Chile green hydrogen momentum building

Chile is poised to see an uptick in activity on the green hydrogen project development front over the coming months.

A portfolio of five projects granted subsidy support by state development agency Corfo should advance further, given they are due to enter service by the end of 2025. 

The biggest among them – generator Enel’s Faro del Sur – is expected to enter the environmental review system by year-end, BNamericas was told on the sidelines of the Hyvolution Chile conference being held this week in Santiago. The others are planned for brownfield sites that already have corresponding environmental licenses.

Targeting windswept southern region Magallanes, Faro del Sur comprises a 300MW wind park and 240MW of electrolyzer capacity to produce green hydrogen for an export-scale synthetic fuels plant planned by partner HIF Global.

An original environmental impact study for Faro del Sur was pulled from review agency SEA in late 2022 following a dispute surrounding the permitting process.

A US$50mn subsidy pot has been earmarked for the five projects – money that will be disbursed to developers to help cover electrolyzer acquisition costs once the plants are up and running.

The subsequent phase would involve scaling up, Ana María Ruz, executive director of Corfo’s green hydrogen development committee, told BNamericas. “The projects that we are co-financing with the US$50mn of Corfo subsidies is the first stage,” said Ruz, adding that the next would involve ramping up capacity. 

“Given that these five need to be operating by December 2025, they need to achieve financial close for the projects now, in 2023, in order to place their orders for electrolyzers, to build, etc.”

Along with Faro del Sur, the other subsidy recipient projects are HyEx (26MW electrolyzer capacity, green hydrogen for green ammonia production, Antofagasta region), Amer (80MW electrolyzer capacity, green hydrogen for e-methanol production, Antofagasta region), Quintero green hydrogen (10MW, green hydrogen, Valparaíso region) and H2V CAP (20MW electrolyzer capacity, green hydrogen, Biobío region).

Overall, some US$155bn in green hydrogen project investment is projected for 2025-2030, according to Corfo forecasts. Engineering and studies work is underway, with the next phase for many involving permitting. 

Among the most advanced projects in Magallanes are those planned by HNH, HIF Global and Total Eren. Chilean state-owned oil company Enap is joining forces with the three firms to turn Laredo port terminal in  Magallanes region into a green hydrogen logistics hub.

ALSO READ: How Chile’s Enap plans to spend US$3.5bn in 2023-27

Of the expected outlay cited by Corfo, US$110bn targets Atacama region and US$45bn Magallanes region. Both have abundant renewable energy resources and existing logistics infrastructure, with the north also home to many potential domestic offtakers, including the copper mining industry ecosystem.

Corfo last week announced a US$1bn facility to help de-risk projects and trim the cost of capital. Built using multilateral financing, the facility – due to be launched next year – is seen not only as a concrete measure to help the fledgling sector take flight but also as a demonstration of Chile's state-level push to build a green hydrogen industry. 

According to June data from the hydrogen association H2 Chile, 50 projects have been announced publicly in Chile: 62% are geared to renewable hydrogen, 30% green ammonia, 4% methanol and 4% synthetic fuels. Some target the domestic offtake market, some the export sector, with Europe and Asia seen as key destinations.

Chile already has a green hydrogen strategy; an associated development roadmap, or action plan, is due to be completed and put out for public comment in August.  

Corfo has been assigned funds for associated institutional strengthening work.

PERMITTING BILL

Challenges and tasks facing Chile include continued renewables development, skills training, product certification, regulations and permitting. 

Regarding the latter area, the government is drafting a bill that streamlines the permitting system – typically seen today as a pain point for project development in general, given its complexity. Officials are working with representatives and stakeholders of different sectors to identify where action is needed, the conference was told.  

SEA is also working on green hydrogen-related rules. 

Officials underscored the importance – on the part of project developers – of submitting well-prepared projects for evaluation and engaging in early-stage community relations work.

In Latin America, Chile’s green hydrogen and derivates industry is in the vanguard but still remains in the nascent phase. It should gather steam over the next several years, starting with the commissioning of megawatt-scale plants targeting domestic offtake followed by gigawatt-scale export complexes from around mid-decade onwards.