A $3.1 million pilot project to produce green hydrogen via electrolysis at an existing gas facility in Queensland has won $950,000 in funding from the Australian Renewable Energy Agency.

ARENA on Friday announced the funding for gas company BOC, to install a 220kW electrolyser and a 100kW solar array at its Bulwer Island gas facility in Brisbane.

The electrolyser, supplied by ITM Power, will be configured to produce hydrogen via electrolysis drawn from the onsite solar or grid sourced renewable energy via a power purchase agreement.

The project aims to produce up to 2400 kilograms of green hydrogen per month via electrolysis using the industrial gas equipment and infrastructure onsite, and includes a hydrogen refuelling station in Brisbane.

In addition to supplying BOC’s existing industrial customers, 50kg per day of renewable hydrogen would be produced by BOC for the vehicle refuelling station.

It would also reduce the need to transport fossil fuel hydrogen, which BOC currently produces at its Altona steam methane reformer in Melbourne.

The project comes amid a major global push to develop renewable hydrogen technology and infrastructure, as a potential key player in Australia’s increasingly renewable grid.

At this stage, the cost and difficulty of making it has confined renewable hydrogen to niches applications, but Bloomberg New Energy Finance believe the cost will likely plummet in coming decades – making projects like Bulwer Island all the more important.

“Once the industry scales up, renewable hydrogen could be produced from wind or solar power for the same price as natural gas in most of Europe and Asia,” Kobad Bhavnagri, BNEF’s head of special projects, said in the report on Wednesday.

“These production costs would make green gas affordable and puts the prospects for a truly clean economy in sight.”

ARENA CEO Darren Miller said BOC’s project would demonstrate the production and use of renewable hydrogen in refuelling, and in existing gas production and supply chains.

“BOC’s project is a great example of leveraging current industrial gas equipment and infrastructure, and will also trial renewable hydrogen in refuelling,” Miller said.

“Producing hydrogen on site will reduce shipping costs, while being able to help grow the local Brisbane fuel cell vehicle market and also meet demand from local industry.”

Miller said hydrogen was a “huge opportunity” for Australia, both economically and for the future energy market, but that it was still in its early stages.

“In Australia, hydrogen has applications across transport, heavy industry, and as energy storage injected into our existing gas networks. Internationally, we are well placed to become a leading exporter of hydrogen,” he said.

BOC South Pacific’s managing director John Evans said the project would leverage the gas company’s existing infrastructure and expertise to support the growth of hydrogen as a zero emission fuel.

“BOC is delighted to be working with ARENA and our project partners to establish a local supply of renewable hydrogen in Queensland that can be easily scalable and replicated across the country.

“Through this project, we will deliver added environmental value to our industrial customers and facilitate the introduction of hydrogen fuel cell electric vehicles in Queensland – while also enhancing our own production processes at Bulwer Island.”