Global Energy Ventures’ Tiwi Islands compressed green hydrogen project ticks all the boxes, says Edison

The development signals the company plans to become a vertically integrated producer and supplier of compressed green hydrogen.

Global Energy Ventures Ltd (ASX:GEV)’s planned development of a 2.8GW green hydrogen export project in the Tiwi Islands proceeds apace, leading Edison Investment Research Ltd to initiate its latest report on the company.

GEV’s project consists of an 1800-hectare solar farm connected by a 30-kilometre energy transmission line to a hydrogen production site near an existing industrial port.

Compression and loading facilities will be co-located, enabling the green hydrogen to be loaded onto GEV’s own compressed hydrogen ships.

The solar farm has been assessed to have the potential for 2.8GW of solar generation, sufficient to produce up to 100,000 tonnes of green hydrogen a year.

This development signals the company plans to become a vertically integrated producer and supplier of compressed green hydrogen.

Feasibility studies that would support existing modelling assumptions are expected by early 2023. These are expected to show attractive internal rates of return for a 430-tonne pilot vessel fleet and for the far more efficient 2,000-tonne vessel design.

The project is slated to become operational in 2026, which will coincide with the availability of the first compressed hydrogen ships.

External reliance risk removed

The project will remove a key risk for GEV – external reliance on the supply of green hydrogen. This brings several advantages including proof of concept, security of supply, cost discovery and supply competition into the equation.

The company’s assumptions are underpinned by falling costs – initial modelling assumed that a supply of green hydrogen would be available to purchase from third parties at a delivered price of US$4/kg.

Edison believes that the Tiwi Hydrogen Project would allow GEV to capture the producer’s margin, while also helping manage the delivered cost of hydrogen to the customer.

As technological advances are made in the future, the cost of green hydrogen production has the potential to fall further.

In its analysis, Edison points to the cost of installed solar panels, which fell around 82% between 2010 and 2020 – a trend that will only accelerate.

Proximity to markets

The Tiwi Islands are among the most northerly location in Australia, which is strategically important for shipping green hydrogen to emerging markets across the Asia-Pacific, including Singapore, Indonesia, South Korea and Japan.

This location also takes advantage of GEV’s compressed hydrogen shipping solution. The need for costly hydrogen storage is removed and there are minimal requirements for battery storage, as the production and loading of hydrogen will ‘load follow’ the daily and seasonal solar fluctuations.

Importantly, it has the support of local stakeholders including the Tiwi Land Council, the Munupi Landowners and the Northern Territory Government. Unlike a mining or resources project on the Australian mainland, there are no Native Title agreements required.

Low environment and cost impact

The site has optimal climate conditions and is on previously cleared land. It, therefore, has a low impact on the existing environment.

GEV will install small-scale desalination facilities to produce the demineralised water for the electrolysers. In the longer term, local water catchment has potential to supplement the project with fresh water.

If successful, the project is expected to prove the concept and the economics of green hydrogen production, compression and transportation from Australia to markets in South-East Asia.

The scalable nature of the project allows GEV to develop a phased approach, initially installing 0.5GW of solar generation, rising to the full 2.8GW to follow demand.

This phased approach allows GEV and its customers to benefit from cost and efficiency improvements in photovoltaics, electrolysers and shipping.

Compression of the hydrogen will occur prior to loading, which avoids the complex and capital-intensive process to ‘pack and unpack’ pure hydrogen gas that is required by other forms of hydrogen transportation such as liquified hydrogen, ammonia, or liquid organic hydrogen carriers. This is critical for the end user in the supply chain.

Jobs in the region

The area has a population of approximately 2,500, and the project is expected to employ around 50 people at full production. GEV says it will focus on skills training and jobs to progress the project and support the local communities.

The company has secured Northern Territory Government support and will go on to seek federal infrastructure funding and support given the new, sustainable industry and economic opportunities for the Indigenous communities on the Tiwi Islands and the wider population in the Territory.

What’s to come

Edison has intimated that there is likely to be a long list of news events to follow in the coming months.

“We believe it is likely that GEV will make further announcements periodically relating to key milestones as the project is worked up,” the report said.

“These are likely to include the results of studies, permissions and potentially agreements with third parties such as joint venture partners or offtake customers.”

The main potential announcements on the horizon include an internal pre-feasibility study, full feasibility study, Environmental Protection Agency (EPA) approval, and financial investment decision.

Announcements will ramp up again when the company commences construction on the solar farm and the installation of electrolysers in 2025 and commences electricity and green hydrogen production in 2026.

Source: Susanna Nelson – Proactive

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