The deal came as Westpac said Australian hydrogen was well short of being commercial with production prices still at least five times above the level needed to be viable.

However, the Fortescue deal, which is for 25 years and for up to 337 megawatts, is conditional on it making an investment decision on Gibson Island by December this year. Bulli Creek also has to reach financial close.

Fortescue, led by Andrew “Twiggy” Forrest, has talked up the Gibson Island project and the plan has previously received $13 million from the Federal Government to progress studies.;

The power purchasing agreement would enable Genex and its joint venture partner, J-Power, to commit to the first stage of Bulli Creek at a minimum capacity of 450 megawatts. The PPA with Fortescue would provide 75 per cent of the contracted revenue stream.

“Concurrently, Genex is continuing discussions with external parties for further solar offtake which may allow the initial capacity of the project to be increased to 775MW,” the company said.

Genex has big plans for Bulli Creek, about 100km south west of Toowoomba. There have been plans for a 400MW battery with a potential capacity of the project estimated at 2 gigawatts.  It bought the project last year from Solar Choice.

“This would position the Bulli Creek solar farm as the largest solar farm connected to the national electricity market,” Genex said.

Genex expected to reach a financial investment decision on Bulli Creek in the second half of 2024 and first energy in 2026.

The Westpac report on hydrogen found that Australia had a distinct natural advantage to support a hydrogen industry but a lack of infrastructure and cheaper alternatives made its future uncertain despite investment announcements to the value of $127 billion so far.

It said Australia’s hydrogen industry progress was starting to stagnate.

“The reality of Australia’s lagging hydrogen performance has led some to curtail their ambitions. Between 2021 and 2023, the Australian Energy Market Operator lowered its 2050 hydrogen export forecast
by roughly 35 per cent,” the report said.

“At present, the costs of production and transport exceed what is needed to make the industry viable, although that is expected to change rapidly.

The report quoted Wood Mackenzie analyst Flor Lucia de la Cruz as saying: “A lot of hydrogen projects are going to fail, but the projects that been having the right conversations throughout the value chain will inevitably be the ones getting to FID.”

The report said the current price for hydrogen at the ActewAGL refueling station was between $10 and $15 a kilogram. However, it said green hydrogen would soon be cheaper than blue hydrogen, made from gas.