Hydrogen Price and Production Outlook
Hydrogen production in Australia in 2026 is estimated at approximately 1.0 to 1.4 million tonnes per year, reflecting a diversified production base spanning fossil-based hydrogen integrated with industry and expanding electrolysis capacity aligned with large-scale infrastructure.
Production volumes are governed by installed reforming capacity, electrolyser capacity, electricity availability and operating utilisation rather than short-term demand signals. Natural gas-based hydrogen supplies refining, ammonia and chemical manufacturing, while electrolysis contributes a growing share of output through grid-connected and dedicated renewable systems.
Production growth is driven by abundant natural gas resources, high-quality solar and wind availability and coordinated development of ports and industrial hubs. Pricing from a production perspective reflects feedstock costs, power procurement structures, capital recovery and balance-of-plant efficiency.
Key Questions Answered
- How scalable are gas and renewable electricity supplies for hydrogen production?
- How do power and feedstock costs influence production economics?
- How do utilisation rates affect realised output?
- How does infrastructure readiness shape capacity expansion?
Hydrogen: Product Families That Define How It Is Used
Product Classification
- Industrial hydrogen
- Ammonia and fertiliser feedstock
- Refining and upgrading
- Chemical manufacturing
- Energy and mobility hydrogen
- Heavy transport and mining fleets
- Port and logistics equipment
- Power and energy storage hydrogen
- Powertogas systems
- Energy balancing applications
- Hydrogen derivatives
- Ammonia
- Synthetic fuel intermediates
Industrial hydrogen and derivatives dominate production allocation. Ammonia functions as both a domestic input and the primary export carrier, shaping plant scale and operating profiles.
Key Questions Answered
- How do industrial users define hydrogen quality and continuity?
- How do derivatives influence storage and logistics decisions?
- How do purity and pressure requirements vary by application?
- How does product form affect plant sizing?
Hydrogen Production Routes That Define Cost and Output
Process Classification
- Steam methane reforming (SMR)
- Mature, largescale deployment
- Integrated with ammonia and refining assets
- Gaspricesensitive economics
- Autothermal reforming (ATR)
- Higher efficiency potential
- Compatible with carbon capture
- Selective deployment
- Electrolysisbased hydrogen
- Renewablepowered and gridconnected systems
- Largescale electrolyser installations
- Electricitycostdriven economics
SMR and ATR remain central to industrial hydrogen supply, while electrolysis represents an expanding component of total production supported by high-capacity-factor renewables.
Key Questions Answered
- How do production routes differ in cost structure and efficiency?
- How does feedstock availability affect output reliability?
- How do uptime and maintenance profiles vary by technology?
- How do producers balance multiple production pathways?
Hydrogen End Use Spread Across Key Sectors
End Use Segmentation
- Industrial processing
- Ammonia and fertilisers
- Refining
- Chemicals
- Energy and power systems
- Longduration storage
- Renewable balancing
- Transport and mobility
- Heavyduty vehicles
- Mining and rail equipment
- Fuels and derivatives
Industrial and derivative applications define baseload hydrogen production. Other sectors influence incremental allocation.
Key Questions Answered
- How do industrial users integrate hydrogen into operations?
- How do transport applications affect output profiles?
- How do power systems assess hydrogen storage value?
- How do derivatives expand production flexibility?
Hydrogen: Regional Production Potential Assessment
Western Australia (Pilbara)
Pilbara hosts the largest concentration of hydrogen production capacity, supported by gas resources, large-scale renewables and export port infrastructure.
Northern Territory
Supports hydrogen production through land availability, solar resources and proximity to Asian shipping routes.
Queensland and South Australia
Combine industrial demand with renewable generation and emerging hydrogen infrastructure.
Key Questions Answered
- How do regional resource profiles shape production economics?
- How does port access influence derivative production scale?
- How does infrastructure availability affect capacity growth?
- How do statelevel policies influence investment decisions?
Hydrogen Supply Chain, Cost Drivers and Trade Patterns
Australia’s hydrogen supply chain begins with natural gas and renewable electricity, followed by hydrogen production, compression, storage and conversion to ammonia for domestic use and export.
Cost structure is dominated by feedstock pricing, electricity procurement, capital expenditure and utilisation rates. Export logistics and conversion costs influence delivered economics.
Key Questions Answered
- How do feedstock and power prices influence hydrogen cost competitiveness?
- How do utilisation rates affect unit production cost?
- How do storage and conversion choices shape delivered cost?
- How do buyers benchmark Australian supply globally?
Hydrogen Production Ecosystem and Strategic Themes
Australia’s hydrogen production ecosystem includes gas producers, renewable developers, electrolyser manufacturers, ammonia producers, port authorities and government agencies. The ecosystem emphasises scale, infrastructure alignment and export readiness.
Equipment providers support reformers, electrolysers, compression systems and storage assets. Producers coordinate feedstock procurement, plant operation and long-term offtake agreements.
Deeper Questions Decision Makers Should Ask
- How secure is longterm feedstock and power access?
- How diversified are production technology supply chains?
- How bankable are export offtake agreements?
- How resilient is production to energy price volatility?
- How scalable is port and export infrastructure?
- How quickly can production efficiency improve?
- How robust are monitoring and safety systems?
- How aligned are federal and state strategies?
Bibliography
- Australian Government, Department of Climate Change, Energy, the Environment and Water. (2024). National Hydrogen Strategy Update. Commonwealth of Australia.
- Australian Renewable Energy Agency (ARENA). (2024). Hydrogen and ammonia production pathways in Australia. ARENA.
- USA Energy Information Administration. (2024). Hydrogen production, storage, and transport. Annual Energy Outlook Technical Appendix.
