Horizon Power has announced plans to build what it claims to be Australia’s first renewable hydrogen demonstration plant in Denham, Western Australia.

The first-of-its-kind demonstration project, named the Denham Hydrogen Demonstration Plant, is expected to help lead Australia’s energy transition towards the adoption of renewable energy.

Backed by A$2.6m ($1.9m) funding from Australian Renewable Energy Agency (ARENA), the project aims to test the technical capability of hydrogen as a dispatchable power source in remote microgrids.

The project will feature a 704kW solar farm, 348kW electrolyser, hydrogen compression and storage and 100kW fuel cell.

It will use renewable energy to power an electrolyser, which will produce hydrogen that will be stored and used later in a fuel cell to deliver electricity.

Horizon Power CEO Stephanie Unwin said the demonstration plant will extend the company’s knowledge and technical capability of hydrogen operating systems and test ways to implement the technology in remote diesel microgrids in regional Western Australia.

Unwin added: “This plant will demonstrate how hydrogen can reliably produce dispatchable power for our towns currently dependent on diesel fuel power systems and allow us to transition our network away from higher emission generating sources and meet our target of no new diesel generation systems from 2025.

“This technology has the potential to be an environmental game-changer for many remote towns in Western Australia and other similar locations around Australia, and allow greater uptake of reliable cleaner, greener renewable energy sources in the future.”

Planned to be connected to the Denham hybrid power system, the plant will generate 526MWh per year, which is equivalent to powering up to 100 houses in Denham.

Construction on the project is set to begin in August 2021 and the project slated to commence operations in December 2021.

The project will also receive funding from the state and federal governments as well as a further A$5.7m ($4.2m) financing from the Western Australian Government as part of its Recovery Plan.

Earlier this year, Horizon Power signed a gas sales agreement with Shell Energy Australia to secure gas for use in regional electricity generation.