive cost of just $2.83 per kg.

This is hugely significant as it places the project within striking distance of the $2/kg mark which is widely touted as the price point where green hydrogen becomes competitive with fossil hydrogen, which is produced from coal or natural gas using steam methane reforming without the use of carbon capture and storage.

It is also far lower than the Australian Renewable Energy Agency’s (ARENA) current green hydrogen production cost forecast of between $6 to $9 per kg based on current electrolyser and renewable energy costs.

Frontier Energy (ASX:FHE) says the low cost is due to Bristol Springs’ location, which allows it to use nearby major existing infrastructure and its connection to the existing Landwehr Terminal, allowing for excess solar renewable energy to be sold via the South West Interconnected System.

Additionally, multiple existing water sources means there is no requirement for capital intensive infrastructure such as desalination – clean water being a requirement for the electrolysers that will break apart the water molecules into hydrogen and oxygen.

Initial hydrogen production is likely to be sold into the domestic market with first movers for offtake expected to come from long-haul transportation, gas pipelines and energy storage.

“Green hydrogen is a unique opportunity to store, move and distribute renewable energy and is set to play a huge role in helping humanity decarbonise the energy we need,” executive chairman Grant Davey said.

“The Frontier Energy green hydrogen project is strategically located with suitable land, abundant water, SWIS access, gas pipeline access and transport infrastructure so as to be an Australian leader in ensuring that green hydrogen production and distribution becomes a near term reality.”

Bristol Springs project

Bristol Springs is located about 120km south of Perth and 8km from the town of Waroona.

It currently covers an area of 195ha, which is sufficient for its planned Stage One solar farm capacity of 114MW that could provide enough power for 45,000 homes and abate 180,000t of CO2 emissions per year.

Frontier also undertook the PFS to determine the project’s potential to underpin a green hydrogen project and the resulting production cost has been encouraging to say the least.

Other takeaways from the study included an initial capital cost of $236.8m and the potential to generate additional revenue through excess energy sales and Reserve Capacity Credits.

The company has also identified a number of areas that could further improve the project’s returns:

  • Expansion Study – A number of the key costs for the hydrogen plant are based on the scalability of the plant, which will reduce units costs through scale economies;
  • Behind-the-meter (BTM) – Sales of power via a power purchase agreement (PPA) enables the project to retail excess power cheaper than the grid by avoiding transmission, distribution, and market operator charges;
  • Reduction in water costs – Multiple, existing water sources will allow Frontier to assess the optimal solution from either existing water schemes or new bore(s) to extract water from the existing aquifer;
  • BTM power supply – Like BTM sales of power, BTM supply of power will be cheaper due to the avoidance of transmission, distribution, and market operator charges;
  • Oxygen Offtake – While the current plant design assumes that all oxygen produced in the process will be vented to the atmosphere, the significant volumes could provide an additional revenue stream for the hydrogen plant given there is local demand for oxygen offtake.

Next Steps

Frontier is close to finalising the Expansion Study that assesses the long-term growth potential at Bristol Springs and outline its long term road map through the various stages of hydrogen production.

It also intends to soon commence front-end engineering and design for the hydrogen facility, which will include developing a phasing plan for the staged build out to 150MW electrolyser capacity.

As part of this process, the company expects to continue seeking offtake agreements with customers and begin project financing discussions later this year.

 

 

 

This article was developed in collaboration with Frontier Energy, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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