Liberals claim $500m black hole in Labor hydrogen jobs policy

Labor’s key election promise will cost twice the amount budgeted, says SA Liberal analysis. But one of Australia’s most respected forecasters says it’s their sums that are wrong.

Labor’s signature election policy to build a hydrogen power plant to generate thousands of jobs will cost almost double the $593m predicted figure, according to rival Liberal analysis.

Produced by Energy Minister Dan van Holst Pellekaan, the state government’s costings claim the Labor policy does not include the $310m-plus cost of liquefying hydrogen or other crucial operational elements worth more than $160m.

However, the Opposition is standing by its price tag, saying the government has made an “embarrassing” blunder in its calculations.

Mr van Holst Pellekaan claimed the total cost of “Labor’s half-baked power plant” would be at least $1.07bn, before additional charges for land, grid connection and project development.

The Liberal examination, released more than five months after The Advertiser in March revealed Labor’s hydrogen jobs plan, is a government attempt to tear apart the credibility of Opposition Leader Peter Malinauskas’s first major policy release ahead of next March’s state election.

Opposition Labor Leader Peter Malinauskas. Picture: Roy VanDerVegt

Mr van Holst Pellekaan argued Labor’s policy included a storage facility for liquefied hydrogen ten times larger than for United States rockets at Florida’s Cape Canaveral but the calculations did not include the cost of liquefying this hydrogen.

“It’s staggering Peter Malinauskas would release a policy so riddled with errors that it missed key components without which the plant can’t even operate,” he said.

“Peter Malinauskas is proposing to spend more than a billion dollars of taxpayers’ money on a white elephant power plant.”

The Liberal costings were based on GenCost, a collaboration between the CSIRO and the Australian Energy Market Operator to annually update electricity generation and storage costs. A state government-backed Hydrogen Export Modelling Tool also was used.

One of Australia’s most respected forecasters, Frontier Economics, which provided the cost estimates for Labor, reviewed its costings on Sunday, and disputed the $310 million figure touted by the Liberals while standing by its $31 million price tag for the hydrogen storage facility.

“We have used the CSIRO’s costs estimates for 2025 and can confirm that accounting for the capital cost of $31 million, as well as electricity costs and operating costs, the resulting cost of hydrogen is consistent with $1.59 – $1.94/kg reported by the CSIRO for 2025,” Frontier Economics director Andrew Harpham said.

“Clearly, this includes costs to build as well as operate the storage facility.”

Opposition energy spokesman Tom Koutsantonis said Mr van Holst Pellekaan “keeps on getting this stuff wrong and he should be focused on doing his job rather than trying to debunk something he is completely wrong about”.

“We’ve gone back to Frontier Economics to look at what the government has accused us of and they’ve come back and said the government is wrong,” he said.

“It is I think pretty embarrassing for DVHP that on Father’s Day he’s spending time trying to debunk something and it has got it completely wrong.”

Mr Koutsantonis said Labor was proposing $593 million to build to build a new industry.

“This government has spent a million over the last three years working out a regulatory framework for hydrogen,” he said.

“They’re not serious about – they’re just trying to talk everyone else down.”

The hydrogen policy is Labor’s major policy release thus far, although the ALP annual state convention, scheduled for October 23, is being positioned as the trigger point to start releasing its election pitch.

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The plan involves a hydrogen-fired power station designed to cut electricity bills and create thousands of jobs that would be built, owned and operated by a Labor state government.

The $593m Hydrogen Jobs Plan is aimed at harnessing South Australia’s wind and solar energy to generate clean power.

The hydrogen policy predicts up to 300 jobs would be created during the plant’s construction, along with at least another 10,000 through kickstarting projects from a $20bn pipeline of proposed renewable energy investments in SA. At least a further 900 jobs would be generated by developing a hydrogen export industry.

Labor estimates the 200MW electricity station would be able to power between 60,000 and 90,000 homes. The proposed site for the power station and plant has not been made public but Mr Malinauskas has vowed it will be finished by the end of 2025.