With its inauguration on June 8, the Cerro Corredor solar complex in the Atacama Desert in northern Chile became the largest photovoltaic system in operation in Latin America. CREDIT: Cerro CorredorSANTIAGO, June 15 (IPS) – Chile is in a privileged position in the world to produce green hydrogen and to advance the development of the new fuel thanks to the country’s optimal conditions for solar and wind power generation, however the high level of investment and water scarcity are two of the greatest obstacles to be overcome.
The South American country’s National Green Hydrogen Strategy aims for Chile to produce the cheapest green hydrogen in the world by 2030, to become a major exporter by 2040, and to achieve an electrolysis capacity of five gigawatts (GW) by 2025.
“Our main goal is to become one of the top three exporters of green hydrogen in the world by 2030, producing approximately $ 2.5 billion each year at the lowest global cost,” said Juan Carlos Jobet, Minister of Energy and Mines .
“We are extraordinarily blessed with some of the best solar and wind resources in the world,” he said on June 2nd, referring to the strong solar radiation in the northern Atacama Desert and the strong winds in Patagonia in the southern Magallanes region.
Chile raised the target for clean power generation to 40 percent by 2030, at the same time as the inauguration of the Cerro Dominador complex in the northern region of Antofagasta on June 8, which became the largest solar plant in Latin America. A goal that puts green hydrogen into the equation.
According to Jobet’s calculations, Chile will produce hydrogen for $ 1.50 per kilo by 2030, a price that is competitive with fossil fuels. In the same year, the minister predicts a market potential of 25 billion dollars.
Hydrogen, the most abundant element in the universe, has already been used to refine oil, methanol or steel, for example, but it was obtained from fossil sources and thus contributed to the emission of pollutants.
Green or renewable hydrogen, on the other hand, is a fuel made by electrolysis of water, a process that separates hydrogen from the oxygen in water by using electricity from clean sources like solar and wind power to avoid global warming.
Energy accounts for 70 percent of the cost of this process, so encouraging the steady decline in prices of these sources in the country is vital.
Marcelo Mena, professor at Valparaíso Catholic University, former Minister of the Environment and member of the government’s Advisory Committee on Green Hydrogen, told IPS that the strategy “is possible but requires a change in industrial policy in Chile”.
“Unlike history where governments, based on ideologies, say that the market has to choose the winners and not the states, I believe that here we have to choose, bet and seek comparative advantage over its production,” he said.
Mena argued that “a high level of funding is required in the transition phase” and cited as an example the subsidies in Germany of around 700 million dollars per year, while “we have invested 50 million euros so far”.
“A more robust subsidy is needed, a greater amount of funding, as these are emerging technologies that require a reduction in risk for investors,” he said.
As an example, Mena said, “A large green hydrogen project of one to two gigawatts requires an investment of nearly a billion dollars.”
According to Mena, a leading expert on the energy transition, green taxes can provide some of these resources.
A mock-up of the Haru Oni plant, which is about to be built in the Magallanes region of southern Chile, where it will take advantage of the abundant wind energy provided by the region’s strong winds. With an investment of 45 million dollars, ecological methanol is to be produced on the basis of green hydrogen and the resulting gasoline will be used in conventional vehicles. CREDIT: Siemens EnergíaNo doubt
The consultant María Isabel González, manager of the Energética company and former executive secretary of the state National Energy Commission, doubts the country’s bet on the so-called fuel of the future.
“Producing green hydrogen in Chile is too ambitious a goal that does not do justice to the situation here. Just compare investments in countries like Australia with projects of more than 27 gigawatts and an investment of 36 billion dollars,” she said IPS.
She also argued that the idea of green hydrogen is in stark contrast to the energy poverty that suffers half of the population in this country of 17.5 million people who still have no access to hot water, while thousands of households have firewood use for heating.
“Of course, a developing country like Chile should first address the basic needs of its people, and especially those most in need,” argued González.
So she suggests postponing green hydrogen plans.
Mena agrees that energy poverty is a problem, but believes the situation can be addressed concurrently with the production of hydrogen.
“We can promote an industry that has revenues of around $ 20 billion or $ 30 billion a year, and with that increased revenue we can electrify the energy mix by replacing environmentally harmful fuelwood, which is expensive and causes heavy deforestation,” he said.
