Renewable Hydrogen Deployment Funding Round...Funding Round parameters are subject to change and the...

Renewable Hydrogen Deployment Funding Round

Information and Consultation Session

March 2020

Note: Funding Round parameters are subject to change. Information contained in these slides is indicative only.

Note to readers

The following presentation was used as part of the Information and Consultation Forums for the Renewable Hydrogen Deployment Funding Round (Funding Round).

Funding Round parameters are subject to change and the information in this document is indicative only.

Should you have any queries or require any clarification in relation the following presentation please email hydrogen@arena.gov.au.

Agenda

About ARENA

Strategic Context: Renewable Hydrogen in Australia

Renewable Hydrogen Deployment Round

Q&A Session

Investment Priorities

ARENA’s current hydrogen portfolio

Approximately $50 million across 28 projects

Benefits● Global export opportunity ($9.5bn by 2030)● Domestic decarbonisation (transport, power, heating, industrial)● Complementary to energy sector

Key issues● Major barriers remain to large scale deployment● Demand drivers are still evolving ● Sector price discovery is key

International ● Hydrogen Council: US$20bn to 2030 for economic gap● 70 GW of global electrolysis deployment needed● Key drivers: electrolyser cost and input electricity ● Japan and Korea expressed interest in offtake

Pathway to a renewable hydrogen industry

Australia ● Since 2015, Australian Government committed over $146 million to

hydrogen projects● 10+ years journey to realise hydrogen economy● Ability for Australia to capitalise on abundant renewable

resources and export hydrogen ● National Hydrogen Strategy: Australia hydrogen industry could

generate 7,600 jobs and $11bn annually in GDP by 2050

ARENA’s role● Portfolio of supported projects and activities● Investment Priority alignment● Need to develop and kick-start the pathway to a renewable

hydrogen sector

Pathway to a renewable hydrogen industry

Hydrogen competitiveness in targeted applications

Source: CSIRO National Hydrogen Roadmap

The hydrogen supply chainHydrogen source

Electrolysis

Exportable hydrogen or conversion to a carrier

Utilisation at end point

Thermochemical

Biological

Photocatalysis

Fossil fuels + CCS

Liquid hydrogen

Chemical carriers

Physical carrier materials

Regeneration of hydrogen

Transport

Electricity generation

Direct combustion

Chemical feedstockNot supported

by ARENA

Large Scale Solar - Pathway to commercialisation

Renewable Hydrogen Deployment Funding Round

Note: Funding Round parameters are subject to change. Information contained in these slides is indicative only.

Funding Round Consultation Process

● ARENA undertaken industry engagement

● Stakeholder Consultation Forums held in: ○ Brisbane - 21 February 2020○ Sydney - 24 February 2020○ Perth - 3 March 2020○ Melbourne - 6 March 2020○ Hobart - 10 March 2020○ Adelaide - 11 March 2020

● State Government consultation

Note: Funding Round parameters are subject to change. Information contained in these slides is indicative only.

Funding Round Objectives

● Demonstration of electrolysis and associated renewable hydrogen technologies at scalein a grant funding round

● Provide price discovery and transparency in relation to the current and projected economics for renewable hydrogen technologies, by sharing the actual and forecast economics of applications received as part of the Round (anonymously to the extent possible)

● Facilitate a pathway to technical and commercial viability of renewable hydrogen in Australia

Note: Funding Round parameters are subject to change. Information contained in these slides is indicative only.

Investment Focus AreasFOCUS AREA REQUIREMENTS

Technology

● New deployment of electrolysis/renewable hydrogen production facilities● May utilise existing energy generation or hydrogen end-use infrastructure ● Powered by 100% behind-the-meter renewables (offset via retirement of large-

scale generation certificates) and/or power purchase agreement ● Excludes feasibility funding activities

Project Size ● Minimum - 10 MW● Maximum - unrestricted

Project Location Australia

Other

● Projects must be for a single site deployment● Applications must have a valid commercial case for the end use of hydrogen● Applications must include a commercialisation pathway (cost reduction

pathway) analysis

Note: Funding Round parameters are subject to change. Information contained in these slides is indicative only.

● $70 million of ARENA grant funding round

● ARENA may allocate an amount of funding that is less than the Total Funding Allocation if proposals are not considered to be of sufficient merit to support an offer of ARENA funding

● At its discretion, ARENA may increase the Total Funding Allocation for the Round

● ARENA anticipates supporting more than one project

● Funding Round focused on deployment rather than feasibility, design or concept development

Proposed Funding Allocation

Note: Funding Round parameters are subject to change. Information contained in these slides is indicative only.

