Submission

AHC Submission in response to the DraftNetwork Infrastructure Strategy

About the Australian Hydrogen Council

The Australian Hydrogen Council (AHC) is the peak body for the hydrogen industry, with 103 members
from across the hydrogen value chain.
Our members are at the forefront of Australia’s hydrogen industry, developing the technology, skills
and partnerships necessary to build Australia’s hydrogen economy.

AHC Partnes

AHC is pleased with the NSW Government’s approach to developing its Draft Network Infrastructure
Strategy. In its 2021 White Paper, AHC called for the planning in the national interest1
, and while a
truly national strategy will require action from state and federal governments, we consider that
EnergyCo’s coordination with broader national processes, namely AEMO’s Integrated System Plan
(ISP) is consistent with this approach.

Developing Australia’s hydrogen industry

Hydrogen is just one of the many tools that Australia will use to achieve net zero emissions. We
believe that to maximise NSW’s (and in fact Australia’s) chances of developing a commercial green
hydrogen industry, it should be done within the context of achieving economy wide decarbonisation.
That is, first determining and defining hydrogen’s role within the broader net zero story and
developing infrastructure wholistically in pursuit of this outcome. NSW has previously demonstrated
its understanding of this approach by through elements of its hydrogen strategy such as by
incentivising green hydrogen production to areas of the network where spare capacity is available2
.
This approach will ensure that hydrogen production complements the decarbonisation of the grid
and does not cannibalise renewable energy resources which could be put towards decarbonising by
other means (ie, displacing fossil fuel generation from the NEM).

Consistent with this approach, we support the Draft NIS’ indication that the focus of the initial Final
NIS will be on network options for connecting electricity supply to replace retiring generators. A
more direct focus on the establishment of a large-scale hydrogen economy should follow in future
iterations. This said, it is crucial that the initial NIS options do not preclude future hydrogen
development.
We note that while the currently proposed Renewable Energy Zones (REZ) could be used to support
hydrogen developments if it is practical and economically feasible, the indicated Zones in the Hunter
and Illawarra are likely to be centres for considerable hydrogen production and use due to their
proximity to industrial load. The transition to net zero must be appropriately mapped out so that the
right invest`ments in the right technologies are made in the right geographic areas and we consider
that the right investments with regard to hydrogen are likely to be made following grid
decarbonisation and are more likely to occur within the indicative zones.
The economics of hydrogen production is likely to vary from one location the next, depending on the
quality of the renewable resources, proximity to demand sources and potentially on policy
developments such as the development of a capacity market or NEM settings which impact the
extent to which electrolysers can provide grid services. It is imperative that EnergyCo plans for
NSW’s infrastructure needs in a way that enables an efficient and timely transition to net zero.

We support the recognition in the Draft NIS that a flexible, option rich pathway towards
decarbonisation is necessary. This need for flexibility is especially acute in an environment where
there is considerable uncertainty about future electricity needs. Emissions from the combustion of hydrocarbons for transport and heating (both domestic and industrial) will be mitigated by some
combination of hydrogen (and other renewable gases), energy efficiency and electrification and the
infrastructure needs for the various combinations of these will differ greatly. The Final NIS can drive
the right investment by outlining a clear objective and desired outcomes while acknowledging future
uncertainty.

Summary

AHC welcomes the development of the Draft NIS and encourages EnergyCo to continue to engage in
national processes such as AEMO’s ISP and the Net Zero Australia project which will plan for
Australia’s decarbonised energy future. We believe that the approach outlined in the Draft NIS sets a
solid foundation for the Final NIS to support NSW’s transition to net zero emissions.

Click here to download the submission PDF.

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