Another problem is that producing green hydrogen requires a lot of water. According to González, nine tons of one tonne of hydrogen should be produced. However, Chile is facing a major drought that has lasted for more than a decade.
She said “this could be solved with seawater desalination” but added that “this is not our only downside” and cited the “significant” problem of removing Chile from major markets.
This long and narrow country between the Andes and the Pacific Ocean can export its products via its ports on the Pacific coast, ship them through the Panama Canal or transport them through several South American countries to the Atlantic.
Mena believes that “the amount of water required is much less and there are ways to find this water without conflict. One is desalination and another is the use of wastewater that is now discharged unprocessed into the sea in northern cities.”
The Canela wind farm with 112 meter high wind turbines and an installed capacity of 18.15 megawatts generates electricity with offshore wind in the Coquimbo region in northern Chile. CREDIT: Orlando Milesi / IPSDarío Morales, head of studies for the Chilean Renewable Energy Association (Acera), which represents companies and industry professionals, admitted to IPS that water is a challenge that should not be minimized.
But he also mentioned the desalination option, pointing out that “one of the goals of developing the domestic hydrogen market is to replace fossil fuels, the refining of which also consumes significant amounts of water.”
The investment challenge
Morales also pointed out that the strategy aims to invest $ 5 billion in hydrogen development by 2025, “which is a huge challenge, especially when we consider that it has to come with a big boost for renewables”.
He said these clean energies should at least double their current generation capacity.
According to Minister Jobet, Chile can generate 70 times more renewable electricity than it produces today.
Mena said the strategy “involves investing over 300 giga solar energy. In terms of modules per person, that would be 15 KW of power, which equates to 40 solar panels for every Chilean.”
He said it was important to subject the plans to a strategic environmental review that would allow for consultation on this policy and consideration of environmental aspects.
“What we need is a strategic look at water, waste, citizen participation, transmission, space requirements. Everything has to be transparent and discussed with the community. Otherwise those who could be our promoters could become critics.” ,” he said.
He also warned that “green hydrogen is not competitive today”.
“The cost needs to be cut, like solar energy, which has cut costs by 90 percent in a couple of decades,” Mena said.
González noted that “a kilo of green hydrogen, which contains about 33.3 kWh, costs between 3.50 and 5.0 euros (each euro equals $ 1.22), that is between 100 euros / MWh and, according to the International Energy Agency 150 euros / MWh. ”
A view of dawn amidst the steam from the geysers of El Tatio in northern Chile. Geothermal energy is another clean, unconventional energy, in this case also infinite, that Chile is starting to use with the Cerro Pabellón geothermal power plant in the municipality of Ollagüe. CREDIT: Marianela Jarroud / IPS “To be competitive, it should reach around 60 euros / MWh or around two euros per kilo,” she said.
The strategy targets costs of $ 1.30 / kg H2 by 2030 and 0.80 cents / kg H2 by 2050. A cost reduction would be achieved through lower electricity prices. Another would come from economies of scale, for which it is important to develop domestic demand.
To achieve this goal, “policies to develop specialized suppliers and local technological development should be encouraged. If either of these pillars fails, it will be difficult to achieve the expected cost reductions,” Mena said.
Eduardo Bitrán, named “Green Hydrogen Ambassador” by the government of Sebastián Piñera, said the domestic market is led by the mining industry. “The transition towards green mining is a starting point,” he said. This is followed by use in long-distance heavy haulage and passenger traffic.
He said the coronavirus pandemic “has made us aware of the extent of global interdependence”.
“The great post-pandemic threat is climate change. This is the last decade to keep the temperature of the planet from rising more than two degrees Celsius,” he said at a meeting of the innovation club he chairs.
Potential production countries and other consumers agreed at an international meeting in Santiago in preparation for the 26th Conference of the Parties (COP26) on Climate Change in Glasgow to join forces to make hydrogen an alternative to fossil fuels, Scotland in November.
Australia, Chile, the UK and the European Union will try to make green hydrogen affordable and competitive, they agreed at a virtual meeting on June 3rd.
Minister Jobet stated that “we as a planet must do what we can do as a planet to use this hydrogen faster, lower its costs as it is still more expensive to produce, transport and store than its oil or gas alternatives.”
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