Southland well-placed to capitalise on growing global green hydrogen market

Friday, 18 December 2020

Great South's general manager of business and strategic projects says Southland has a golden opportunity to capitalise on a growing global green hydrogen market.

Steve Canny labels himself an optimist.

In July when Rio Tinto revealed plans to wind down operations and close its aluminium smelter at Tiwai Point near Invercargill, Canny admits to the feeling of shock.

He expected the day would come, but it didn’t soften the blow when it arrived.

After all, Canny is the general manager of business and strategic projects for Southland's regional economic development agency. It's his job to lead Southland’s economic health.

Rio Tinto's aluminium smelter at Tiwai Point with Bluff in the background.

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But for Canny, the shock lasted just moments. His mind quickly switched to potential opportunities, in particular green hydrogen.

Canny had circled green hydrogen as a possible industry for Southland from as far back as 2008.

Venture Southland - now called Great South - was a foundation member of the New Zealand Hydrogen Association, with Canny leading the way.

Invercargill-based transport company, HWR Richardson Group, was another foundation member.

Green hydrogen is a fuel produced by the electrolysis of water using renewable electricity. The appeal is its potential to help reduce carbon emissions.

It's viewed as an ideal replacement fuel for heavy transport. Trucks, trains, tractors, and potentially even planes in the future.

Until recently Canny's excitement for green hydrogen has largely sat behind closed doors and gained little traction.

He says initial hydrogen investigations were prompted by concerns about New Zealand's future fuel supplies.

But there wasn’t a lot of desire globally to transition. And in turn, there wasn’t a market available for green hydrogen fuel.

Lowering emissions simply wasn't a priority, but Canny says it’s changed. There is a global push to lower emissions and Southland could lead the way in New Zealand around large-scale green hydrogen fuel production.

Other green hydrogen prospects elsewhere in New Zealand are already in the pipeline but it does not mean Southland is playing catch up.

It’s not an either-or, Canny says.

He adds that the scale of what could be produced from Southland could be much larger than elsewhere in New Zealand, given the reliable renewable energy that’s available from the Manapouri Power Station.

There's an opportunity to not just to create fuel independence for New Zealand, but also establish another export industry.

An attempt to put Southland front and centre of the green hydrogen production is underway.

New Zealand energy companies Meridian Energy and Contact Energy have announced they were co‐funding a $2 million feasibility study to investigate the potential of a large-scale hydrogen production facility in the lower South Island.

It would take a large commercial operator to turn it into a reality, but Canny confirms following the smelter announcement interest parties have surfaced.

With other countries, such as Canada and Iceland, also looking to attract interested companies, Canny says there will be global competition to develop a green hydrogen industry.

As has played out with Rio Tinto, power negotiations between potential hydrogen companies and energy suppliers will remain a key factor in making a green hydrogen plant at Tiwai Point work.

“The industries coming to look at using electricity need to know what the price is, how long that price is going to be available, and can you reliably supply the electricity to the plant,” Canny says.

“So if it's a 35-40 year investment they want to have agreements that stack up over that period of time.”

In terms of potential job numbers for Southland, Canny says he couldn't put a number on it. It would come down to the scale of the operation set up.

Although he suggested if it is on a global scale, it could potentially replicate the level of employment that the smelter currently has.

It's estimated the smelter employs close to 1000 jobs and a further 1600 indirect jobs.

“It's quite a significant opportunity. If [Rio Tinto] chooses to exit New Zealand and Southland then [hydrogen] would be a good substitute for aluminium production.

“As are other opportunities, there are a number of other opportunities for the use of the energy [produced at the Manapouri Power Station].”

The introduction of a data centre to Southland is already well advanced, irrespective of the smelter closes or not. While there has also been interest in silica reserves in Southland to produce polysilicon for solar panel manufacturing.

“In all adversity, there are opportunities created.”

Canny feels the next five to 10 years will be the most significant period of transformation for the world and Southland is well-positioned.

“If you look at it from a Southland perspective we have a tremendous range of opportunities. Excited would be a good way of describing how I feel.”

So when could a green hydrogen plant realistically be up and running in Southland, if all the required boxes are ticked and Rio Tinto does in fact close its doors in New Zealand?

For a start, Canny suggests 2021 will probably be knocked out with the hydrogen feasibility study.

“If you had to ask me how long it would take to have a plant up and operating, I think it would take four or five years.

“The perfect scenario, if Rio Tinto does depart New Zealand, is we have a planned phase-down over five years. That would reasonably match.”

Canny’s isn’t wearing an eye patch when suggesting Southland has an opportunity to lead the way for New Zealand in green hydrogen production.

New Zealand Hydrogen Association chief executive Linda Wright backs up his comments.

The market for green hydrogen is growing as countries like South Korea, which doesn’t produce renewable energy, tries to lower emissions, Wright says.

It provides New Zealand with an ideal opportunity and Southland was well-positioned to lead the way given the skilled workforce that would be available and the access to reliable power, Wright says.

How is hydrogen made?

The most common way to make hydrogen is by splitting hydrogen from the water molecule, then storing the hydrogen gas and compressing it into a cylinder before running the hydrogen through a fuel cell, Canny says.

The fuel cell produces electricity and the electricity drives the electric motors in vehicles.

Hydrogen can be produced as a liquid or a gas and can be stored for long periods of time and transported over long distances, allowing the distribution of energy between regions and countries.