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Chile seeks green hydrogen projects of 10 MW or greater

29 April 2021 Kevin Adler

Chile's government announced new tenders for green hydrogen projects of 10 MW or larger that could be operating by the end of 2025.

In all, $50 million is available to support projects by either domestic or international companies, according to the announcement on 20 April from the Chilean National Development Agency, known as Corfo.

"Our strategy contemplates the development of the fuel in different stages. First, we seek to produce for and clean our local industries, and once the industry is consolidated and sufficiently scaled, we will be able to export hydrogen," Minister of Energy and Mining Juan Carlos Jobet said in a statement.

Applications are due in September.

Chile presented its National Strategy for Green Hydrogen in November 2020, identifying three objectives:

  • Have 5 GW of electrolysis capacity under development by 2025
  • Produce the cheapest green hydrogen in the world by 2030
  • Be among the world's three largest hydrogen exporters by 2040

Supporting the program are research loans, 35% tax breaks on R&D expenditures, loan guarantees, and other incentives.

"These and other initiatives could make Chile a powerhouse of the hydrogen economy," said IHS Markit in a January analysis of the program.

Green hydrogen - hydrogen produced through electrolysis that is powered by renewables - can be produced in Chile from either solar or wind power, both of which have huge potential in the country, said IHS Markit.

"Unparalleled solar and wind resources and business-friendly power regulations facilitate renewable electricity generation at some of the lowest costs globally," IHS Markit said of the Chilean market. "The country's power market is oversupplied, and its renewables target for 2025 [of 20% of power] is already met, so renewable producers are open to hydrogen business opportunities."

Government estimates are that the country has nearly 1,700 GW of solar power potential and nearly 200 GW of onshore wind power potential. This is approximately 70 times the country's current energy needs, according to Corfo.

The national hydrogen strategy is off to a good start, said Jobet. "In November, we had 20 projects to develop green hydrogen, and we have already more than doubled that number to more than 40 projects to produce or consume green hydrogen in Chile," he said.

On the larger end of the scale of proposals is a partnership between two Austrian companies, AustriaEnergy and Ökowind EE, for a $3-billion green ammonia and hydrogen facility; it would be in the southern part of the country where wind power potential is abundant, the Magallanes Region. The partners would install 2 GW of wind capacity to run a 1.4 GW electrolyzer to produce green fuels.

A project announced last year as a partnership between Enaex, a Chilean mine services company, and international energy company Engie would construct a 2 GW solar farm in northern Chile, in order to produce green hydrogen from a 1.6 GW electrolyzer facility, with a possible startup of 2030.

In all, the proposed projects could require more than $12 billion of funding, according to Jobet.

But IHS Markit said that questions remain about how much private investment in Chile will materialize. "The global economic crisis and a debate over new constitution threaten Chile's ability to attract foreign investment. Investor uncertainty will be elevated during the next two years, until a constitutional referendum is finalized," IHS Markit said.

Strikes are also indicative of the challenges facing the economy. Some copper workers - Chile is the world's top copper producer, and global prices are now at their highest level in a decade - are currently on strike after being denied a pension withdrawal, and a general strike has been called for 30 April.

Posted 29 April 2021 by Kevin Adler, Editor, Climate & Sustainability Group, IHS Markit

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