Auditor-General Reveals $285 Million Spent on South Australia’s Hydrogen Project

The South Australian Government has spent over $285 million on its now-cancelled Whyalla hydrogen power project, according to a recent Auditor-General report tabled in Parliament. The funds were spent over three years by the state’s Office for Hydrogen Power, which was dissolved in May 2025 after the ambitious project was shelved.

The Malinauskas Government had originally allocated $593 million to build a hydrogen power plant in Whyalla, establishing the Office for Hydrogen Power in May 2022 to deliver on pre-election hydrogen and renewable energy commitments. However, the project was effectively cancelled in February 2025 amid rising costs and private sector pullouts from green hydrogen projects across Australia.

How the $285 Million Was Spent

The Auditor-General’s report detailed that:

• $209.2 million went to capital costs, of which $85.7 million was written off as it related to early works for hydrogen production and storage that are not expected to generate direct economic benefits.
• $53.4 million covered operating expenses for the office.
• $12.5 million was spent on land acquisition in Whyalla.

“This accounting treatment recognises that there is insufficient certainty that economic benefits will flow to the state,” the report notes.

Government Response and Recovery Plans

The state government confirmed that much of the cost could still be recouped by selling four gas turbines purchased for the hydrogen plant. These turbines, with a total capacity of 200 megawatts, are expected to be valuable in the private market, potentially offsetting a large portion of the expenditure.

Energy and Mining Minister Tom Koutsantonis said:

“We’re buying generators, and these are assets with real value. The sales process has already started, and given global demand for such generators, we expect to recover much of the investment.”

The Department for Energy and Mining, now responsible for hydrogen, confirmed that the turbine sale process began in early August 2025. While $85.7 million has been classified as having “no immediate economic benefit,” Koutsantonis explained that this is a standard accounting practice for cancelled projects, similar to previous infrastructure projects such as the Port Dock rail extension.

“The infrastructure and studies from the hydrogen plant—including substations, transmission lines, and engineering work—can be reused in other projects. We retain the intellectual property and lessons learned, which adds long-term value,” he said.

Political and Industry Reactions

The state opposition criticized the expenditure, calling it an “eye-watering gamble” and highlighting the significant financial risk of the cancelled hydrogen project. Shadow energy spokesperson Stephen Patterson said:

“Over $285 million spent in just three years on a project now destined for the scrap heap is a stark reminder of government mismanagement.”

Despite criticism, the Malinauskas government emphasized that the investment and experience gained from the hydrogen project will contribute to South Australia’s broader energy transition, particularly in renewable energy infrastructure and green hydrogen knowledge.