The Southern Green Hydrogen project was envisioned as a transformative opportunity for Southland, leveraging the Manapōuri hydro-electric plant to produce green hydrogen or ammonia for domestic use and export, particularly to Asian markets.
The project had an important role in the diversification of the region’s economy and was a pivotal part of Great South’s Beyond 2025 Southland regional long-term plan, which estimated it could provide about 140 jobs and $760 million annually to Southland’s GDP.
Meridian Energy chief executive Neal Barclay said the project was an unique opportunity to leverage New Zealand’s renewable resources and support global markets to achieve their carbon reduction commitments.
However, global inflationary pressures have presented significant headwinds for the project.
Meridian decided to not progress to detailed design until the economic prospects for the project improve.
"The economics of producing green hydrogen at scale in New Zealand have become more challenging and this is consistent with what we are seeing in other hydrogen projects overseas.
"Markets have been slow to resolve the gap, between the cost of producing green hydrogen and potential customers’ willingness to pay for it."
Mr Barclay said the company would continue to actively monitor the target markets, as they believed Southern Green Hydrogen remained well-placed to be a competitive green hydrogen opportunity.
"We will review the opportunity to progress the project when the time is right."
Great South chief executive Chami Abeysinghe said they worked closely with Meridian and they had been alerted beforehand about the decision.
"But of course it doesn’t mean that we’re not disappointed.
"As far as we understand, it has hibernated and I know they’ll work hard if there are opportunities to revitalise it again; they definitely will — it just doesn’t seem like it’s the right time now."
She said Great South would continue to work with partners to seek out opportunities for Southland, or if hydrogen could be developed at a different scale.
If there were different interested parties, they would definitely support them as well, she said.
"Just because green hydrogen is gone, doesn’t mean that that’s the end of our sort of economic growth.
"We’ve got so many different opportunities, so maybe just at this point in time, we concentrate on developing aquaculture, for example, and that will drive the economic growth that we want."
Southland Business Chamber chief executive Sheree Carey said they remained optimistic about Southland’s future in renewable energy.
The region’s strategic advantages, including its established renewable energy infrastructure and potential for large-scale production, would continue to position Southland as a key player in New Zealand’s transition to a low-carbon economy, she said.
Invercargill Mayor Nobby Clark understood the reasoning behind the decision.
"I’m naturally disappointed, but the economic factors including power pricing and market demand need to be improved to make [the] investment worthwhile.
"When those factors improve, which may be years away, I hope Invercargill is still the preferred location to build the plant."
During Meridian Energy’s presentation yesterday, Mr Barclay said its full-year net profit was $429m — a rise of more than 400% from last year — which reflected its operating strength prior to the onset of a drought in May.
