Overview

The SCF’s Technical Assistance Facility has commissioned a market study to analyse the current challenges and barriers to green hydrogen production in Chile, which has the potential to decarbonize energy-intensive industries and electricity production in the region and beyond. It is estimated that Chile could produce up to 160 megatons per year of green hydrogen and become the leading low-cost exporter by 2040. The need for a market study emerged from SCF’s conversations with the developer of a green hydrogen project in Chile’s Antofagasta region, where many green hydrogen projects are currently under development, but only a handful have gone past the pre-feasibility stage. Based on interviews with stakeholders and project developers, insights from the market were collected regarding barriers and challenges in the sector. The main insights identified related to supply were regulation, permitting, supply chain, and environmental challenges. From the demand sector, export market challenges were the main challenges identified. A cost analysis was also performed identifying costs for electrolyzers and renewable energy infrastructure cost as the most relevant. Finally, some recommendations to monitor and identify investment opportunities for Chile were provided.  The report provides robust information for a potential future engagement of the SCF in the Chilean green hydrogen industry.

The Challenge

Green hydrogen (GH2) has become a topic of growing interest in the transition to a low-carbon and sustainable economy. It is produced from renewable energy such as wind, solar, hydroelectric, or biomass, through a process of water electrolysis that does not generate greenhouse gas emissions. Due to its versatility and ability to significantly reduce carbon emissions in hard-to-abate sectors, such as heavy industry and transportation, green hydrogen has become a key pillar in achieving decarbonization and climate neutrality goals.

However, despite its promising potential, the widespread deployment and adoption of green hydrogen face several challenges that are important to analyze in detail, including;

• Costs
• Infrastructure
• Regulatory framework and policies
• Funding

Chile is currently embarking on an ambitious journey to become the world’s leading producer of green hydrogen and its derivatives while striving to ensure that its production is highly competitive in terms of costs. The National Hydrogen Strategy stands out, aiming to achieve a cost of $1.5 USD/kg of hydrogen by the year 2030. The interviews that were conducted with stakeholders across industry, academia and investment in the context of the market study provided valuable insights into the landscape of green hydrogen, addressing essential matters such as the current market situation, existing regulations, permitting processes and the supply chain.

SCF’s Involvement

Technical Assistance

SCF has conducted a pre-feasibility study to assess the market dynamics, current challenges/barriers, and potential for green hydrogen in Chile.

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