The Australian Renewable Energy Agency (ARENA) will provide up to $432 million to support the development of a renewable hydrogen hub in New South Wales’ Hunter Valley, backing one of the country’s most significant clean energy initiatives to date.
The funding will go toward Orica Ltd (ASX:ORI)’s Hunter Valley Hydrogen Hub (HVHH) on Kooragang Island, where the company plans to replace fossil gas with renewable hydrogen in its ammonia production process — a key step in cutting industrial emissions in one of the region’s most critical manufacturing facilities.
The investment is part of the federal government’s $2 billion Hydrogen Headstart Program, designed to bridge the commercial gap for large-scale renewable hydrogen projects and accelerate Australia’s energy transition.
Electrolyser to replace natural gas at major industrial site
At the heart of the HVHH is a 50-megawatt electrolyser, powered entirely by renewable electricity, capable of producing up to 4,700 tonnes of green hydrogen annually. This hydrogen will be used to displace a portion of the natural gas currently consumed at Orica’s Kooragang Island ammonia plant, which supplies fertilisers and explosives for the mining and agriculture sectors.
Orica managing director and CEO Sanjeev Gandhi said the company was proud to lead industrial decarbonisation efforts in the Hunter region.
“We look forward to continuing our collaboration with ARENA and other federal and state government agencies to support the transition of Orica’s Kooragang Island manufacturing facility and help shape a cleaner, more resilient future for the Hunter region,” Gandhi said.
The plant has operated for more than 50 years and is a cornerstone of the local economy, making its decarbonisation a milestone for both emissions reduction and industrial renewal.
Hydrogen Headstart backing builds national momentum
ARENA CEO Darren Miller said the investment demonstrates how renewable hydrogen can help decarbonise sectors where direct electrification is difficult.
“Renewable hydrogen is an important decarbonisation lever for applications like ammonia production where hydrogen has traditionally been produced with fossil fuels,” he said.
“By replacing natural gas-derived hydrogen with clean, renewable alternatives, projects like Orica’s are helping to decarbonise core industrial processes while preserving domestic manufacturing and unlocking new export opportunities.”
The $432 million in funding will be disbursed over a 10-year period, tied to specific project milestones and production outcomes to ensure accountability and delivery.
This is the second major project backed under Hydrogen Headstart, following the $814 million commitment to Copenhagen Infrastructure Partners’ Murchison Green Hydrogen Project in Western Australia. Together, the two ventures conclude the first round of the program, with more initiatives expected as part of Australia’s goal to become a global leader in green hydrogen.
The HVHH is expected to support jobs, bolster renewable energy uptake and cement the Hunter region’s role in Australia’s clean energy future.
