We have been exploring the hydrogen supply chain and what the absence of affordable, safe, and scalable storage means for food, steel, and energy security. For this final instalment, we turn to energy — and to a question that is suddenly very urgent.
The Strait of Hormuz Is Not a Hypothetical
In April 2025, US military strikes on Iranian nuclear facilities triggered retaliatory threats to close the Strait of Hormuz — the chokepoint through which approximately 21% of global oil and liquefied natural gas trade passes daily (U.S. Energy Information Administration, 2024¹). Tanker insurance premiums spiked. Spot crude prices jumped. Governments that had been comfortable with 30-day fuel reserves began asking whether that was enough.
Australia’s position is particularly exposed. The Department of Industry, Science and Resources has acknowledged that Australia holds roughly 28–32 days of liquid fuel cover — well below the International Energy Agency’s 90-day stockholding obligation, which Australia has never fully met (DISR, 2023²; IEA, 2023³). The Hormuz crisis was a stress test. The next one may not be a drill.
The question is no longer whether long-duration energy storage is a strategic priority. It is: what replaces diesel?
Hydrogen Competes with Diesel, Not with Electricity
There is a category confusion in much public debate about hydrogen’s role in the energy transition. Hydrogen does not compete with batteries or EVs for short-duration grid balancing or passenger transport. When it comes to energy security, hydrogen competes with diesel — as a bulk, long-duration, transportable fuel that can sit in reserve for months and be dispatched on demand.
Consider the use cases diesel currently dominates:
- Remote and off-grid power — mining, agriculture, island communities
- Heavy transport — long-haul trucking, rail, shipping
- Backup generation — data centres, hospitals, defence facilities
- Strategic national reserves — the equivalent of the US Strategic Petroleum Reserve
Batteries are an essential and rapidly growing part of the solution for short-to-medium duration storage (2–12 hours). The cost of utility-scale lithium-ion storage has fallen to around USD $150–250/kWh and continues to decline (BloombergNEF, 2024⁴). For daily solar firming and grid frequency response, batteries are increasingly the right tool.
But batteries have fundamental physical limits for long-duration storage. At the scale of weeks to months, the capital cost of a battery system scales linearly with every additional hour of storage. Storing 90 days of national energy reserve in batteries is not a cost problem that learning curves will solve — it is an energy density and materials problem. A 90-day diesel reserve for a mid-sized economy would require battery installations measured in hundreds of terawatt-hours. For context, global battery storage capacity in 2023 was approximately 45 GWh (IEA, 2024⁵).
Hydrogen, stored as a chemical, does not have this constraint. The cost of additional storage capacity in a hydrogen system is primarily the cost of the storage vessel — not the energy conversion equipment. This is the structural advantage that makes hydrogen the credible long-duration alternative to diesel.
The Economics Are Now Competitive
The breakeven between green hydrogen and diesel has already been crossed in some markets. At a dispensed cost of AUD 10–16/kgH₂, the diesel equivalent breakeven is approximately AUD $2.20/litre — a threshold Australian consumers passed some years ago. More significantly, Chinese producers have demonstrated dispensed hydrogen costs of around AUD $5/kgH₂ (approximately USD $3.20/kg), achieved through cheaper renewable power, scaled electrolyser manufacturing, and integrated supply chains (China Hydrogen Alliance, 2021⁶; X. Zhao, Caixin, 2022⁷).
The cost curve is moving. The storage bottleneck is the obstacle that remains.
Why Existing Storage Technologies Fall Short
The incumbent bulk hydrogen storage options each carry a structural penalty:
- Compressed gas (350–700 bar): High-pressure vessels are expensive. Scaling storage means buying more tanks. CAPEX scales with volume.
- Liquid hydrogen (–253°C): Liquefaction consumes approximately 30–35% of the hydrogen’s energy content. Boil-off losses during storage can reach 0.3–0.5%/day (U.S. DOE, 2022¹⁰).
- Underground salt cavern storage: Low-cost at scale but geographically constrained to specific geology. Not deployable at a project site.
- Ammonia as a hydrogen carrier: Viable for shipping but requires energy-intensive cracking back to hydrogen at point of use, adding cost and infrastructure complexity. Its hazardous safety profile limits the locations suitable for storage.
None of these technologies enables a project developer, a mining operator, or a national reserve manager to say: “I need to double my storage buffer — how much does that cost?” and receive an answer that is linear and affordable.
Hydrilyte: The Infrastructure-Compatible Alternative
Hydrilyte® is a liquid, hydrogen storage technology — pumpable, storable at ambient pressure and temperature, and transportable using the same tanks, trucks, and infrastructure currently used for diesel. This last point is not incidental. It means that the transition from diesel reserves to hydrogen reserves does not require a parallel capital buildout of new storage and logistics infrastructure. It means the 28-day diesel reserve that Australia currently holds could, over time, be converted to a 90-day hydrogen reserve capitalising on assets that already exist and extending that tank infrastructure.
The critical economic characteristic of Hydrilyte® is that incremental storage capacity requires only marginal additional CAPEX — the cost of more storage medium, not more pressure vessels or cryogenic plant. This changes the calculus for supply chain resilience entirely. For the first time, a hydrogen project developer can build in a 30-, 60-, or 90-day buffer at a cost that is proportionate to the risk it mitigates.
This matters for three supply chain resilience scenarios that are now live, not theoretical:
- Geopolitical disruption — A Hormuz closure, a Taiwan Strait incident, or a Suez blockage can sever fuel supply chains for weeks. A 90-day hydrogen reserve, held domestically, is immune to that disruption.
- Renewable intermittency — Green hydrogen is produced from wind and solar, which are variable. A multi-week storage buffer decouples hydrogen supply from short-term weather events that curtail production.
- Infrastructure failure — Pipelines, terminals, and shipping routes are vulnerable to accident, cyberattack, and extreme weather. Distributed, ambient-condition hydrogen storage is inherently more resilient than centralised cryogenic or compressed storage facilities.
The Strategic Imperative
The US-Iran confrontation over the Strait of Hormuz has done what years of policy discussion could not: it has made energy storage a front-page issue. Governments are now asking, with urgency, how to reduce their dependence on imported liquid fuels and how to hold meaningful strategic reserves.
The answer is not batteries alone — they are the right tool for hours, not months. The answer is not continued dependence on diesel — its supply chains are the vulnerability. The answer is a transition to hydrogen-based long-duration storage, built on infrastructure that is safe, scalable, and affordable.
Hydrilyte® is the technology that makes that transition possible. It is safe — no high-pressure vessels, no cryogenic hazards. It is low-cost to scale — incremental storage at marginal incremental CAPEX. And it is infrastructure-compatible — deployable today, using assets that exist today.
An investment in Hydrilyte® is an investment in the resilience of hydrogen energy supply chains globally.