Chile green hydrogen: ‘For 24-hour energy, 100% renewable, we require storage’

A key challenge to unlock Chile’s green hydrogen potential concerns leveraging technology to drive down production costs.

A hurdle that projects need to clear is securing a steady supply of competitively priced clean electricity to power energy-hungry electrolyzers. 

“For electrolyzers we need 24-hour energy,” Jaime Pino Cox, Chile CEO of Canadian renewables player Innergex, told BNamericas. “For 24-hour energy, 100% renewable, we require storage.”

Cox underscored where work is needed, citing the fact that solar PV-storage power supply solutions are still not sufficiently competitive.

“Therefore, we have two challenges: one is to reduce the cost of energy 24 hours a day and to try to have more efficient electrolyzers that could possibly work with higher prices.”

Pino, speaking at the storage and green hydrogen conference Renmad Chile, held this week in Santiago, said the company was trialing electrolyzer technology in Canada but that renewables were still its primary focus.  

Thanks to abundant solar output, daytime electricity supply – in Chile’s north at least – is cheap but prices climb when the sun goes down. This poses a potential headwind for prospective green hydrogen producers. 

Pino’s comments about costs follow those made recently by the founder and chair of green ammonia project developer MAE, James Calaway, who said falling prices of solar PV and storage systems were nudging unit costs closer to the sweet spot. MAE is behind the US$2.5bn Volta green ammonia project, the most advanced of its kind in the country.

Battery prices have fallen 10% in the past year and the trend continues, the event was told. 

Volta is one of six utility-scale green hydrogen sector projects in the environmental review phase. The complex is planned for Antofagasta region, where the local government is working to build a development roadmap. Volta’s electricity would come from a planned 600MW solar PV plant that includes a battery storage system. MAE also plans to draw power from the grid but has underscored the headwind that system costs constitute.

Chile has multiple green hydrogen pilot projects operating as the country awaits final investment decisions on planned megawatt and gigawatt scale projects.

Energy undersecretary Luis Felipe Ramos told BNamericas that wheels were turning, citing Chile’s state-level green hydrogen push and the priority President Gabriel Boric has given to sector development.

"We hope that in these two years, from 2024 to 2026, the financial closure of green hydrogen projects will be achieved, to have developed and completed our 2030 goal with all the necessary infrastructure and regulatory framework development to ensure that this structure can be implemented within the objectives set in the 2020 national green hydrogen strategy and the green hydrogen action plan that is published," Ramos said. 

To help get investment flowing and send out signals about Chile’s commitment to hydrogen development, state development agency Corfo has built a US$1bn facility to help derisk projects and trim the cost of capital.

Corfo is now shifting its attention to stimulating local demand for green hydrogen and its derivatives. 

The agency is also offering subsidies to spur the creation of electrolyzer manufacturing or assembly plants on Chilean soil.

Mining

The mining industry, meanwhile, is demanding large volumes of clean energy, 24/7, at competitive costs, said Alfredo Solar, Chile and Southern Cone CEO of generator Atlas Renewable Energy.

Northern Chile, home to major mining operations, has optimal natural conditions for solar generation and storage and is the “cherry on the cake,” a key part of the solution, the event was told.

This comes amid prospects for greater demand for behind the meter solutions – to limit exposure to system costs – and for clean energy certification which, in turn, may help producers obtain price premiums for the likes of copper mined using low-emission energy. 

Against this backdrop, authorities need to address, for all electricity consumers, the issue of system costs, delegates heard. 

The price of electricity in Chile has trended down, driven by renewables technologies, but system costs – linked to multiple factors including complementary service charges, system flexibility limits and charges linked to a distributed generation price stabilization regime – have tended to work against these gains.

Regulatory challenges

Rossana Gaete, global hydrogen manager at generator AES Andes, said that, at the development stage, a regulatory focus concerned community relations. Another is environmental permitting, Gaete said.

Karla Chace, a fuels unit chief at the energy ministry, said a regulatory diagnosis had been conducted, looking at what work needed carrying out through 2030. Chace added that processes needed to be agile, to be able to adapt regulations to new technologies and requirements as they emerge. 

Public-private coordination and collaboration is needed – and being seen – to help projects advance, the event was told.