How green hydrogen costs may play out in Peru

The levelized cost of green hydrogen plus transport in Peru in 2030 could be in the US$2.51-5.23/kg range, according to a study carried out by Engie Impact for the country’s hydrogen association H2 Perú.

During an online event to highlight the report, Engie Impact senior hydrogen manager Tomas Baeza said the cost range envisions 630-850MW of installed electrolyzer capacity and 960-1,300MW of installed renewable energy capacity.

The transport cost would represent 30% but drop to 14% and 13% in 2040 and 2050, respectively, on greater consumption, he added.

The cost in 2040 would range from US$1.78-2.48/kg with 3,350-4,530MW of installed electrolyzer capacity and 6,000-8,130MW of installed renewable energy capacity; and range from US$1.13-1.61/kg in 2050 with 9,400-12,700MW of installed electrolyzer capacity and 15,760-21,330MW of installed renewable energy capacity.

Baeza explained that the projections assume that goals to combat climate change are met, among other factors.

Heavy transport such as that used in Peru’s mining industry offers the most potential competitive use of the alternative fuel, according to the study.

"Mining is increasingly facing pressure, I would say more and more acute from regulators, investors, customers and the financiers themselves, to decarbonize their operations,” according to fellow webinar participant, Pablo de la Flor, head of local mining, petroleum and energy industry group SNMPE.

De la Flor said that 30-50% of greenhouse gas emissions from a mine come from diesel-operated vehicles.

"A switch from diesel to green hydrogen could be a quick and easy way to decarbonize, evidently as long as the cost structure justifies it,” he said.

H2 Perú president Daniel Cámac said green hydrogen not only would supply the domestic market but could be exported.

"[Peru could] be a great competitor in the major world leagues to supply the markets of Europe and Asia, which we know will be the great demand for green hydrogen.”

But for green hydrogen to take a hold in Peru, a national strategy and public promotion policies must be implemented, along with a regulatory framework of economic incentives and technical norms, said Cámac.

The report is available here and the publication of a position paper by H2 Perú is available at this link.