Kansai Electric Power is withdrawing from a Queensland hydrogen production venture as mounting costs threaten the project’s viability, marking another setback for Australia’s green energy ambitions.
The Osaka-based utility notified partners Marubeni and Iwatani of its departure from the A$117 million ($75.6 million) initiative, which aimed to produce 70,000 tonnes of hydrogen annually by 2028. Both Japanese companies plan to maintain their involvement alongside Australian energy firm Stanwell.
The exit follows a design-and-planning phase that revealed significantly higher production expenses than initially projected. With electricity costs representing about 70% of production expenses and showing no signs of decline, the utility concluded the venture wouldn’t achieve profitability within an acceptable timeframe.
The move adds to a growing list of abandoned Australian hydrogen projects. Origin Energy halted its New South Wales development, while Woodside Energy Group withdrew environmental applications for its Tasmania project. The trend extends globally, with Shell canceling a Norwegian facility and Mitsubishi Heavy Industries abandoning its Hamburg venture.
Despite Japan’s recent legislation offering subsidies to bridge the cost gap between hydrogen and traditional fuels, Kansai Electric determined that importing hydrogen for its power plants remains economically unfeasible.
