Alternative fuels: Pioneering Chile dimethyl ether project advancing

Offtakers are being sought for output from a trailblazing Chilean sustainable fuels pilot project, BNamericas was told.

Branded Power-to-MEDME, the project is being engineered by the Chilean branch of German applied research institution Fraunhofer and shifts into the final investment decision phase in 2025.

Heading a consortium, the Chilean unit of German industrial gas company Linde – pre-assigned US$15mn of financial support from Berlin – would build the roughly US$90mn project, which is designed to produce, from green hydrogen and captured carbon dioxide, methanol and 5,000t/y of derivative dimethyl ether (DME).

With handling properties similar to LPG-type propane, DME, an efficient energy carrier and fuel, can be used as a conventional LPG substitute, with relatively minor modifications in final applications. DME, among other uses, has been employed in the US and Asia to fuel heavy trucks and boilers. 

Depending on the final project plans, the Antofagasta region production facility could be built at the 110MW concentrated solar plant Cerro Dominador and draw power from it. 

Carbon dioxide would be captured during the production process at cement producer and consortium member Cementos Bío Bío. Natural gas distributor Lipigas is the third member.

With the project in the advanced studies phase, attention is now tightening on securing offtakers, Fraunhofer Chile new technologies chief Marco Vaccarezza told BNamericas, adding that pilot projects like this are vital to break the initial inertia and build confidence, know-how and local capabilities, key conditions for later scale-up. 

Vaccarezza said: “That’s the challenge we face, on top of the others, such as permitting and regulations. But without demand, all the rest becomes secondary considerations. There is interest – we're conducting several conversations and meetings, but nothing firm yet to place the production, get a final offtaker, for this 5,000t [a year] of dimethyl ether.”

As things stand, the target is to make a final investment decision in 2025 and have production underway in 2027-28.

The offtake challenge is similar to that faced by other developers worldwide, given green hydrogen and derivatives will initially struggle to compete price-wise with fossil fuels, which, globally, attract trillions of dollars in annual subsidies. 

Vaccarezza said a major effort in Chile – citing as an example initial feed-in tariffs that helped the solar PV sector gain traction – was needed to unlock green hydrogen’s potential. 

“Solar is simpler, and the hydrogen value chain is more complex, but if there’s no push, no strong incentives, this industry will struggle to launch,” he said, citing the potential of contracts for difference to help bridge the price gap in the early phases.

Potential Power-to-MEDME offtakers are mining firms, which could use the fuel, either blended with LPG or diesel, or neat. This would help trim the emissions of their diesel-guzzling fleets without major retrofitting needed, in turn, easing investment demand on the offtaker side. Also, DME could be used in large boilers for feeding process heat in industries such as mining and agroindustry.

Meanwhile, echoing comments made by European hydrogen financing officials, Vaccarezza said demonstration plants like Power-to-MEDME were key to building hydrogen economies. 

He said: “We think it is vital to develop industrial pilot projects. The technology is not new… the novelty is that hydrogen can be part of other energy systems.”

Power-to-MEDME involves construction of a 12MW electrolyzer plant, capable of producing 5,000t/y dimethyl ether – the equivalent of 3,500t/y of LPG – and with potential to later ramp up production tenfold and electrolyzer capacity to almost 200MW, in turn, reducing unit costs. 

During the process, water extracted from intermediary product methanol would be recycled and fed back into electrolyzers, helping ease water demand in the arid region. 

Other project components include a carbon-capture unit at the cement plant.

Industrial-scale green ammonia and synthetic gasoline plants are planned for Chile, which has to import almost all hydrocarbons it consumes. 

In terms of pilots, demonstration synthetic gasoline, or e-fuels, plant Haru Oni was built in Magallanes region, the biggest of several pilot projects operating in the country.