“Up until now, one of the barriers to green hydrogen production is that it has a higher cost than gray hydrogen, and the cost of electricity is one of its greatest components.”
Hydrogen has historically been used as fuel in refineries, the production of ammonia, and the steel industry, among others, but new uses are currently under development, which will help reduce industry emissions and provide fuel for trucks, public transport, or ships, making it a potential replacement for oil and other fossil fuels used in these processes.
According to the International Energy Agency, Chile could produce up to 160 million tons of green hydrogen per year, doubling the current demand of hydrogen across the board, while Bloomberg estimates that the price of green hydrogen will be competitive with that of diesel in the course of around 10 years.
“Chile’s advantage in becoming a key player in the green hydrogen market is its abundance of renewable energy sources, allowing for lower cost electricity production. Few countries in the world boast the same characteristics as ours for the production of green hydrogen at prices the international market will require.”
Experts believe that Chile is poised to become a global leader in production, with an industry that could become a new center of progress for the country and the necessary potential to emerge as an essential production sector like copper mining is today. For Acera's Research Director, the time to act is now, not only so that Chile can become a green hydrogen exporter, but also, “The country must take advantage of the opportunity to use its natural resources as leverage to participate in those stages of greater added value within the hydrogen value chain. It would be a shame to limit ourselves to the export of green hydrogen without also participating in the export of technology, knowledge, and human capital for this global industry. To make that a reality, we have to work with a sense of urgency.”
And while Northern Chile has loads of wealth in terms of solar power, the south of the country has enormous potential in the development of wind power. “From this perspective, there is no limitation in terms of the site of green hydrogen production, as long as 100% of our electricity is produced using renewable energies.”
Chile’s growth in NCRE
During recent years, Chile has become one of the leading countries in the world for the development of renewable energies, aimed at mitigating the effects of climate change and generating non-contaminating sustainable energy. According to the 2019 Climatescope ranking prepared by Bloomberg NEF, the country holds first place in Latin America and second place in the world, behind India, as an attractive emerging market for investment in this area, out of a total of 104 countries.
In June, “non-conventional” renewable energies represented 18.2% of the national energy matrix, with an accumulated share of 19.2% in the electric matrix as of July 2020, according to information provided by the Renewable Electricity Generation Sector Statistics Report prepared by Acera. This is in addition to the contribution of conventional hydraulic energy, which brings the share of clean energies to 38.7% in July 2020.
The progress made in terms of renewable energies enhances the value of green hydrogen production for the country.
“Green hydrogen has enormous potential to become a relevant economic sector in Chile. It is important to work towards converting that potential into a reality and not merely an aspiration,” affirms the Acera representative.
“Green hydrogen has enormous potential to become a relevant economic sector in Chile. It is important to work towards converting that potential into a reality and not merely an aspiration.”