Forrest’s Green Hydrogen Project Faces Challenges Amid Rising Energy Costs

Andrew Forrest’s ambitious green hydrogen production project at the Gibson Island ammonia plant in Queensland is at a critical juncture. The project, which aims to establish a 550 MW green hydrogen electrolyser, has been awaiting approval to proceed. However, the main challenge lies in securing a cost-effective electricity supply, as Queensland’s grid remains heavily reliant on coal, resulting in higher electricity prices compared to other states.

Last October, the Gibson Island project secured a supply agreement with Genex Power for the Bulli Creek solar and battery project. This agreement was intended to provide 337 MW of capacity from the solar farm to support the electrolysers. However, Fortescue, the company behind the project, requested an extension on the agreement until the end of February due to difficulties in reaching financial close.

The cost of electricity is a major concern for Fortescue, prompting discussions with government departments to explore potential solutions. Fortescue’s head of green energy, Mark Hutchinson, highlighted the importance of affordable power in the green hydrogen space. He mentioned that Fortescue is considering alternative locations such as Brazil, Namibia, and Morocco, where cheaper power options are available.

While the cost of green hydrogen projects, particularly in their initial phase, remains uncertain, the availability of affordable electricity will be a determining factor. Hutchinson emphasized the need for financial rigour and security in evaluating the project’s economics, including the power supply.

Fortescue’s board meeting in February will likely decide the fate of the Gibson Island project. Hutchinson expressed confidence in Fortescue’s broader green power strategy, aiming to achieve “real zero” emissions by 2030 while remaining profitable. The company has already built a new transmission line to connect its Iron Bridge mining project, enabling greater integration of renewables at its Pilbara mining operations. This includes the upcoming launch of a 100 MW solar farm, two battery storage installations, and a total of over 3 gigawatts of renewables and storage.

The implementation of these renewable energy initiatives will allow Fortescue to eliminate gas-fired generation and reduce its reliance on diesel consumption for transportation. The company is actively exploring electric alternatives, such as fully electric excavators, haul trucks, and trains, including the innovative “gravity train” that harnesses the recuperation potential of battery storage.

Fortescue’s commitment to proving the feasibility of “real zero” emissions and its ability to generate profits in the process demonstrates its dedication to sustainable energy solutions.