● Funding Round will be conducted under ARENA Advancing Renewables Program (ARP)

● Two-stage process (EOI and Full Application)

● Refer to ARP Guidelines for eligibility criteria

● Portfolio approach (ARP Guidelines, clause 4.23 and 4.24)

Eligibility and ARP Guidelines

Note: Funding Round parameters are subject to change. Information contained in these slides is indicative only.

Indicative assessment timeline and anticipated FID (DRAFT)

EOI Q&A Process

EOI due date

[May/June 2020]

Applicants advised if invited to Full Application

ARENA to assess and notify applicants within [45] days of EOI Due Date

EOI due date + [45] days

Funding Announcement Released

EOI open date

[April 2020]

Dates are subject to change

Note: Funding Round parameters are subject to change. Information contained in these slides is indicative only.

Indicative assessment timeline and anticipated FID (DRAFT)

Full Application Q&A Process

[July 2020]

Decision outcome and development milestones agreed Expected date

[November 2020]

Bid Bond lodged

20 business days following decision

outcome

Funding Agreement Execution

TBD

Financial Close

ARENA may assess as higher merit, projects that have a more timely proposed financial close and commissioning timetable.

[Anticipated 30 June 2021]

Full Application Due Date

[Late September / October 2020]

Dates are subject to change

Note: Funding Round parameters are subject to change. Information contained in these slides is indicative only.

Assessment Information and Process

PROJECT DEVELOPMENT AREA EOI FULL APPLICATION

Energy supply MOU Executed term sheet

Equity finance MOU Executed term sheet

Debt finance Detailed finance plan Executed term sheet

Offtake or end use of hydrogen MOU Executed term sheet

Total project cost accuracy +/- 30% +/-20% or lower

Electrolyser Detailed pricing from supplier Firm pricing and supply terms

Note: Funding Round parameters are subject to change. Information contained in these slides is indicative only.

Draft Merit Criteria Metrics

● ARENA will adopt a set of metrics to inform the commercial competitiveness in the context of the Funding Round. These may as follows:

– Grant funding $ / MW of electrolysis capacity installed

– Grant funding $ / tonne of hydrogen delivered (forecast first 12 months of continuous operations)

– MWh / tonne of hydrogen delivered

● ARENA will take into account the potential for the project to be replicated and be able to demonstrate a pathway to commercialisation for hydrogen production

● ARENA will also assess all projects under the ARP merit criteria and any additional criteria will be noted as part of the Funding Announcement.

Note: Funding Round parameters are subject to change. Information contained in these slides is indicative only.

● Proportion of applications for different use cases of hydrogen

● Total project cost per MW of electrolysis capacity to be installed● Project cost by category (e.g. electrolyser, balance of plant, generation etc) ● Total project cost by location● MWh/tonne of hydrogen delivered

● ARENA $/MW of electrolyser capacity installed● ARENA $/tonne of hydrogen delivered (forecast first 12 months) ● ARENA grant as a percentage of total project cost

● Cost ($/L) and volume (L/kg of hydrogen produced) of water used ● Source of water (i.e. potable, recycled, seawater)● CO2e compared to Steam Methane Reforming● FTEs required - construction and operation period

Proposed Publication of Information

Use Case

Cost Metrics

Grant Metrics

Other

Note: Funding Round parameters are subject to change. Information contained in these slides is indicative only.

Next Steps

● ARENA to collate consultation outcomes

● FAQs will be collated and answered on our webpage

● Please provide any further feedback via slido

● ARENA to finalise round parameters

● Target formal funding announcement expected in April 2020

Note: Funding Round parameters are subject to change. Information contained in these slides is indicative only.

Learn more about ARENA projects online

● ARENA’s Knowledge Bank is an open-source library of reports, studies and tools. Subscribe to our industry newsletter, Insights, arena.gov.au/knowledge-bank

● Our podcast features energy experts Dr Alan Finkel, AEMO CEO Audrey Zibelman and Managing Director of German Energy Agency, Kristina Haverkamp. Subscribe wherever you get your podcasts.

● ARENAWIRE is home to news and analysis about ARENA funded projects. Subscribe to our E-news at arena.gov.au/blog.

Further Feedback or Information

Email: hydrogen@arena.gov.au

Website: arena.gov.au

General enquiries: proposals@arena.gov.au

Note: Funding Round parameters are subject to change. Information contained in these slides is indicative only.