But Tallawarra B comes with an added capability: in addition to gas, its turbine can run on an initial 5 per cent hydrogen, which causes no greenhouse gas emissions. Next month, EnergyAustralia begins a $90 million upgrade of Tallawarra A, which will include enabling the use of up to 37 per cent green hydrogen once the fuel is commercially available.

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“The combination of the two will create a demand pull for hydrogen in the region,” Collette said. “So far we don’t have a viable supply of green hydrogen … that’s something that will need a push from projects across the country.”

Green hydrogen is considered a promising future fuel due to its potential to displace gas and help decarbonise processes that cannot be simply electrified. However, it remains prohibitively expensive to make and is not yet viable at scale, with most of today’s hydrogen still made using fossil fuels.

There are signs that hydrogen is on track to become more viable, according to Collette, who says government-funded projects could prove the “catalysts needed to push it forward”. South Australia, for instance, is funding a 250-megawatt electrolyser device to make green hydrogen, and a 200-megawatt hydrogen power station.

The Grattan Institute calculates that the lowest-cost road to net zero emissions for the Australian electricity sector is for renewables to supply 90 per cent of the grid, and gas to supply the last 10 per cent.

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While cautioning that there is much “hype” around hydrogen’s promise as a tool decarbonise any number of emissions-intensive processes, Grattan says supplying industrial heat for manufacturing and back-up power generation for the grid are among the areas where it has the most potential.

“Green hydrogen power plants using turbines or fuel cells could play a similar role to gas peakers, and would avoid the need for offsets or carbon capture and storage,” it said.

“The case for hydrogen in this context will depend on the techno-economics of the hydrogen supply chain, and these will vary with location.”

EnergyAustralia is assessing the feasibility of using hydrogen in Tallawarra B’s fuel mix by the end of 2025, but says that timing will depend on the development of a hydrogen manufacturing industry of an appropriate size and scale to supply it.

Collette said South Australia’s hydrogen power station targeted for the second half of the 2020s would likely be expensive, “but all power technologies start with an expensive first-of-a-kind power station, you learn from the first one, and it starts to kick off an industry”.

“There’s no reason why the first one starting in the 2020s couldn’t lead to multiples in the 2030s,” he said. “Over the next decade, there are reasons to be optimistic that we might have some hydrogen tools available that we don’t have today.”

Wood Mackenzie, a global energy consultancy, said green hydrogen remained expensive, but innovation and scaling up should make it a competitive energy source by the early 2030s.

“Subsidies will be vital to support low-carbon hydrogen supply and demand for years to come and will make or break project economics,” principal analyst Flor De la Cruz said.