Investment funds could ride LatAm’s nascent green hydrogen wave

Green hydrogen projects represent a big opportunity for investment funds, a Chilean energy company executive said.

Latin America is taking its first steps along the green hydrogen highway, with Chile in the vanguard.

Local and foreign government agencies are among those providing critical early-stage financing support, with the traditional financial industry deemed unprepared for the level of technological uncertainty and amount of funds needed. 

With government agencies nurturing the industry – as they did in the early days of the solar PV industry – the ground is becoming fertile for some niche players to enter the fray.

“Today, we need specialized financial entities and here you turn to investment funds that specialize in this type of financing,” said Enrique Rosselot, a senior manager at Chilean energy solutions firm Imelsa, during Vostock Capital's Hydrogen Latin America Congress in Bogotá.   

“There's a big opportunity here for investment funds.”

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José Martínez, managing partner at Colombian investment management company Incuba, said the main challenge rested on the demand side.

Martínez told the conference: “You need to see demand as the generator of green hydrogen production; I wouldn’t worry about the issue of project finance in hydrogen … we’re going to see it. Everything boils down to where the cash flow comes from.”

CHILE

Work has started on Chile’s first plant, the US$51mn Haru Oni clean methanol and gasoline production facility, and countries including Argentina, Brazil, Paraguay, Colombia and Uruguay also have green hydrogen on their radars.

Dozens of green hydrogen projects have been announced in Chile, with a batch applying for pilot scheme financing from state development agency Corfo among the most advanced. 

Corfo received 10 bids earlier this year for financing, with average project electrolyzer size of 20MW. Award announcements could be made by the end of the month, the conference was told. Projects will need to come online by the end of 2025 and the exercise is also expected to help officials devise future hydrogen development regulation.

Latin America, with its abundant renewable energy resources, is well positioned to ride the green hydrogen wave, with Chile chiefly eyeing the Asian market. Based on estimates, the country is positioned to produce the fuel at a cost that would make it competitive with diesel, the conference was told.