Lessons from Chile, the spear-head in the hydrogen revolution.
Many of us probably know Chile from being a prominent contender for the World Cup; some of us may unknowingly have a product from Chilean origin in our houses and electronics, as Chile’s main export is copper. What few of us are aware of is that Chile could become a major player in the world of hydrogen.
On November 30th, 2020 Chile published their National Green Hydrogen Strategy (click here, in Spanish)
The Chilean strategy, in a nutshell, recognizes the vast potential of green hydrogen to kickstart Chile’s ambitions to become an energy exporter despite Chile having very little to no prior engagement as a world power in energy.
In a nutshell, these are the main arguments Chile presented as the foundation of the Chilean hydrogen economy:
- It is a country rich in renewable energies. Chile has more than 1800 GW in renewable energy potential, most of it coming from solar: 500 GW CSP (Concentrated Solar Power) and 1200 GW PV (Photovoltaic). They also quote some onshore wind power potential (190 GW) and little (but not negligible) hydroelectric potential (6 GW). To put these numbers in perspective, the whole final energy consumption (i.e., after conversion losses) of the EU was 1370 GW in 2019 (Source: Eurostat).
- Electricity can be cheap, very cheap. By 2030, the LCOE (Levelized Cost of Electricity i.e., including CAPEX and other expenses) in Chile can be as low as 0,015 USD/kWh (less than 2 cents). This means that green hydrogen produced via electrolysis (which has an energy consumption of ~50 kWh/kg-H2) would have an OPEX of 0,75 USD/kg-H2.
- Hydrogen can also be cheap, very cheap. A study from McKinsey puts the LCOH (Levelized Cost Of Hydrogen) of H2 between 1,3 and 1,8 USD/kg-H2. The transportation industry in Europe (which will be the subject of another article soon) has stated that, for hydrogen to be an enticing alternative to diesel, its production cost would have to fall below 1,5 USD/kg-H2, which apparently Chile could reach in 2030. Thus, it is likely that Chilean green hydrogen can decarbonize the transport sector at an adequate price level for them.
Chile is being very emphatic about utilizing hydrogen as a platform to become an energy exporter, which, looking at OPEP and other trade organizations’ influence in the world’s politics, would be a very sensible thing to do if they want to have an open stage in broader forums.
Chile is spear-heading the hydrogen revolution, ahead of the EU and the most of the developed nations.
Dr. Julio C. Garcia-Navarro
As we all know, national hydrogen strategies and other political white papers can be utterly meaningless because they are not enforceable; you can’t sue a country for not upholding their promises, especially if you are not a citizen of said country. Chile, on the other hand, seems to be putting its money where its mouth is.
The Chilean financial newspaper Diario Financiero reported yesterday (May 10th) that the government is introducing a regulation to expedite the approval of hydrogen-related projects. The government seems to aim at approving hydrogen projects in 30-45 days, which is record-breaking considering that there is no regulation (of basically any kind) in place yet for hydrogen in Chile and pretty much nowhere else in the world. This measure is likely to incentivize the private sector by ensuring that they will not get caught in a bureaucratic loophole and promoting the first hydrogen projects to come to the South American country.
Furthermore, the Chilean government is already introducing a bill to create demand for hydrogen by imposing mandatory quotas for hydrogen blending in natural gas. This is especially noteworthy, considering that most countries can only accept a minimal amount of hydrogen (less than 1%) in their current natural gas networks, despite it being a well-known fact that hydrogen blends of up to 20-30% cause no significant adverse effects in the existing natural gas transport infrastructure.
Chile is definitely on the right track towards becoming a mainstream supplier of hydrogen for the world. I am amazed at the speed at how Chile is doing things around hydrogen despite being a latecomer to the hydrogen world. Other countries (read: the EU) should take the Chilean innovation example and finally take the hint that hydrogen is finally here to stay.
About the author
Dr. Julio C. Garcia-Navarro is a Hydrogen Project Coordinator at New Energy Coalition. He has worked in the hydrogen industry for nearly a decade, on topics such as hydrogen electrolysis, compression, and transportation. Besides hydrogen, he is passionate about Renewable Energy Systems and the Internet of Things.
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