The Horizon Power-led project in the town of Denham, 800km north of Perth, will test the technical capability of using hydrogen as a power source in remote microgrids and help the technology become commercially viable.
Denham was chosen by Horizon due to the close proximity to quality wind and solar resources and land and water availability.
The plant will consist of a 348kW hydrogen electrolyser with accompanying compression and storage and 100kW fuel cell, alongside 704kW of solar that will power the electrolyser to produce hydrogen for storage which can be later used in the fuel cell to deliver electricity when needed.
The federal government announced Friday it would commit A$2.6 million to the project via the Australian Renewable Energy Agency, while the WA state government has put A$5.7 million towards it as part of its COVID-19 recovery plan.
"The Denham project will keep Horizon Power at the leading edge of new technologies as we work towards the McGowan Government's ambition to achieve net zero emissions by 2050," WA energy minister Bill Johnston said today.
"The plant will extend Australia's knowledge of hydrogen operating systems, and test the possibility of implementing microgrids and hydrogen technology into other regional power systems across the State."
Construction starts in August, with commissioning to commence in December.
Horizon said it will work closely with local and surrounding regional businesses and the community to identify supplier opportunities.
If the project is successful, Horizon will look to scale up the solution with increased hydrogen and solar penetration and replicate the technology in other remote power systems across its portfolio.
"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," Horizon Power CEO Stephanie Unwin.
Horizon has aims to phase out all of its diesel generation systems by 2025.