Chile Energy Green Hydrogen

The potential for green hydrogen to transform Chile’s renewable energy sector received an endorsement from the Government in Chile when the Ministry of Energy unveiled its national hydrogen strategy at the end of 2020. The strategy includes the policies and regulatory framework that should be enacted to encourage the development of the industry. The Ministry projects that Chile could produce up to 160 megatons per year of green hydrogen and become the leading low-cost exporter by 2040, when the local market will be worth an estimated $33 billion, including $24 billion in exports. 

In order to develop the sector, the Government of Chile has committed $50 million in financing to encourage the development of pilot projects. The Ministry of Energy has also formed a task force to make recommendations on how to improve the permitting process for new projects and is leading a government effort to improve the regulatory environment to promote foreign investment. The strategy also includes recommendations to support local research and development of green hydrogen. 

Chile is an ideal location to develop green hydrogen. With a coastline that stretches 4,000 miles, Chile has access to water and an abundant and diverse renewable energy supply. Northern Chile has the highest solar radiation in the world while southern Chile has some of the best conditions for wind energy. These conditions are one reason experts believe Chile will be able to produce green hydrogen at some of the lowest rates compared to other countries. The government also expects initial domestic demand for green hydrogen to be driven by the mining sector, which has been under pressure to reduce its carbon footprint. 

The country’s first pilot project in green hydrogen is expected to be operational by the end of 2021. The Chilean/German consortium is investing $38 million to develop the project and estimates that the project will be ready to expand into commercial production in 2022.  An RFI released by Chile’s economic development agency, CORFO, yielded an additional $12 billion in potential green hydrogen projects. 

For more information on the green hydrogen market in Chile, contact Marcelo Orellana at Marcelo.Orellana@trade.gov.