Regulation seen as necessary for green hydrogen blending in Chile natgas system

While the possibility of using green hydrogen to substitute fossil fuels in direct applications in Chile’s industrial and mining sectors tends to grab the headlines, another potential domestic use case is blending – but a regulatory gap needs closing, BNamericas was told.

Companies could inject green hydrogen into the natural gas distribution network, providing stable offtake and helping consumers of all types decarbonize and boost green credentials. 

A pilot blending project involving some 1,800 domestic offtakers and led by distributor GasValpo and Universidad de La Serena was launched in 2021, with an end goal of having up to 20% of green hydrogen in the finished mix. 

Miguel Arrarás, South America energy CEO of Spanish energy and infrastructure giant Acciona, said the regulatory model developed in the company’s home market could be studied by policymakers in Chile.

“In the sphere of green hydrogen, Chile has the major challenge of ensuring regulation keeps pace with the execution of this type of project,” Arrarás said.

“One regulation needed concerns blending of green hydrogen with natural gas.”

In partnership with LNG terminal GNL Quintero and Spanish energy infrastructure firm Enagás, Acciona is advancing a 10MW project planned for a brownfield site in Quintero bay in central region Valparaíso. A procurement process for the electrolyzer component is underway and the company is working to ensure the project is built by the end of 2025. That is the original deadline established by state development agency Corfo, which awarded the companies a subsidy of US$5.7mn for electrolyzer acquisition, funds that would be disbursed once the 500t/y plant is completed.  

Acciona plans to submit, voluntarily, the project for environmental review. Associated objectives are educating locals about green hydrogen’s benefits and addressing any potential concerns. Technically, such a step is not needed as the proposed plant targets a brownfield project site already covered by an existing environmental license.  

“We’ve already issued a call to secure an electrolyzer because we want to ensure we meet our completion commitments with Corfo, and in the coming weeks we expect to submit our environmental impact study,” Arrarás said. “We’re committed to building it and become among the first to supply industrial green hydrogen in Chile.”

Chile's two LNG regasification terminals, GNL Quinteros and GNL Mejillones (Antofagasta region), injected 2.97Bm3 (billion cubic meters) or around 8.14Mm3/d (million cubic meters a day) into the network in 2022, down from 4.09Bm3 (11.2Mm3/d) in 2021, according to a 2022 annual report from Chile's national energy commission CNE. Quinteros accounted for 67% of the 2022 total.

The country also imports piped gas from Argentina, chiefly via links to the Santiago metropolitan region and Biobío region to the south. Over the past 12 months, imports of Argentine gas have ranged from 2.88Mm3/d (July 2023) to 10.01Mm3/d (February 2023).

A spokesperson for Chile's hydrogen association was not immediately available for comment when contacted by BNamericas. 

Acciona, currently in talks with potential offtakers, has already built a 2.5MW green hydrogen plant on the Mediterranean island of Mallorca, with end-users including the transport sector. The core of a pioneering island green hydrogen ecosystem, the plant is due to be joined by a second facility, a 25MW system in Navarra province on the Spanish mainland.

Meanwhile, to help Chile's fledgling sector take flight, there are calls within the green hydrogen ecosystem for the State to become an initial offtaker, via hydrocarbons firm Enap and copper giant Codelco. Enap, whose oil refining operations account for about 95% of hydrogen consumption, could use green hydrogen to replace grey hydrogen as an input – which is produced from natural gas – and Codelco could phase in green hydrogen as a replacement fuel for its fleet of diesel-guzzling mine trucks.

Chile has a multibillion-dollar pipeline of green hydrogen projects, targeting both domestic offtakers and the export market. The Acciona-GNL Quintero-Enagás project is in the vanguard. 

A demonstration e-fuels plant, Haru Oni, has been operating in Magallanes region since last year.