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Meet the man charged with building SA’s hydrogen industry

Business

Sam Crafter is no stranger to working on major gas projects or with Labor state governments. But his latest role as the inaugural chief executive of Hydrogen Power SA promises to be his biggest challenge yet.

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The son of Bannon-era Labor minister Greg Crafter, Sam was a Labor staffer himself in the Weatherill government and returned to the public service last week on a reported annual salary of $550,000.

Other previous roles included as chief development officer with SA hydrogen company H2U and seven years with oil and gas giant Santos.

Crafter has been brought in to drive the emerging hydrogen industry in South Australia, an industry the Malinauskas Government believes can create greater stability in the SA electricity network by smoothing out renewable energy supply and demand, creating hundreds of jobs and leading to major export opportunities.

Among the first tasks Crafter faces is to oversee the design, construction and commissioning of a $593 million state-owned hydrogen power plant near Whyalla, a key plank of the government’s Hydrogen Jobs Plan, which it took to the March state election.

The project is set to include a 250MWe hydrogen electrolyser, a 200MW combined cycle gas turbine generator principally fuelled by hydrogen and a 3600-tonne hydrogen storage facility that will equate to one of the world’s biggest hydrogen power plants.

Premier Peter Malinauskas used his presentation at last week’s Australian Hydrogen Conference in Adelaide to announce the opening of a six-week market sounding process calling for design and delivery concepts for the Hydrogen plant.

Other major hydrogen projects in SA include the nearby Port Bonython Hydrogen Hub, which has received $70 million in federal funding, $30 million from the state government and is expected to generate a further $40 million in private investment.

The state government last year short-listed seven potential projects at the hub involving the companies Santos, Fortescue Future Industries, Origin Energy, H2U, Neoen, Chiyoda, ENEOS Australia, Mitsubishi Australia, and AMP Energy.

InDaily sat down with Crafter on just his second day in the role last week to find out why he is the right man for the job and how he is going to go about achieving its lofty goals.

Q: What is the timeframe around the hydrogen power plant?

A:  There is a two-year construction period so we need to be getting going with construction by the middle of 2023. All of the planning and pre-feasibility work is what we’ll be doing between now and then.

That would land us in the middle of 2025 with a period to commission and make sure that everything is operating by the end of the year.

My work in the coming weeks is to map that out and get it into a detailed schedule.

 We’ve put out this market sounding to say ‘we’re really interested to hear about your concepts and how you think we should go about it.

Everyone has got different ideas and there are some clear parameters that the government laid out about what needs to be achieved but what we are trying to do is understand from industry how they think we should do it and then we’ll use that information to better understand where the market is at with things but also to design a procurement strategy so we can get some competition going for supplies from around the world.

Q: What qualifies you to run such an important project?

A: I’ve worked with industry and government and I’ve worked with small business in the industry side of things as well.

My last experience in government was running the team that built the big battery and we built 276MW of temporary generation and we did that in nine months so I’m quite comfortable working to tight timeframes, it provides lots of challenges and lots of opportunities.

I also had seven years at Santos working in Adelaide, in Queensland and in New South Wales. I worked across public affairs but ended up on the management team of the NSW business when we purchased Eastern Star Gas.

I was also one of the first 10 people working on the LNG project at Gladstone in Queensland just as the whole energy market was transitioning to build out the east coast LNG developments.

Q: What did you learn from the Gladstone experience that could help shape this project?

A: If you think about what we’re trying to do in South Australia, we’re trying to develop a new industry in hydrogen more broadly.

We’ve got the project immediately that the government is looking to develop in the next four years but we’ve got a whole lot of other investors coming to South Australia and we want to build this hub concept where we can really turn it into an export business over time and that’s what has happened with LNG.

The learnings from that are really important because what happened in Gladstone if you talk to people up there is they felt like industry came in, they built things and they left.

While there is an ongoing operation, there wasn’t that ongoing benefit and people think there was a missed opportunity there so one of the things we need to do is learn from some of those experiences.

