The Australian Pipelines and Gas Association (APGA) represents the owners, operators, designers, constructors and service providers of Australia’s pipeline infrastructure, connecting natural and renewable gas production to demand centres in cities and other locations across Australia. Offering a wide range of services to gas users, retailers and producers, APGA members ensure the safe and reliable delivery of 28 per cent of the end-use energy consumed in Australia and are at the forefront of Australia’s renewable gas industry, helping achieve net-zero as quickly and affordably as possible.
APGA welcomes the opportunity to contribute to the Western Australian Governments’ consultation on a proposed Renewable Hydrogen Target for electricity generation in the South Western Interconnected System (SWIS). APGA commends the Western Australian Government for demonstrating national leadership through proposing a renewable hydrogen target, and advises the expansion of the generation-specific, hydrogen specific target to cover all gas users and all renewable gases.
APGA supports a net zero emission future for Australia by 2050[1]. Renewable gases represent a real, technically viable approach to lowest-cost energy decarbonisation in Australia. As set out in Gas Vision 2050[2], APGA sees renewable gases such as hydrogen and biomethane playing a critical role in decarbonising gas use for both wholesale and retail customers. APGA is the largest industry contributor to the Future Fuels CRC, which has over 80 research projects dedicated to leveraging the value of Australia’s gas infrastructure to deliver decarbonised energy to homes, businesses, and industry in Western Australia and nationally.
Western Australia’s decarbonisation challenge is not the same as faced elsewhere in the country. As identified in the consultation paper, pumped hydro for mass energy storage is geographically unfeasible in the SWIS. It is likely the SWIS will need to rely on natural gas power generation to provide dispatchable power for years to come, plus offsets to deliver affordable and reliable net zero electricity.
Hydrogen power generation, supplied through hydrogen pipelines, can initially supplement and may ultimately supplant natural gas power generation in a net zero energy future. Storage of hydrogen in pipelines also offers a realistic and cost-effective storage option for variable renewable energy, especially when compared to battery energy storage systems.
Introducing renewable hydrogen into the energy mix for Western Australia may appear to suffer from low electricity supply chain efficiency. Energy is ‘lost’ from the point of renewable generation through hydrogen electrolysis, and then through transforming that hydrogen back to electricity. However energy efficiency is only one factor in economic efficiency. When energy storage is taken into consideration, the economic efficiency of the electricity-hydrogen-electricity supply chain markedly improves. Pipelines offer both a realistic and cost-effective storage mechanism for energy in the form of hydrogen, while also providing a cost-effective means of energy transport.
APGA believes that renewable electricity infrastructure and renewable gas infrastructure together can combine to support the least cost, most rapid energy decarbonisation pathway for Western Australia. APGA observes that gas use decarbonisation could cost less through 100% green hydrogen replacement compared to 100% electrification.[3]
A Renewable Hydrogen Target for energy generation would be a powerful catalyst in developing a broader hydrogen industry in Western Australia. A local hydrogen industry represents a valuable opportunity in assisting Western Australia achieve least-cost decarbonisation of its electricity grid, as well as providing other benefits, such as the potential to catalyse a hydrogen export market.
The proposed renewable hydrogen electricity generation certificate-based scheme would address some of the challenges of connecting the cost of renewable hydrogen to the value of net zero emissions energy for users. APGA believes it is appropriate that the scheme as proposed by Energy Policy WA levies liability for purchasing renewable electricity on electricity retailers and large consumers, but that greater outcomes would be achievable if the Western Australian Government committed to some level of annual certificate purchasing. Alongside a 10% generation target, the certificate scheme would provide considerable support for the investment necessary to achieve broader development of the hydrogen industry and decarbonisation of the SWIS.
Renewable gases include renewable forms of methane such as biomethane alongside hydrogen. Biomethane is a mature technology and can deliver carbon-neutral gas today at modelled costs in line with projected 2030 hydrogen costs.[4]
APGA considers that such a scheme could have an even greater positive impact on Western Australia’s net zero energy transition if it supports all renewable gases equally. APGA proposes that the proposed Renewable Hydrogen Target be built upon to include all renewable gases. This would provide market incentives for biomethane alongside hydrogen, where both can be considered carbon neutral when produced and used, potentially at overall lower cost to energy customers.
