Chile

Country: Chile

Document type: National Strategy

Title: National Green Hydrogen Strategy

Released: November 2020

Summary Points:

The ambitions of the strategy are defined as:

2025

  • Chile is the top destination for green hydrogen investment in Latin America
  • 5 GW of electrolysis capacity operating and under development
  • 200,000 tonnes per annum production in at least two ‘hydrogen valleys’

2030

  • Chile is the world’s cheapest producer of green hydrogen (<US$1.5/kg)
  • Chile is among the global leaders in the export of green hydrogen and derivatives
  • Chile is among the global leaders in the production of hydrogen via electrolysis (25 GW capacity)

The Strategy describes a three stage (or wave) approach to implementation:

  • The first stage (to around 2025) focuses on replacing imported ammonia for local production, and replacing hydrogen produced from fossil fuels used in oil refineries. The use of green hydrogen for heavy and long-distance transportation becomes attractive for fleets and machinery operating in concentrated zones (or ‘valleys’).
  • The second (to around 2030) sees first exports of hydrogen and derivatives (e.g. ammonia). More competitive production cost of green hydrogen allows for replacement of an increasing share of liquid fuels in land transportation and increased blending into gas grids.
  • The third (beyond 2030) sees fuels derived from green hydrogen decarbonising the shipping and aviation sectors and exports continuing to grow.

A set of specific Actions is described across four broad areas:

  • Promotion of domestic and export markets – includes launch of a funding round of up to US$50 million to support green hydrogen projects
  • Standards, safety and piloting
  • Social and local development
  • Capacity building and innovation

In April 2021, the Corporation for the Promotion of Production (Corfo), Chile’s Economic Development Agency, released bidding guidelines for its first call to develop green hydrogen projects.  In this first call, the tender is offering up to US$30 million for one or more projects of 10MW or more size that can commence commercial operation by the end of 2025. Applications are due for submittal by 6 September 2021. Reports indicate the US$30 million would be available from March 2022, an additional US$10 million is expected to be available from March 2023 and the remaining US$10 million from March 2024.

In December 2021, it was reported that Corfo had selected six projects to advance development of the hydrogen industry in Chile. The projects have a reported electrolyser capacity of 388 MW capable of producing more than 45,000 tonnes of renewables-based hydrogen annually. Total funding is reported at US$50 million, with projects to be operational by end 2025.  In May 2022, it was reported that Corfo had signed agreements with three of the six companies selected.

In June 2023, progressive media reports indicated that Corfo has established a fund of around US$1 billion to facilitate investment in green hydrogen projects. The fund is expected to be launched in the third quarter of 2024 in line with the timing of financial investment decisions of the present pipeline of projects.  The make-up of the fund includes the following contributions:

  • The World Bank has indicated a commitment amount of US$150 million in fiscal year 2023 (with press reports from November 2022 indicating a further US$200 million loan is possible at a later stage).
  • The Inter-American Development Bank in June 2023 announced that it had approved a US$400 million loan to support the development of the green hydrogen industry and its derivatives in Chile.
  • Contributions from the €225 million Fund for Renewable Hydrogen announced by the EU President in June 2023 – media reports indicate €100 million each from the European Investment Bank and the German state-owned investment and development bank KfW would be made available, with the EU providing a top-up of €16.5 million via the Latin America and Caribbean Investment Facility.
  • A contribution of US$250 million from Corfo as reported by media agencies in June 2023

 

Updated: June 2023`