SINGAPORE - Australia's Northern Territory government on Monday (Dec 13) gave its backing to a US$10.75 billion (S$14.6 billion) project that uses solar energy and water captured from the atmosphere to produce hydrogen.
The Desert Bloom Hydrogen project, which is expected to grow in stages south of Darwin, aims to eventually deliver around 410,000 tonnes of hydrogen a year for domestic and international export markets, including Japan, by 2028.
Mr Gerard Reiter, chief executive officer of technology company Aqua Aerem that is building the project, said he expects construction to start in 2022 and the first commercial scale production by 2023.
Aqua Aerem's majority shareholder is Sanguine Impact Investment (SII), a Singapore-based entity that sources its funds from Europe, North America and Asia.
SII is providing initial capital of A$1 billion (S$977 million) for the project and has also just reached an agreement with one of Japan's largest gas buyers and distributors to invest in the project.
On Monday, the Northern Territory government granted it major project status, which means helping with approvals and identifying suitable land, SII said in a statement.
Mr Reiter told The Straits Times the aim is to scale up the project in phases. The first phase will produce hydrogen for a gas-fired power plant in Tennant Creek south of Darwin by 2023.
Green hydrogen fuel is being viewed in Australia and globally as an alternative source of clean energy for industry, power generation, home heating and transport, especially for heavy vehicles. Australia, Germany, Japan and others have developed national hydrogen strategies.
Green hydrogen is produced using renewable energy and electrolysers that split water into hydrogen and oxygen. Burning it is much more climate friendly than fossil fuels, which produce large amounts of planet-warming carbon dioxide (CO2).
But a major drawback is the cost of production, which is still around US$3 a kilogram.
Those costs are falling as investment grows quickly and the prices of key equipment, such as electrolysers, fall. But project design, scale and location also matter.
Mr Reiter said the Desert Bloom Project aimed to reach US$2 a tonne by 2027, a level that would make it more cost-competitive with global natural gas prices.
He pointed to the project's large-scale, modular design and location, which is one of the world's sunniest areas.
The project, which will initially be based at Tennant Creek, close to an existing gas pipeline that links it to Darwin, will consist of a series of portable 2 megawatt hydrogen production units, or HPUs, that each generate water, heat, electricity and hydrogen.
By 2028, the project aims to have about 4,000 HPUs covering an area of about 10,000ha - approximately five times the size of Tampines town.
The hydrogen is compressed and piped or can also be mixed with nitrogen from the air to create green ammonia, which can also be used as a fuel, Mr Reiter said.
"We don't have to place all the modules in one spot - we can move them around as well. So that gives us a bit more flexibility," he said.
The aim is not to rely on local water sources. Each module will use a system developed by Aqua Aerem that captures water from the surrounding air.
"We have an absorber that absorbs the water out of the atmosphere as it comes past. And then we use solar thermal energy to release that water back," he explained.
"Deserts are quite interesting in that humidity does fluctuate quite a lot. People would think it's automatically very low. But that's not the case - it is seasonal and it changes daily."
The design means that more water and solar modules can be added to help local desert communities if they need more water and power, he added.