UK-headquartered oil and gas company BP has announced it will invest $1.76m (AUD$2.7m) into an Australian scheme to study the practicalities of mass hydrogen production.

In a statement, the company said it aimed to “better understand the possibilities of using hydrogen to export renewable energy at scale”. It has also committed to releasing the results of the study to the public.

How will the BP hydrogen study work?

The feasibility study will use water to produce hydrogen, which would be converted into ammonia instead of using natural gas as a source. Production in Geraldton, Western Australia will start at 20,000 tonnes of ammonia per year, scaling up to one million tonnes per year. This ammonia will be used within Australia as well as exported.

The manufacturing process will require 1.5GW of power, which BP said it expects to be sourced from new renewable generation, “enabling the project to benefit from the advantaged solar and wind resource in the region”.

It is using its solar power joint venture BP Lightsource to advise on and provide generation for the project. However, it will also use grid power using a power purchase agreement.

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How this fits the Australian energy sector

Australia is heavily dependent on fossil fuels for its electricity generation. According to the country’s energy ministry, about 80% of its power comes from oil, coal and gas.

However, the Australian Government has put money toward clean energy innovation, including grants issued by independent agency Australian Renewable Energy Agency (ARENA). This agency is co-funding the project with $1.11m (AUD$1.7m).

The agency has listed the development of hydrogen as one of its three main priorities and has put $35.7m (AUD$55m) toward hydrogen projects.

It said BP selected the Geraldton site because of “its vast solar and wind resources, existing port infrastructure and proximity to large, long-term Asian markets”.

Energy consultants GHD Advisory will produce the final report into the study.

Executives’ view on the deal

BP Asia-Pacific COO Frédéric Baudry said: “Western Australia is the study location due, in part, to its vast solar and wind resources, existing port infrastructure and proximity to large, long-term markets for green hydrogen. The study further demonstrates BP’s long-standing investment and commitment to the region.”

The company’s gas and low-carbon energy executive vice president Dev Sanyal said: “We believe that green hydrogen will play an increasingly important role, not only as a new, clean energy vector but also in enabling the further growth of renewable power. This aligns with BP’s ambition to support the world’s decarbonisation agenda. This feasibility study is an important step towards developing a large-scale export project and understanding this hydrogen value chain in full.”

Ashley Wright, GHD’s chief executive, added: “We are not waiting for a clean energy future – we are building it with our clients and communities. Renewable hydrogen has the potential to be a significant part of the solution by decarbonising a range of industries where it is difficult to meaningfully reduce emissions any other way.”