SA Election 2022: Premier Steven Marshall attacks Labor’s $593 hydrogen plan

Labor’s state-owned hydrogen power plant is under fire from Premier Steven Marshall, who calls it a “thought bubble” set to send a “shiver up the spine”.

Labor’s plan to spend $593m on a world-first, state-owned hydrogen power plant without a detailed business case has been attacked by Premier Steven Marshall, who warns his rival’s energy policy “should send a shiver up the spine of every single South Australian”.

The government-built, owned and operated power station is a centrepiece of Labor’s claimed $2.2bn election spending plans, the final costings for which Opposition Leader Peter Malinauskas signals will not be released until just days before the March 19 election. The Liberals have also pledged $1bn in key projects and policies.

In another major spending move, Labor on Tuesday will vow to redirect at least 5 per cent, or $425m, of government procurement to SA firms – but any financial impact of moving away from the most cost-effective suppliers is unclear.

Artist's impression of Labor's proposed $593m hydrogen power station. Picture: Supplied

In an interview with The Advertiser, Mr Marshall attacked Labor for producing scant details about the cost of building and operating the hydrogen generator, which he branded a risky “energy thought bubble”.

Opposition Leader Peter Malinauskas said respected consultancy Frontier Economics had assisted Labor’s development, costing and modelling of the policy for the hydrogen power station, electrolyser and storage facility – slated for Whyalla.

This forecasts operating costs of $33.1m annually and revenues between $39m and $80m.

Mr Marshall warned the “highly experimental”, state-owned power station would compete with private firms, jeopardising between $5bn and $10bn of investment forecast to be unleashed by the $2.3bn high-voltage electricity link to NSW – expected to be commissioned in late 2023.

A hydrogen filling station. Picture: AFP

“Their current proposal is to drive billions of dollars worth of investment out of SA by saying that they will provide a state-owned power generation company,” Mr Marshall said.

“Now, they say that this is going to be hydrogen-fuelled. This hasn’t occurred anywhere in the history of the world.

“I do not think the people of SA believe that (Labor energy spokesman) Tom Koutsantonis, who delivered the highest-priced, least-reliable energy in the history of our state, will be able to deliver something that no other government, no other private sector has been able to deliver anywhere in the world. But that is what they’re asking us to believe.”

Mr Marshall said the hydrogen plant “loses on every level” because it would not create cheaper power prices, was highly experimental and would deter investment.

Premier Steven Marshall says the energy plan is just a thought bubble. Picture: Kelly Barnes

“It will say to every single energy investor that you’re going to be competing with the government,” he said.

“How’s the price going to be set? How does this interact with the market? It’s an extraordinarily flawed policy.”

Labor released the $593m hydrogen jobs plan in March last year, and Mr Malinauskas has billed it as a linchpin of his economic strategy. The plan has three elements: a 200 megawatt power station, hydrogen electrolysers with 250 megawatt electric capacity, and a hydrogen storage facility holding two months’ supply, or 3600 tonnes.

Revealing on March 1 that Whyalla had been chosen as the green hydrogen hub’s site, Labor said its Hydrogen Jobs Plan would help create up to 300 positions during construction, at least 10,000 jobs “unlocked from the $20bn pipeline of renewable energy projects in SA” and more than 900 jobs through developing a hydrogen export industry.

The Liberals have claimed a costing error means the hydrogen plant would cost at least $1.07bn.

Labor in March last year released a 15-page “modelling approach summary for the SA hydrogen generator”, produced by Frontier Economics, which put the cost at $593m and said power prices would reduce by between 8 and 11 per cent.

Labor Leader, Peter Malinauskas. Picture: Emma Brasier

A one-page Frontier summary of operating costs and revenues projects the biggest component of the annual $33.1m operating cost would be $21.7m in electricity costs for the hydrogen electrolyser and $4.9m for the generator.

Mr Malinauskas said Frontier’s assessment “probably constitutes a business case, however you define it. It’s an independently verified and costed program”.

Asked when Labor would release the detailed budget impact of its costings, Mr Malinauskas said this would be “in the lead-up to the election”, signalling that this was likely to be on Thursday, March 17.

Responding to Mr Marshall’s charge of flawed spending, Mr Malinauskas said Labor was going to the election declaring how it would cover its costs. “This is a state government that’s increased debt – they doubled the debt before Covid. Then they’ve doubled the debt after Covid,” he said.