Navigating the South Australian hydrogen landscape

The HRE Act introduces a new system that will allow the state government to declare certain pastoral lands, state waters and prescribed Crown land (referred to as ‘designated land’) as a release area, based upon their suitability for the operation of renewable energy infrastructure. These release areas exclude freehold land, and various sanctuary zones, parks and protection areas. Once a release area has been declared, a competitive tender process will be organised by the government for feasibility licences based upon selection criteria. New renewable projects and hydrogen projects can, of course, be licenced on land other than designated land, including freehold land.

Similar to the Mining Act, licence holders must enter into an access agreement or follow a ‘notice of entry’ approach in respect of other land occupants, whether they be freehold owners, pastoral lessees or mining tenement holders. Landowners affected by authorised operations are entitled to compensation for any economic loss, hardship or inconvenience.

Licences over native title land require either a registered indigenous land use agreement or a less formal agreement (if acceptable to the relevant native title group). Where there is no native title declaration or registered claim, the Minister must before granting a licence be satisfied that the grant of licence will be valid under the Native Title Act.

The HRE Act will implement a state-wide permit and licensing framework for hydrogen and renewable energy projects. There are six types of licence and one permit under the HRE Act:

• a renewable energy feasibility licence or permit which authorises exploration and investigation to assess the feasibility of generating renewable energy;
• a renewable energy infrastructure licence which authorises the construction and operation of renewable energy infrastructure, such as wind turbines and solar panels;
• a renewable energy research licence which authorises the research, testing and data collection for renewable energy technologies;
• a hydrogen generation licence which authorises the construction and operation of a facility to generate hydrogen;
• an associated infrastructure licence, which permits ancillary infrastructure, such as transmission, roads and associated facilities, such as hydrogen power plants, ports for hydrogen product export and desalination for hydrogen production.

a special enterprise licence which authorises hydrogen and renewable energy projects considered by the government to be a major significance to the economy of the State. This licence comes with a range of extraordinary powers, including the grant of a right to enter and use freehold land for the project without an agreement with the landowner.

Hydrogen hubs are regions where hydrogen producers, users and exporters are co-located, making the production of commercial quantities of hydrogen at scale in an efficient and more affordable manner. As reported in our Energy, Resources and Environment Update – November 2023, the Port Bonython is well positioned to become South Australia’s first largescale export terminal for green and blue hydrogen. State and federal governments have together committed $100 million to the project and an additional $40 million is expected to be contributed by project partner developers. At this stage, six proposed project partners have been selected: AMP Energy; Fortescue Future Industries; H2U; ENEOS Corporation; Origin Energy; and Santos.

The state government has committed more than half a billion dollars to the Hydrogen Jobs Plan to build a world leading state-owned renewable hydrogen 250 MW electrolyser, 200MW hydrogen fuelled power plant and hydrogen storage facility near Whyalla. The facility will be the biggest of its kind in the world. Construction of the new facility is scheduled to begin in the second half of this year and be completed early 2026. Most of the hydrogen produced by the electrolyser will then be used as fuel in the power plant – converting intermittent renewable electricity (from the wind and the sun) into baseload electricity without generating any carbon emissions. The remaining hydrogen produced by the electrolyser can be used for purposes including selling the hydrogen as fuel to third parties.

HyP SA in Tonsley is an Australian first project that produces renewable hydrogen gas. It uses the existing gas network to develop up to 5% renewable hydrogen blended with natural gas to power around 4000 homes and business South of Adelaide’s CBD.

The state government and the State of California recently embarked on a landmark collaboration to advance renewable and hydrogen technology. Premier Peter Malinauskas and Acting Governor Eleni Kounalakis formalised this partnership in Sacramento signing a letter of cooperation on 15 May 2024. Both states have aligned their objectives to collaborate on pioneering clean renewable hydrogen projects, aiming to produce green hydrogen and other low and zero carbon fuels while scaling up hydrogen production for domestic use and export. This collaboration will also foster cooperation between Hydrogen Power SA and the California Natural Resources Agency and California Energy Commission, catalysing innovation in the clean energy sector.

As part of the 2024 budget, the federal government announced proposed tax incentives and funding for green energy – including a proposed Hydrogen Production This article provides general commentary only. It is not legal advice. Before acting on the basis of any material contained in this article, seek professional advice.Tax Incentive which would provide a AU$2 incentive per kilogram of renewable hydrogen produced for up to 10 years per project, between 2027-28 and 2039-40, and would operate alongside the expanded hydrogen headstart program (which is also extended by AU$1.3 billion over the next 10 years).