A risk-averse Origin Energy (ASX:ORG) is planning to exit the Hunter Valley Hydrogen Hub (HVHH) development project amid uncertainty around the pace and timing of development of the hydrogen market.
The $17.77 billion market capitalisation company is concerned about the risks associated with developing capital-intensive projects of this nature.
The company remains open to exploring commercial options for the HVHH but intends to cease work on all hydrogen development opportunities.
Origin announced plans for a potential hydrogen hub on Kooragang Island in early 2022 with the hydrogen produced originally intended to progressively displace natural gas as a feedstock in nearby ammonia manufacturing as well as activate mobility and other use cases.
It entered into a joint development agreement with Orica (ASX:ORI) in July 2023 to progress through front-end engineering and design, received New South Wales Government planning approval, and was targeting a final investment decision (FID).
CEO Frank Calabria says Origin has worked hard to evaluate the investment case for hydrogen and despite the decision, continues to believe hydrogen could play a role in the future energy mix.
“However, it has become clear that the hydrogen market is developing more slowly than anticipated, and there remain risks and both input cost and technology advancements to overcome. The combination of these factors mean we are unable to see a current pathway to take a final investment decision on the project,” says Calabria.
“The decision to exit reflects the prioritisation of capital expenditure towards opportunities closely aligned to Origin’s strategy. Ultimately, we believe investments focussed on renewables and storage can best support the decarbonisation of energy supply and underpin energy security over the near-term.
“Origin has been closely following the global development of hydrogen technology and markets over the past four years and we have evaluated a range of options across several jurisdictions.”
The HVHH project was shortlisted under the Australian Government’s Hydrogen Headstart program, having previously secured Commonwealth and New South Wales grant funding program commitments.
Write to Adam Orlando at Mining.com.au
Images: iStock & Origin
