The Australian Renewable Energy Agency (ARENA) has announced up to $432 million in grant funding for Orica’s Hunter Valley Hydrogen Hub (HVHH), marking the second major allocation under the federal government’s Hydrogen Headstart program.
The HVHH will use a 50-megawatt electrolyser powered by renewable electricity to produce renewable hydrogen, the agency said in a news release.
The hydrogen will be used to replace natural gas in Orica’s ammonia production process at its Kooragang Island facility in New South Wales, aiming to reduce emissions from the manufacturing site.
ARENA Chief Executive Officer Darren Miller said the project reflects hydrogen’s growing importance in industrial decarbonisation, particularly in sectors where electrification is not viable.
“Renewable hydrogen is an important decarbonisation lever for applications like ammonia production where hydrogen has traditionally been produced with fossil fuels,” Miller said.
“By replacing natural gas-derived hydrogen with clean, renewable alternatives, projects like Orica’s are helping to decarbonise core industrial processes while preserving domestic manufacturing and unlocking new export opportunities,” he added.
The Hydrogen Headstart program, delivered by ARENA on behalf of the Australian Government, is designed to support large-scale renewable hydrogen projects that aim to reduce emissions and strengthen Australia’s competitiveness in clean energy.
“Orica’s project is a great example of what’s possible,” Miller said.
Orica’s Kooragang Island facility has operated for more than 50 years and produces ammonia and ammonium nitrate for use in Australia’s mining, agriculture and industrial sectors. The HVHH project is seen as a key milestone in transitioning the facility toward low-carbon production.
Orica Managing Director and Chief Executive Officer Sanjeev Gandhi welcomed the announcement, stating: “We’re grateful for this crucial support, which brings us closer to realising the Hunter Valley Hydrogen Hub and advancing the decarbonisation of our Kooragang Island facility.”
“We look forward to continuing our collaboration with ARENA and other Federal and State government agencies to support the transition of Orica’s Kooragang Island manufacturing facility and help shape a cleaner, more resilient future for the Hunter region.”
Funding through Hydrogen Headstart will be tied to actual renewable hydrogen production volumes, with support paid over a 10-year period. Orica must first meet a series of conditions and contractual milestones in partnership with ARENA before the funding is disbursed.
This announcement follows the earlier commitment of $814 million to Copenhagen Infrastructure Partners’ 1,500 MW Murchison Green Hydrogen Project in Western Australia, the first project backed under the Hydrogen Headstart initiative. With Orica now named as the second recipient, Round 1 of the program is now concluded.
ARENA has committed a total of $370 million to 65 renewable hydrogen projects to date, ranging from early-stage research to full-scale deployment.
Consultation for Round 2 of Hydrogen Headstart is currently underway.
