Origin Energy Withdraws from Hunter Valley Hydrogen Hub Project

Origin Energy has confirmed its decision to step away from its proposed Hunter Valley Hydrogen Hub (HVHH) project, citing uncertainty in the hydrogen market’s development and the challenges associated with large-scale investment in the emerging technology.

The decision marks a shift in the company’s strategic direction, with CEO Frank Calabria stating that while hydrogen remains a potential future energy source, the project’s viability has become increasingly difficult to justify in the current market environment.

“We have thoroughly assessed the investment case for hydrogen over several years, and although government support has been strong, we now recognise that the hydrogen market is evolving more slowly than we had hoped,” said Mr Calabria. “The associated risks—ranging from high input costs to lagging technology advancements—make it challenging for us to proceed with the final investment decision at this time.”

The HVHH, initially proposed for Kooragang Island, was part of a joint development agreement with Orica. The hub aimed to produce hydrogen that would eventually replace natural gas in nearby ammonia manufacturing processes. Plans were also in place to explore the potential for hydrogen-powered mobility and other industries.

Despite NSW government approval and federal recognition through the Australian Government’s Hydrogen Headstart program, Origin concluded that capital investments in renewables and energy storage present a clearer pathway towards achieving decarbonisation and energy security goals.

Mr Calabria highlighted that prioritising these areas aligns more closely with the company’s broader strategy. “Our focus remains on investments that are better aligned with our current priorities—namely, renewable energy and energy storage, which we believe will have a more immediate impact on decarbonisation and supply security.”

Though disappointed, Origin expressed gratitude to the federal and state governments, Orica, and the local community for their support throughout the project’s exploration phase. The company remains open to potential commercial options for the HVHH but has also signalled an end to its pursuit of hydrogen development projects in Australia for the foreseeable future.

The initial announcement of the HVHH came in early 2022, with high hopes for hydrogen’s role in future energy systems. However, Origin’s withdrawal underscores the broader uncertainty facing the hydrogen sector as it navigates technical and economic hurdles in its quest to become a commercially viable energy source.

This decision comes as other renewable technologies such as solar and battery storage gain momentum, offering more immediate opportunities to meet energy demands while reducing emissions.