Article by Perry Williams, courtesy of The Australian
02.09.2025
The first NSW gas plants built in a decade have shelved ambitious deadlines for delivering green hydrogen in the latest setback for the maligned clean fuel source battling cost challenges and insufficient customer demand.
While EnergyAustralia’s Tallawarra B gas peaking plant was set to start blending green hydrogen into the energy mix this year, the electricity giant has now delayed the timeline for introducing renewable supplies by at least two years until 2027.
The federal government-owned Snowy Hydro planned to originally run its Kurri Kurri gas facility on 15 per cent hydrogen once the plant started up with the power station positioning itself as a key project for the transition from coal to renewables.
The Albanese government pushed for an even stronger ambition with 30 per cent hydrogen on start-up and 100 per cent by 2030, a key point of tension with former Snowy boss Paul Broad.
However, Snowy will need to spend an extra $75m to modify the existing plant to accommodate hydrogen, with sources pointing to such a committment being several years away. No official timeline is currently set.
The delay follows a reality check by Energy Minister Chris Bowen who told The Australian this week that gas would be needed for industrial processes for “some time to come” given green hydrogen was not yet commercial.
EnergyAustralia secured $80m of state and federal government funding to support Tallawarra B with a portion of the funds granted to ensure it could run on hydrogen as well as gas.
About $45m of the $83m total has so far been handed to EnergyAustralia with some of the balance remaining off limits until the hydrogen component has been fulfilled.
EnergyAustralia’s total grant funding of $78m for the Tallawarra B plant from the NSW government will not be fully disbursed until it meets milestone commitments defined under the funding agreement, the NSW Department of Climate Change, Energy, the Environment and Water confirmed.
The nation’s third-largest electricity operator said Tallawarra B was designed to be a hydrogen-capable, gas-fired power station and it continues to hold a “future ambition” to operate it using a proportion of green hydrogen.
“EnergyAustralia remains committed to building the infrastructure required to blend hydrogen into our system such that we can run a trial period of running on a green hydrogen blend. We currently have a standing offer in the market for the supply of green hydrogen for Tallawarra B and are open to working with any supplier who can meet the terms of the offer,” a spokesman said.
Community group Responsible Future Illawarra said it was concerned over the energy transition and questioned the selection of taxpayer funding.
“In 2025, Tallawarra B was meant to run on a blend of green hydrogen with $83m in taxpayer funding,” Responsible Future Illawarra president Alex O’Brien said.
“Instead, it’s been indefinitely shelved — showing that public funds aren’t being allocated to the right projects. With offshore wind collapsing, hydrogen delayed, and major energy users like BlueScope still reliant on coal and warning energy costs are too high, it’s clear a full review is needed if we’re to get this energy transition right.”
BlueScope Steel warned in August that Labor’s Future Made In Australia manufacturing policy will not exist unless an urgent intervention is made in the nation’s east-coast gas market to free up supply and cut prices.
Still, EnergyAustralia remains confident green hydrogen – produced by splitting water into hydrogen and oxygen through zero-emissions technologies – will eventually develop into a viable source.
However, like Snowy Hydro it will have to invest further to blend the fuel at its Tallawarra B site.
Mr Bowen pledged $432m in July to revive a green hydrogen project in the Hunter Valley, sticking by the nascent energy source despite waning investor confidence and a series of abandoned hydrogen projects across Australia.
Energy giant BP in the same month said its decision to walk away from the $55bn Australian Renewable Energy Hub megaproject in Western Australia was sealed by the reluctance of future customers to back up their support for green power with financial commitments.
The minister told a farming forum on Tuesday the energy transition was a monumental task for Australia, warning communities and the public must be wary of disinformation damaging confidence in the journey.
“You don’t manage the biggest economic transition in the history of the country without learning things as you go, improving as you go and ensuring that community consultation is improved and benefits are improved,” Mr Bowen said.
“That’s a reality, but it’s also the reality that there’s plenty of disinformation in this debate. That means we all have jobs to do to correct that disinformation at the same time and that is hard work. But we don’t do this because it’s easy. We do this because it’s so important.”
Fortescue founder Andrew Forrest said last week that green energy and hydrogen projects remain central to its future, despite walking away from a number of much-hyped projects and cutting jobs in the sector in the past year.