Contact and Meridian seek partners to investigate world's largest green hydrogen plant

Thursday, 22 July 2021

Hydrogen is already made from industrial processes, such as BOC's green hydrogen factory at NZ Steel’s Glenbrook factory.

Contact Energy and Meridian have announced they are looking for partners for what could become the world’s biggest green hydrogen plant in Southland.

Green hydrogen, a fuel produced by electrolysising water, is being increasingly seen globally as one of the key solutions for reducing greenhouse gases.

It does, however, require a lot of electricity and Southland has the benefit of a reliable renewable source from Manapouri Power Station, currently being used by the Tiwai aluminium smelter.

A feasibility report by international consultants McKinsey and Co says a green hydrogen plant has the potential to earn hundreds of millions in export revenue and help decarbonise economies both here and overseas.

At Glenbrook, south of Auckland, a small facility makes low-emissions hydrogen gas.

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

* Green hydrogen for Tiwai? Govt acknowledges interest is out there

The report was commissioned by Meridian and Contact as one option once their supply agreement with New Zealand Aluminium Smelters at Bluff finishes at the end of 2024.

Meridian Energy chief executive Neal Barclay said developing a hydrogen economy could deliver significant economic and energy independence benefits for New Zealand, as well as environmental ones.

“Our renewable energy gives us a valuable head start and competitive edge as markets for green hydrogen develop.,” he said.

“Early, large-scale production will allow us to build a domestic hydrogen supply chain and kickstart demand around the country.”

The power companies also believe green hydrogen could give them the flexibility to dial down production when lake levels are low, allowing that electricity to flow back into the national grid.

“In this mode of operation, green hydrogen could solve up to 40 percent of New Zealand’s ‘dry year’ problem,” Contact Energy chief executive Mike Fuge said.

That could help the country cut down on coal and gas-fired electricity generation, he said.

“Given the low lake levels over the past six months, if this plant had been available this year it could have been used to avoid up to one million tonnes of carbon emissions.”

Pumped storage at Lake Onslow in Otago is being considered as an alternative way of offsetting New Zealand’s dry year problem.

The Southern Green Hydrogen feasibility study is ongoing, with two further reports being produced later in 2021.

Not all the energy would be for New Zealand. In fact, exporting green hydrogen is being seriously considered as a way of giving green hydrogen an outlet until hydrogen-using technology in the transport and industrial sectors catches up.

New Zealand has already signed co-operation agreements with Japan and Singapore to research production and similar agreements have been made with South Korea – countries which want to offset their emissions but don’t have the same access to renewable electricity.

Meridian and Contact's fanfare about their idea comes as the Ministry of Business, Innovation and Employment continues its own investigation into options for how best to deal with New Zealand's “dry year” risk.

Officials are assessing Lake Onslow alongside alternative renewable options to replace the country’s reliance on burning gas and coal to power the country in “dry years,” when hydro generation is low.

Energy Minister Megan Woods said in June that progress was being made towards the possible development of the multibillion-dollar Lake Onslow pumped hydro scheme, despite opposition from within the power industry.

“I think it is fair to say there are many in the industry who are openly resistant to using a renewable source of ‘dry year’ storage and who will have questions,” Woods told a select committee last month.

The floating of the hydrogen proposal also comes amid speculation that Rio Tinto may want to extend the life of the Tiwai Point aluminium smelter beyond the end of 2024 because of high aluminium prices.

Proposing a huge green hydrogen scheme in Southland, which would provide an alternative use for power for Meridian and Contact's South Island dams, could aid the power firms in any negotiations with Rio Tinto.

Guy Waipara, Meridian’s general manager of development, said the interest from international players, including some big multi-nationals, had been real.

“The volume of really high quality international interest is really pleasing. The process we’re kicking off is going to test the reality of that.”

However, getting it ready as soon as 2025 would be a challenge.

“This is part of why we're going to market to see what demand is going to look like, because you almost have to work backwards and hear from real customers from when they think they'll be ready to take product and then to figure out how do we solve that.”