The Australian Renewable Energy Agency (ARENA) has announced a conditional $432 million funding package to Orica for its Hunter Valley Hydrogen Hub (HVHH) on Kooragang Island, New South Wales, as part of the federal government’s Hydrogen Headstart program.
The project aims to establish a 50-megawatt electrolyser to produce renewable hydrogen, which will progressively replace natural gas in Orica’s manufacturing operations for low-carbon ammonia and ammonium nitrate — products critical to Australia’s mining, agriculture, health, and food sectors.
The HVHH becomes the second recipient of Hydrogen Headstart’s inaugural $2 billion funding round.
The first was awarded to the Murchison Green Hydrogen project in Western Australia, which has received $814 million to support its development of a 1.5-gigawatt green hydrogen facility targeting 900,000 tonnes of green ammonia per year.
Hydrogen Headstart, administered by ARENA, is designed to provide revenue support for major renewable hydrogen projects through competitive production credits, with an additional $2 billion allocated for its second round and industry consultation now underway.
The announcement drew immediate praise from the Australian Hydrogen Council (AHC).
AHC CEO Dr Fiona Simon stated: “AHC is thrilled to see the Hunter Valley Hydrogen Hub move one step closer to a Final Investment Decision with $432m funding support from the Australian Government’s Hydrogen Headstart program.
“This is an important project that supports Orica’s decarbonisation ambitions, the Hunter region’s transition from a coal-based economy and the broader NSW economy.
“It is critical that government and industry work together to scale renewable hydrogen projects located in regions such as the Hunter where heavy industry needs to decarbonise and common user infrastructure is already in place.
Dr Fiona Simon highlighted hydrogen’s critical role as the foundation for essential chemicals like ammonia and methanol, noting that the Australian Hydrogen Council is collaborating with major end users such as Orica to ensure hydrogen is available where and when it is required to meet diverse industry needs.
Simon also remarked that while government initiatives like the hydrogen production tax incentive and Hydrogen Headstart are significant steps towards bridging the commercial gap for these major projects, additional policy support is needed to build suitable infrastructure, increase renewable energy supply, and establish the social foundations necessary for these emerging sectors.
She added that the Council looks forward to working with the government to advance initiatives under the Future Made in Australia Agenda and the next round of Hydrogen Headstart, while continuing to support key stakeholders in the Hunter region as the project moves forward.
ARENA CEO Darren Miller emphasised the significance of hydrogen in decarbonising difficult-to-electrify sectors, stating: “Renewable hydrogen is an important decarbonisation lever for applications like ammonia production where hydrogen has traditionally been produced with fossil fuels.
“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.”
Miller explained that the Hydrogen Headstart initiative aims to accelerate the growth of Australia’s renewable hydrogen sector by backing large-scale projects that reduce emissions, bolster the nation’s industrial competitiveness, and help establish Australia as a frontrunner in global clean energy exports.
Miller described Orica’s project as a prime example of the kind of impactful progress that can be achieved through this program.
Orica’s Managing Director and CEO Sanjeev Gandhi expressed thanks for the support, 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 — a site we’ve proudly operated for over fifty years.
“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.”
The HVHH will use recycled water and renewable electricity to produce hydrogen, reducing Orica’s reliance on natural gas and its associated emissions.
When operational, phase one is expected to generate about 12 tonnes of hydrogen per day, enough to reduce Orica’s daily natural gas demand by around 7.5 per cent, with emissions savings equivalent to taking about 26,500 cars off Australian roads annually.
The initiative will also create an estimated 160 construction jobs and 10 ongoing roles, contributing to the Hunter region’s industrial transformation.
The Hub had previously secured $70 million from the Regional Hydrogen Hubs program and $45 million from the NSW government, with planning approval granted in May 2024.
Orica must now meet further financial and operational milestones, including a final investment decision, before full funding is released.
Support under the Hydrogen Headstart program is paid based on production volumes over a 10-year period.
As the first round of Hydrogen Headstart concludes with support for both the Hunter Valley and Murchison projects, Australia’s ambitions to become a renewable hydrogen and ammonia export leader are gaining momentum, signalling significant changes ahead for domestic industry and the global clean energy market.
