The Financial Times, and other media outlets, recently praised Chile’s ambition to produce green hydrogen using renewable energy after President Piñera stated that the country could be exporting USD 30 billion of hydrogen by 2050. Unfortunately, these articles did little more than scratch the surface.
In reality, local companies and authorities are observing the adoption of green hydrogen technologies with a mixture of expectation and scepticism amid doubts around implementation timescales. The media, however, are already drawing parallels with the adoption of renewables which was initially criticised but over the past ten years has grown to 44% of the energy mix in Chile.
“Although significant growth [in green hydrogen] is expected in the future, there is no consensus about how distant that future is.”
Advisor to the Ministry of Energy.
According to the director of a renewable energy company, the success of solar in Chile was associated with a significant reduction in costs and a massive effort by the industry to reduce carbon emissions. However, investors and developers are not so convinced that similar business opportunities for hydrogen are viable in the short or medium term. “The application of hydrogen technologies presents both technical and financial challenges that are far from being solved.”
According to an advisor to the Ministry of Energy, “The current administration is unlikely to attract large-scale foreign investment considering the ongoing regulatory discussions around energy and natural resources.” Today, the current market for green hydrogen power projects remains very small. “Although significant growth is expected in the future, there is no consensus about how distant that future is,” continued the advisor to the Ministry of Energy.
“There is no consistent national policy for the development and adoption of green hydrogen at the national level.”
Head of Chilean Family Office.
The head of a large Chilean family office believes that despite numerous R&D projects, “We do not see attractive opportunities in the short or medium term. There are some sporadic early initiatives and pilot projects, but there is no national policy for green hydrogen.”
According to an analyst from Codelco, the state mining company, many companies have developed pilot projects, but none have realistic prospects of scaling. In the case of Codelco, the source adds, “The company is facing significant difficulties in the development of its projects; it is virtually impossible for us to allocate significant resource to substitute fuels.”
In general, our sources agree that this green hydrogen initiative will be developed by private capital and that the participation of the State, beyond generating a clear regulatory framework, will be minimal.
For now, green hydrogen seems far away in Latin America, despite what the media say!