When you are developing export-scale industries that are going to be here for 30, 40 or 50 years you need to get that right in the beginning – the planning, the collaboration and you need to ensure all the work is done in a way that can grow out the opportunity for South Australia.

In Gladstone, a lot of the big facilities are maintained by people who fly in to do the work and then fly out so it doesn’t really benefit but hopefully with Whyalla and the Upper Spencer Gulf we can really build an ecosystem that is local.

 Q: Why is a state-owned power plant needed to drive the industry?

A: Because of the rate of change in the energy market at the moment with all of the coal-fired stations closing. In South Australia we don’t have all the generation we need at all times and the move away from the temporary generators, which have now been sold, means there’s not really a backstop.

The other perspective is that we’ve got so much solar coming into the system in the middle of the day that we’ve got more energy in the system than it’s meant to have.

The opportunity is there to have a flexible energy load like an electrolyser and power generator in the energy mix to help manage and smooth out some of those grid-based issues.

Then you’ve got the market side, which is around how the energy is used and sold into the grid to provide cheaper energy for all South Australians.

Queensland still owns all of its own generation so it has got enormous advantages in how it manages this transition.

Our power generation model is a bit like the big battery model too – the government contracted the battery to provide backup services in the market when we needed it, which worked well at the time.

The government has made it clear that it’s an asset that they want to be able to own and operate and they’ll need to do that in a way that doesn’t impact other investment and it’s our challenge to get that model right.

But the risk of not having it is far greater.

It will be able to make a significant difference – if you speak to ElectraNet or SA Power Networks – a flexible load in that region of 200MW in that part of the network will add enormous amount of system strength, flexibility and system security.

Q: There has been a lot of talk about Whyalla being on the cusp of a boom since Sanjeev Gupta took over the town’s embattled steelworks in 2017, is hydrogen going to be the catalyst that Whyalla has been needing?

A: Absolutely. I think hydrogen is a really big opportunity. Where Whyalla sits, you’ve got all of the renewable energy resources in the north of the state converging in the area and the current challenge is that those renewable projects are going to be very hard to develop if it’s just supplying power to Australia and South Australia because there is just too much power sitting out in those planned projects.

So how do we capitalise on that and make those projects happen? It’s through converting it to hydrogen and derivative products like ammonia so they can be exported to places like Europe, Japan and Korea.

There is a lot of focus on building a power station, which is important, but I think the real opportunity in doing it in the timeframe that we’ve got is to capture the supply chain industries.

If we can meet those timeframes then we will be one of the first to build in the Australian mix but we will also be one of the world-leading projects.

In doing that it means the supply chain for the hydrogen production, the power generation, the site works can be established and the renewable energy integration with that facility can be put in place in South Australia.

The bigger picture is that once we get that supply chain established here then they can really service the east and west of Australia from here in South Australia.

If we are the fourth, fifth or sixth project in the line then it is going to be much harder to advance that local supply opportunity.

Q: How are we placed in terms of workforce and the deep pool of skills required to build and operate the plant?

A: We’re lucky in some respects that South Australia is being funded to lead a COAG project looking at skills in the hydrogen industry and we’re looking at working actively with TAFE to build up some of the skills needed on the ground and we’ve also got a range of programs with the universities.

We’re also lucky that some of the other research in this space is centred in South Australia – the heavy industry low carbon transition CRC that the University of Adelaide has got up and running has a project they are focusing on in the Upper Spencer Gulf so we can collaborate with them to tackle the sorts of issues we are looking to address.

There will still be some external labour required to build things like any large-scale project but we’re looking to try and build that up.

The one thing that Gladstone has done well over the 30 years of being an industrial workforce is people from Gladstone now fly out to the rest of the country to build projects and you could look regionally at Whyalla and its potential to build that kind of skills base between the steelworks, this project, the developments at Port Bonython and the northern water supply project, so there is a lot happening in that area and if we can make sure that the skills base assembles there and stays there then it is a huge opportunity.

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