Snapshot: The green hydrogen market segment where Uruguay could fly high

Synthetic jet fuel represents the single biggest potential export market for Uruguay in the sphere of green hydrogen and its derivatives in terms of revenue.

That is according to a study published by multilateral lender IDB on Uruguay's green hydrogen potential. 

By 2040, the country could be exporting US$1.3bn per year, with synthetic jet fuel accounting for 58%, green hydrogen 26% and synthetic maritime fuels 14% of the total, the study states. Target export markets are the US, EU and UK.

With biofuel and forestry industries, Uruguay has ready access to biomass that can be processed to produce carbon dioxide, needed to produce some derivatives, such as synthetic jet fuel.

Uruguay, the report states, “has good conditions for the production of these fuels owing to availability of industrial CO2 from industries that process sustainable biomass.”

From 2030, global demand for sustainable aviation fuel should start growing rapidly, reaching up to 98Mt/y of synthetic fuel equivalent by 2040. 

The domestic market, meanwhile, represents a US$750mn/y opportunity, with 48% of that potentially coming from the supply of green hydrogen to trucks and buses. Maritime transport is the second biggest opportunity, followed by the fertilizer sector. Uruguay, which is also working to spur electric vehicle adoption, imports liquid fuels. 

Some US$19bn would be needed in investment in the green hydrogen sector to cover the installation of 20GW of renewables capacity and 10GW of electrolyzers. The required green hydrogen output would be 1Mt/y, according to the report.

In terms of wind power capacity potential, onshore stands at 80GW and offshore 275GW. Regarding solar power, the potential stands at 195GW. The report states that Uruguay’s best option is combining both technologies because “this way you can obtain high electrolyzer-utilization factors, higher than what you would get using only solar or only wind.” 

A key finding is that the wind resource-rich country could produce green hydrogen at a cost of US$1.20-1.50/kg by 2030.

Uruguay has drafted a green hydrogen roadmap and has launched a call for projects to produce the likes of e-methanol and sustainable aviation fuel using carbon captured from a bioethanol plant.

Elsewhere on the green hydrogen map, officials have launched a green hydrogen R&D call and have previously said bidding processes would also be started for onshore and offshore green hydrogen production projects. 

CONSULTANCY TENDERS

Against this backdrop, Uruguay has two associated consultancy services procurement processes underway, with bids due this month and next, respectively.

In the first process, Uruguay is seeking a company to analyze what regulations are needed to develop a green hydrogen and derivatives market in Uruguay. Bids are due by January 15.

In the second, Uruguay is looking for a consultancy to identify what capacity gaps there are for developing power-to-x projects, those that convert renewable electricity into carbon-neutral energy carriers. Bids are due by February 28.