Chile US$50mn electrolyzer production push seen bringing dual benefits

Electrolyzer production in Chile will not only contribute to economic diversification efforts but also help accompany green hydrogen development, BNamericas was told.

In recent days, state development agency Corfo announced the awarding of US$25.6mn in grants to three business consortiums, which plan overall outlay in manufacturing and assembling facilities of more than US$50mn. 

The winning parties involve Chilean, Chinese and Spanish stakeholders, with initial work involving conducting studies, securing land and forming partnerships with local suppliers and providers.

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Two projects are planned for industrial hub Biobío region, and the other capital Santiago. Chile plans to use its abundant clean energy resources to power electrolyzers, which split water into hydrogen and oxygen. The resultant hydrogen can then be used in various applications or combined with nitrogen or recycled carbon dioxide, to create green ammonia and e-fuels, respectively.  

The award decisions follow various stages, including an expressions of interest call, for which companies submitted documentation in 2023.

Chile sees green hydrogen playing a role in decarbonization efforts and e-fuels and green ammonia in particular as new export opportunities. Key tasks facing the nascent industry, developing slower than originally forecast by authorities, surround getting projects permitted, driving down the cost of production and securing offtakers. 

Almost fully dependent on imported hydrocarbons, Chile has around 70 publicly announced green hydrogen projects involving multiple gigawatts of electrolyzer capacity, some targeting the export market, some domestic offtakers, others both. The bulk, by capacity, are in Antofagasta and Magalhães regions, with Biobío region seen presenting opportunities given its industrial base and existing infrastructure. Looking down the road, several offshore wind farms are in the early development phase in Biobío, plants that could potentially become a green hydrogen ecosystem component.

Pilot green hydrogen projects, the biggest among them HIF's Magalhães region Haru Oni, are operational, and several large-scale plants are in the environmental review phase.

As things stand, given the huge scale of some green hydrogen projects and associated demand, local component production would likely complement imports.  

BNamericas spoke with Ricardo Rodríguez, director of studies at local green hydrogen association H2 Chile, for his views on the significance of the development.

Rodríguez: The establishment of electrolyzer factories in our country is extraordinary news that, in addition to securing significant investments, will enable the activation of multiple productive linkages. This will create jobs that require advanced knowledge and help us to sophisticate our economy through the development of cutting-edge technology, a goal that Chile has pursued for a long time.

This objective is inspired by examples from economies that have transitioned from producing only commodities to offering competitive technology to the world, such as Finland, Australia, Singapore and South Korea.

Additionally, we observe that, in order to secure the Corfo financial incentive, business consortiums have been formed, combining international companies with extensive expertise in these technologies alongside local companies with key capabilities and specialties. This collaboration will enable the establishment of production processes and the manufacturing of highly complex products, which will undoubtedly generate valuable experience across the entire local value chain that must be deployed in parallel.

Another notable aspect to highlight is the possibility of generating new hubs of diversified and sophisticated economic activity, not only at the central level but also in other regions. Such is the case of the Biobío region, which has historically demonstrated great potential due to its industries and the knowledge generated by its universities, although it has faced the challenge of consistently creating job opportunities. In this context, the establishment of this industry will allow for the creation of more than 1,000 direct and indirect jobs, in addition to creating opportunities for entrepreneurs from various sectors.

Regarding the green hydrogen industry, having local electrolyzer-manufacturing capacity will facilitate the availability of this equipment for the projects under development in Chile. This will result in significant advantages, such as the geographical proximity between supply and demand, as well as access to precise and timely information about projects advancing in a shared ecosystem among all actors in the value chain.