AGL signs Japanese partners, expands Hunter hub plans

The energy giant has also brought on APA Group and Jemena as it develops the Liddell and Bayswater power station sites alongside Fortescue Future Industries.

A major hydrogen hub could be built at the site of AGL Energy’s Hunter Valley coal plants in NSW. Picture: David Swift

AGL Energy and Andrew Forrest’s Fortescue Future Industries have lured a string of high-profile partners for a planned hydrogen hub in NSW coal country – up to double the original size – as the power giant strives to develop new green sources of growth.

Two of Japan’s biggest energy companies, Inpex Corporation and Osaka Gas, have joined an expanded feasibility study to develop green hydrogen and ammonia at AGL’s Hunter Energy Hub with plans for a facility of up to 2 gigawatts at the site.

Australian gas pipeline giant APA Group and distributor Jemena have also been drafted in as consortium partners as AGL and FFI work to complete the study by the end of 2022 for the scheme.

The Japanese companies are focused on assessing the feasibility of cost-competitive green hydrogen with APA considering both renewables options and a transmission pipeline while Jemena will focus on blending the fuel into its gas network.

Green hydrogen would be produced at the hub which currently houses the Liddell coal plant – set to close this summer – with the nearby Bayswater power station due to close by 2035.

While AGL was forced to abandon its planned demerger after an attack by major shareholder Mike Cannon-Brookes, its concept of creating hubs built around renewables, batteries and industrial precincts looks set to remain a critical plank of its growth strategy as a formal board-led review remains ongoing.

“The feasibility scope will focus on assessing the accelerated implementation of a large-scale production facility from minimum 150MW and up to 2GW of hydrogen and preferred derivatives including ammonia for export and domestic use,” AGL chief operating officer Markus Brokhof said.

“(This hub) will be the first of its kind in Australia and will be an example of how an energy hub can combine grid-scale batteries, solar thermal storage, wind and pumped hydro,” he said.

AGL and FFI, the green arm of iron ore miner Fortescue Metals, revealed a plan in December to investigate the viability of producing hydrogen – using water from Lake Liddell and power from AGL’s planned renewable hub – for export or for use in the grid.

The pair have touted the development as creating 1000 jobs across energy production, advanced manufacturing, recycling and the production of chemicals.

“The scale of green hydrogen production potential in the Hunter Region is world leading and we’re keen to accelerate the delivery of this potential,” said FFI’s director for east Australia, Felicity Underhill.

AGL has already outlined plans to build a wind farm that could generate 350 to 400 megawatts of energy, supported by a 250MW pumped hydro facility at Bells Mountain and a 250MW battery facility.

The joint feasibility study considered the commercial viability of a hydrogen production plant that would initially produce relatively small volumes of hydrogen – about 30,000 tonnes a year, a tiny fraction of the 15 million tonnes a year FFI says it wants to be producing by 2030.

But FFI said at the time the initial feasibility study would also give an indication of whether production could be scaled further at Liddell, potentially giving the Hunter Region a new export industry as thermal coal generators are phased out across the globe.

The power giant had planned to split off AGL Australia, with its 4.5 million customer base, into a newly listed retail-focused company with the current AGL to be rebadged as a coal-dominated generator called Accel Energy.

Instead the demerger was dumped and the company is searching for a new CEO and chairman as Graeme Hunt and Peter Botten head for the exit.

AGL directors Vanessa Sullivan and Graham Cockroft have been handed oversight of a strategic review of the company and have also been joined by fellow board member, Mark Bloom, to reboot the company’s vision.

Australia’s largest polluter will also reassess its decarbonisation strategy and analyse the scale and mix of energy supplies needed to meet carbon reduction goals. An assessment of AGL’s capital structure will also be part of the review.

An update will be provided at its annual results in August with the initial outcomes to be presented to investors in September.