A $6.3 million feasibility study is looking into whether facilities including Iona in Port Campbell could transition away from natural gas to storing green hydrogen.
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It comes as the Australian Renewable Energy Agency this month announced a $2 million contribution to Lochard Energy's 18-month feasibility study into large-scale hydrogen production and storage in the Otway Basin.
The H2RESTORE project would look to re-purpose some of Lochard Energy's existing underground gas storage reservoirs in the long term to safely store hydrogen in porous rock (sandstone).
ARENA chief executive officer Darren Miller said the issue of storage safety had been a major barrier to progress.
"Renewable hydrogen has an important role to play in helping Australia reach net zero, but cost-effective storage is a looming challenge for the industry," he said.
"Solving the storage issue will be critical to enabling renewable hydrogen to be used as a form of long duration energy storage in Australia."
The feasibility study, which began early this year, hopes to also develop a concept design for an initial pilot facility and progress the planning and design of a potential commercial underground hydrogen storage facility.
The commercialisation of underground storage of renewable hydrogen could help with the security of energy supply, firm power to the National Electricity Market and support the further development of a hydrogen economy in Victoria.
