Frontier Energy Ltd (ASX:FHE, OTCQB:FRHYF) is poised to become the first commercial green hydrogen producer in Australia after revealing its strategy for offtake from the Bristol Springs Renewable Energy Project in Western Australia
The offtake pathway highlights the project’s low initial capital expenditure and operating costs for stage one production of green hydrogen at the project.
Frontier's strategy hinges on various established domestic markets that are accessible and primed for early offtake of green hydrogen.
The highlighted markets include those where hydrogen can serve as a viable alternative to existing carbon-based fuels, without necessitating major technological shifts, mass acceptance or legislative adjustments.
Moving forward, the Federal Government's $2 billion 'Hydrogen Headstart' program promises to offer substantial support to the burgeoning Australian hydrogen industry.
First mover advantage
Frontier managing director Sam Lee Mohan said: “At Bristol Springs, we have structural advantages by virtue of the infrastructure surrounding the project.
“We also have an important first mover advantage, having recently completed our definitive feasibility study (DFS).
“The nearby Landwehr Terminal connecting to the SWIS provides potential for electricity sales in a ready-to-access market that is forecast to require an increasing amount of renewable generation.
“Frontier’s partner Waroona Energy is rapidly progressing its study of a Dual Fuel Peaking Plant to capture this opportunity and generate early cash flow.
“The DBNGP provides opportunity for green hydrogen gas offtake to local consumers by blending with domestic gas, subject to regulations being put in place.
“Utilising the recently announced Hydrogen Headstart funding support that is currently being scoped in detail is a prerequisite to finalising offtake.
“Frontier continues to work closely with government and to engage a broad range of potential customers, including potential hydrogen gas foundation customers, to secure commercially attractive offtake in the medium term.”
Dual fuel peaking plants
Frontier has identified the energy storage and power generation sector, particularly dual fuel peaking plants, as an immediate opportunity.
This comes with the backdrop of the sector's technological maturity and the well-established electricity generation market.
Frontier's connection to Western Australia's (WA) electricity grid aligns seamlessly with the WA Government's plans to legislate a 1% renewable hydrogen target for electricity generation on the South West Interconnected System (SWIS).
Blending hydrogen with natural gas
Blending hydrogen with natural gas into the Dampier to Bunbury Natural Gas Pipeline (DBNGP) for domestic gas supply is another advanced market.
Studies on the DBNGP have shown up to 9% hydrogen could be injected immediately.
Stage one production would equate to less than 0.5% by volume within DBNGP.
Frontier has entered a collaboration agreement with AGIG (Australian Gas Infrastructure Group), owner of the DBNGP, and continues engagement with potential foundation customers, most notably major LNG gas traders and producers.
Diesel replacement
In the medium term, the long haulage transport industry (diesel replacement), appears to be one of the more lucrative sub-sectors and is technologically advanced.
An increase in vehicle availability and refuelling stations is, however, required before this market consumes significant volumes of green hydrogen.
Frontier is finalising plans for the first publicly available hydrogen refuelling station in central Perth during the second half of this year.