With US$1bn facility, Chile hopes to fuel green hydrogen investment boom in 2025-30

Chile could attract US$155bn in green hydrogen outlay in 2025-30 – and officials hope multiple projects in the portfolio will tap a US$1bn facility being established to help trigger and ease the flow of investment, BNamericas was told.

The facility, being put together by state development agency Corfo and known as PFCH2V, is designed to mitigate risk and reduce the cost of capital.

Given that green hydrogen is a fledgling sector, concessional loans and de-risking mechanisms are seen as vital to get some projects financed and built.

Some US$45bn of projected investment corresponds to 10 projects planned for Chile’s windswept Magallanes region, while the balance chiefly corresponds to several in the country’s sundrenched northern region of Antofagasta.

Objectives of PFCH2V are helping spur supply and demand of green hydrogen and its derivatives, as well as development of local value chains. 

“We hope that the majority receive it, projects in the north as well as those in the south,” Corfo executive vice president José Miguel Benavente said on the sidelines of a PFCH2V press conference in capital Santiago (pictured). 

“Some will receive financing probably from overseas; what this [facility] does is indicate the seriousness and commitment of the government of Chile.”

The facility is designed to offer support to both large export-focused projects – which chiefly belong to international companies – and national projects.

Officials, planning to launch it next year, hope that each dollar in the facility mobilizes US$12.50 in investment. 

IDB has committed US$400mn, the World Bank US$150mn, KfW US$110mn and the European Investment Bank US$110mn. Chile has also been awarded just over US$17mn in subsidies and technical assistance. Corfo will contribute funds, the press conference was told.

María Florencia Attademo-Hirt, head of IDB’s Southern Cone department, said the multilateral was proud to be accompanying Chile on its green hydrogen journey and that the support was “not just money,” that it also encompassed areas such as technical assistance and social and environmental standards. 

Chilean finance minister Mario Marcel said the facility constituted a concrete measure being taken by the government to help catalyze and accelerate investment. 

Overall, more than 40 green hydrogen projects of varying sizes and configurations have been announced publicly in Chile. A synthetic fuels demonstration plant has been operating in Magallanes region since last year and other pilot initiatives are underway elsewhere. Multiple projects are in the engineering and feasibility studies phase.

Chile already has a green hydrogen strategy and an associated development roadmap, or action plan, which is due to be completed and put out for public comments in August. Given government support, abundant renewables resources and a stable operating environment, the country is deemed well-positioned to ride the green hydrogen wave.