Chile Will Be a Top Competitive Market for Green Hydrogen

In November 2020, Chile unveiled its National Green Hydrogen Strategy, which aims to have 5 GW of electrolysis capacity built or in development by 2025 and 25 GW developed by 2030. Chile’s sweeping hydrogen development is not only meant to decrease the country’s carbon emissions to meet its climate goals, but is also viewed as a valuable export tool for its projected renewable energy surplus.

Chile’s immense renewable energy resources have primed the country to be one of the most competitive green hydrogen markets on Earth. In the northern part of the country, Chile has the highest solar irradiance globally. The southern coast of Patagonia also boasts significant wind resources with the potential for capacity factors at 60% for onshore projects. According to Chile’s Minister of Energy, Juan Carlos Jobet, the country has about 70 times the renewable energy generating capacity than it is currently using.

Chile Will Use Green Hydrogen to Decarbonize Mining

If it is to meet its climate goals, Chile must decarbonize its largest industry: mining. Mining makes up 50% of the country’s exports and over 10% of its GDP. As the world’s largest exporter of copper, Chile plans to replace diesel in its copper mines. In July 2020, ENGIE entered an agreement with Australian global mining technology developer Mining3 to develop a series of projects designed to drastically reduce emissions in mining. One of the projects, Hydra, aims to develop a new powertrain and refueling system for mining vehicles to run on green hydrogen fuel.

Ammonium nitrate is often used for blasting in the mining industry, which is produced with ammonia, a derivative of hydrogen. In July 2019, ENGIE and Chilean blasting technology leader Enaex entered into a strategic alliance to investigate the feasibility of green ammonia production from green hydrogen. While full-scale operations are targeted for 2030, plans show that a pilot program with a 36 MW solar plant and 26 MW electrolyzer could produce 18,000 metric tons per year of ammonia by 2024.

Chile’s Price for Hydrogen May Be the Lowest in the World

One of the biggest barriers for green hydrogen’s market entry is its total cost of production. Green hydrogen, which is produced entirely by renewable energy and so has no carbon emissions, currently sits at $3-$8 per kilogram. Blue hydrogen sits at $1.2-$1.8 per kilogram. To get green hydrogen down to a comparable price, the cost of renewable electricity must decrease as it currently makes up nearly 55% of the total cost of production.

Due to Chile’s vast renewable energy resources, President Sebastián Piñera expects Chile will have the lowest price for green hydrogen in the world by 2030. Despite the lengthy distance of transport across the ocean, Chile may be able to export hydrogen cheaply to Asia Pacific, specifically South Korea, Japan, and China. Overall, the government expects that exports of green hydrogen and its derivatives could reach $2.5 billion annually by 2030.