Renewable gases have the potential to be a source of energy, heat, or chemical feedstock for many industries in the future, beyond energy generation alone. Expanding the proposed scheme to a generic target across all gas use sectors, rather than just electricity generation, would provide additional market incentives towards renewable gas uptake. This itself would deliver least cost emissions reduction through a broader range of market mechanisms than just electricity generation and help reduce the decarbonisation burden of the net zero electricity sector.
Combining the above two proposals, APGA suggests exploring the following options in order of preference for achieving least cost gas use decarbonisation in Western Australia:
A generic Renewable Gas Target would considerably broaden the base of the scheme. This may help reduce the impact of any necessary exemption or partial exemptions to the scheme, as well as providing additional market incentives for investment.
A study by GPA Engineering, commissioned by APGA, compared the relative energy transport and storage costs of hydrogen pipelines, high voltage AC (HVAC) or high voltage DC (HVDC) powerlines, and electricity energy storage technologies.[5] This study concluded that hydrogen pipelines were a cheaper form of energy transport and storage across all modelled scenarios. To determine the cost effectiveness of full renewable energy supply chains however, a broader view of the supply chain is required.
Figure 1 compares rough levelised cost of electricity outcomes for a range of HVAC and hydrogen pipeline scenarios based on data from the GPA Engineering report and simplified energy supply chains. Hydrogen pipelines begin to deliver a lower levelised cost of electricity downstream of hydrogen gas power generation in cases where at least 60% of the energy needed must be stored prior to dispatch to customers [6]. This is due to the low cost of hydrogen storage and not needing to transport and store energy consumed through electrolysis.
Where 100% of energy needs to be stored, all cases considered within the Pipelines vs Powerlines report show hydrogen pipeline transport and storage deliver lower cost outcomes. This scenario would be relevant when considering 100% utility scale solar PV as the VRE supply for electrolysis, in particular where hydrogen power generation is used to cover morning and evening demand peaks. Full expansion of this analysis is available in Attachment A of this submission.
Figure 1: cost of electricity through hydrogen pipelines (including hydrogen pipeline energy storage) and HVAC (with battery energy storage) supply chains.
APGA commits to continuing to work with the Western Australian Government to help achieve a least cost net zero energy future for all energy customers and welcomes further engagement on the potential for hydrogen and other renewable gas pipelines to support this outcome. APGA members are already investing in hydrogen infrastructure in Western Australia, and we recommend close consideration of their submissions
To discuss any of the above feedback further, please contact me on +61 422 057 856 or jmccollum@apga.org.au.
Yours sincerely,
JORDAN MCCOLLUM
National Policy Manager
Australian Pipelines and Gas Association
[1] APGA Climate Statement, available at
https://www.apga.org.au/apga-climate-statement
[2] APGA, 2020, Gas Vision 2050: Delivering a clean energy future, available at
https://www.apga.org.au/sites/default/files/uploaded-content/website-content/gasinnovation_04.pdf
[3] Ibid.
[4] Research undertaken by the Future Fuels CRC indicates a biomethane cost range of $15 to $29 per gigajoule, close to $2 to $4 per kilogram hydrogen ($14.08 to $28.17 per gigajoule). Please contact Future Fuels CRC for access to this research.
[5] GPA Engineering, 2022, Pipelines vs Powerlines, commissioned by APGA.
Pipelines vs Powerlines: a summary
Pipelines vs Powerlines: A Technoeconomic Analysis in the Australian Context
https://www.apga.org.au/sites/default/files/uploaded-content/field_f_content_file/pipelines_vs_powerlines_-_a_technoeconomic_analysis_in_the_australian_context.pdf
Pipelines vs Powerlines: Appendix 3A and 3B Results Summary
[6] A levelised cost of generation without fuel cost of $50 per MWh for CCGT was assumed from Lazard, 2021, Lazard’s levelized cost of energy analysis, Version 15.0, https://www.lazard.com/media/451905/lazards-levelized-cost-of-energy-version-150-vf.pdf