Hydrogen study finds it can replace gas in South Australian networks

Hydrogen can replace gas in South Australia’s home and industrial networks, a landmark study finds, as questions emerge over a cost blowout of Labor’s power plant.

A landmark report finding hydrogen can provide a carbon-free gas supply for South Australia has been seized upon by Energy Minister Tom Koutsantonis to bolster his case for a $593m state-owned power plant.

Releasing the study at an Adelaide business lunch on Friday, Mr Koutsantonis said the research showed it was possible and economically feasible to replace natural gas with hydrogen in the state’s existing network.

I think there will be a time when I’m babysitting my grandkids and I’m turning on my gas heater still – and it’s still blue because of additives giving it the colour – and it’s hydrogen,” he told a Committee for Economic Development of Australia lunch.

Transport Minister Tom Koutsantonis with a hydrogen-powered bus. Picture: Dean Martin

Mr Koutsantonis argued research reinforced SA’s leadership in renewable energy, underpinned by a planned $593m hydrogen power plant at Whyalla that he said would spur green steel manufacturing and a reindustrialisation of the Upper Spencer Gulf.

But the Liberal Opposition says its analysis shows the hydrogen power plant – a flagship Labor election promise – could cost taxpayers up to $900m because of soaring construction cost inflation.

The $4.15m Australian Hydrogen Centre study was backed by the Australian Renewable Energy Agency, along with the Victorian and SA governments.

The report finds SA and Victoria’s gas networks are “an integral part of today’s energy system, providing a reliable supply to millions” of customers.

“In addressing these challenges and opportunities, the AHC’s work has demonstrated that it is technically and economically feasible to continue to use existing infrastructure to achieve a 100 per cent renewable hydrogen distribution system and support Australia’s economy including households, businesses and industry,” the report says.

The world's biggest hydrogen production facility, power plant and storage planned for Whyalla. Image: Supplied

But Opposition Leader David Speirs accused Mr Koutsantonis of lacking belief in Labor’s promise the Whyalla plant would be delivered for $593m, citing his interview on an October 23 RenewEconomy podcast when he said he was comfortable with that cost “but if that changes, it changes”.

Mr Speirs said Australian Bureau of Statistics data put construction cost inflation at 30 per cent, which combined with a low Australian dollar would swell the plant’s cost to $900m.

“Tom Koutsantonis has finally confessed there is no way Labor’s experimental hydrogen power plant will be delivered on budget, and now ABS data shows it’s more likely to cost taxpayers close to $1 billion,” Mr Speirs said.