DFS confirms Bristol Springs as low-cost near-term hydrogen producer

Frontier Energy has wrapped up the Definitive Feasibility Study (DFS) for its Bristol Springs hydrogen project in WA and it’s looking good for low-cost near-term hydrogen.

The company says the study has reaffirmed the potential for the project to be a leader in the Australian green (low carbon) hydrogen industry, benefiting significantly from proximity to existing infrastructure that drives annual production of green hydrogen to 4.9Mkg pa at a total cost of A$2.77/kg (inclusive of capital costs).

The total initial capital cost for Stage One is estimated at $242.5 million (slightly up from the pre-feasibility study estimate of $236.2m), inclusive of the 114MW solar farm and a 36MW alkaline electrolyser.

This makes Bristol Springs one of the lowest reported costs for a green hydrogen project of this scale in Australia.

First mover in green hydrogen

“We are delighted with the outcome of the Study as it again highlighted the unique opportunity we have at Bristol Springs to be a first mover in the green hydrogen industry,” Frontier Energy (ASX:FHE) MD Sam Lee Mohan said.

“The infrastructure surrounding the Project not only allows for our forecast costs to be some of the lowest in Australia for green hydrogen production, but also provides an opportunity for early production as the industry continues to mature over time.

“We believe the most likely pathways to early production will come from hard to abate sectors through accessing the nearby Dampier to Bunbury Natural Gas Pipeline, which can already take up to 9% hydrogen, as well as the potential for the development of a peaking plant, which uses hydrogen for flexible energy generation to meet high demand periods on the WA electricity grid.

“Both of these potential early pathways to production are in line with the Western Australian Government’s strategy and targets for the production and consumption of green hydrogen within the State.”

Low cost thanks to location

Forecast production has increased to 4.9m kilograms per annum up from 4.4Mkg in the PFS, due to increasing the load factor of the electrolyser to 84% (up from 75%) thanks to increased utilisation of the grid connection in off-peak electricity conditions.

The low cost of the project is driven by low capital costs due to the projects ability to access surrounding existing infrastructure, including access to existing water pipeline, connection to the Southwest Interconnected System (SWIS) at the Landwehr Terminal as well as local skilled existing workforce (meaning no camp and other related infrastructure).

Plus, Bristol Springs can utilise existing mechanisms for solar revenue (classified as a negative expense in the Study) that can only be accessed through its connection to the South West Interconnected System (SWIS), which includes unused daytime solar energy sales, Reserve Capacity Credits and the sale of excess LGC credits.

1GW the long-term plan

The company’s long-term plan to produce at least 1GW of renewable energy in the Waroona region – which would be sufficient to produce approximately 80 Mkg pa of green hydrogen.

Frontier is currently in the advanced stages of a process to secure a foundation offtake customer to commercialise Stage One.

Following this, the company anticipates commencing project financing to enable a Final Investment Decision (FID) later this year, and is confident the transition to clean energy will continue to accelerate and numerous banks and other financial institutions will increasingly play a leading role in financing greenfield construction of renewable energy projects.

There are also various grants and credits available at both a State and Federal level which can be accessed to support funding the development of the Project.

Not to mention, the Federal Government recently announced it will review its National Hydrogen Strategy to ensure Australia remains on a path to be a global hydrogen leader by 2030 on both an export basis and for the decarbonization of Australian industries.

This article was developed in collaboration with Frontier Energy Limited, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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