UK govt eying Chile’s emerging offshore wind market

UK government officials have outlined financial support available to domestic and Chilean firms developing or interested in developing energy projects in Chile.

The target segments are green hydrogen and its derivatives, energy storage, carbon capture and storage, and offshore wind.

The support will be delivered by export credit agency UK Export Finance (UKEF).

OFFSHORE WIND

Camila Jorquera, deputy country director for trade and clean growth at the British embassy in capital Santiago, said: “In the energy sector, even though our strength is driving forward and enabling commercial relations in the area of renewables, we’ve decided to categorize some sub-sectors that are very relevant for us, in terms of both the UK’s capacity as well as some needs and issues that we have seen which are relevant here in Chile.”

During a presentation held in collaboration with Chilean investment promotion agency InvestChile, Jorquera highlighted the wind sector, where investment to date has centered on onshore projects, chiefly in the north of the country and south of the capital. 

Installed capacity is 4.70GW, with 1.87GW under construction, among them Colbún’s Horizonte, while 205MW is in the testing phase. 

Despite technical challenges surrounding water depths along some stretches of coastline (relevant for fixed-bottom turbine deployment), Chile has a wealth of offshore potential. Building wind farms in the sea could circumnavigate development hurdles faced today by some renewable energy firms looking to build on land south of the capital. Demand for clean power for water electrolysis and desalination could potentially help spur investment in the technology.

“Yes, offshore wind is at a very, very early stage, as you’ll know, but we’re trying to activate this market,” Jorquera told decision-makers during a webinar to present the services available.  

The Chilean government recently announced an agreement to prepare an offshore wind development roadmap jointly with the US Department of Energy and the World Bank.

The British embassy in Santiago, meanwhile, is planning a knowledge-building Chilean trade mission to Scotland in August and was due to launch a call for interested parties. Scotland has over 2GW of offshore wind capacity, comprising fixed and floating turbines, and multiple gigawatts of projects in the pipeline. 

Mainstream Renewable Power, present in Chile, and partner Ocean Winds – a JV between EDPR and Engie and also in the Chilean market – were awarded rights to develop 2.3GW of floating capacity off the coast of the Shetland Islands, off Scotland’s northeastern tip. Ocean Winds was also awarded rights to build 2GW of fixed capacity further south.

UKEF SUPPORT

UKEF is offering support to both UK exporters of products and services and buyers or contractors of UK products and services in Chile. Solutions include trade insurance and guarantees, working capital support and loans. 

Officials consider UK content, transaction size and contract status, as well as due diligence and risk-analysis outcomes. Globally, via commercial lenders, UKEF delivers credit to governments and companies and, in the sphere of project finance, special purpose vehicles.    

UKEF services are also available to Chilean firms looking to invest in the UK.

HYDROGEN

Meanwhile, UK government trade officials are working on a participation program linked to industry conference World Hydrogen Latin America, scheduled to be held in Santiago in December, where matchmaking sessions are planned.  

Last year, a UK trade mission visited to coincide with the event, with the list of participating companies comprising wind energy developer 17 Energy, decarbonization consultancy Carbon Trust, control and automation firm Desitec, PV player Hive Energy, electrolyzer manufacturer ITM Power, construction machinery company JCB, engineering firm Ricardo, engineering and environmental services player RSK, professional services firm Turner & Townsend, solar PV module producer UKSOL, energy consultancy Voar and engineering and consultancy firm Wood. 

Chile has around 70 publicly announced green hydrogen and derivatives projects, chiefly located in Antofagasta and Magallanes regions, respectively. Pilot projects are operating, the biggest among them the Haru Oni e-fuels demonstration plant in Magallanes. 

State development agency Corfo is preparing a US$1bn green hydrogen facility to help derisk projects and trim the cost of capital, while German international cooperation agency GIZ is also working on the finance front. 

GIZ recently brought its Financial Service Assistance platform online. This is a trailblazing finance brokering service designed to help renewable hydrogen projects advance in Chile.

ENERGY STORAGE

In terms of energy storage, the Chilean government recently published a decree that provides clarity on capacity recognition, which should open the door for more investment in the segment.   

While lithium-ion batteries dominate the project pipeline today, interest is growing in other technologies that can inject energy for longer, including pumped storage and high-temperature sodium-sulfur solutions.

Indeed, the focus is expected to sharpen on longer-duration systems, which are also seen playing a future role in green hydrogen production. 

CARBON 

Chile is working to close or convert its roughly 5.5GW of coal-fired power stations and to eventually have an emissions-free grid.

Carbon dioxide is needed in the production of e-fuels, such as synthetic gasoline, and can be obtained from processing biomass or directly from the air.

E-fuels pioneer HIF Global, behind Haru Oni, last year said it would install a direct air capture system to obtain carbon dioxide for the plant. Founded in Chile and today with a presence and projects in various countries, HIF said it was working with German partners Porsche, Volkswagen Group Innovation and MAN Energy Solutions.  

E-fuels production, already underway at Haru Oni, is expected to eventually ramp up, initially via construction nearby of plant Cabo Negro, currently in the environmental review phase.