Written by Ian Cardenas, Paralegal
Defining the global context
At a global level, when the prices of hydrocarbons and liquefied natural gases (LNG) are high, opportunities have opened for green hydrogen as it is typically cheaper in comparison.
There are three distinct types of hydrogen that differ based on how they are produced and their emission levels. Grey hydrogen is produced from natural gas by steam reforming and generates large quantities of carbon dioxide (CO2). Blue hydrogen is also produced from fossil fuels but without releasing carbon dioxide (which is captured and stored or reused). Green hydrogen, on the other hand, is obtained through electrolysis and renewable energy sources, such as solar or wind power, and does not generate polluting emissions.
Green hydrogen can be a clean and non-polluting substitute for some industrial gas-fired processes, as well as serving as an energy source for fuel cell vehicles. The cost of hydrogen will depend primarily on two factors: the price of electrolysers and the cost of electricity from renewable sources. In both cases, costs can be expected to fall further as the technology matures and scales up.
Unlike hydrocarbons, a green hydrogen plant can be built anywhere with sun, abundant wind or water, allowing it to be produced locally and not having to import it from other regions. For these reasons, the north of Chile can be especially relevant in terms of green hydrogen investment, as it has all the ideal characteristics to carry out its production.
According to a report earlier this year by Rethink Energy, the cost of green hydrogen will fall from the current $3.70/kg to just over $1/kg by 2035 and $0.75/kg by 2050.
Green hydrogen opportunities in Chile
Chile possesses a large amount of renewable energy resources of more than sufficient quality to allow it to become one of the main exporters of different types of clean and renewable energy.
With this in mind, it is necessary to create infrastructure that facilitates energy integration in a multilateral way, considering the design and construction of electricity and gas distribution networks that allow interconnection throughout South America and the rest of the world.
A good design of energy distribution networks is essential, as it will reduce the pressure on the various energy storage systems, as the grid itself will make renewable energy sources manageable.
Chile’s solar potential can drive the sustainable development of our country, leaving behind dependence on fossil fuels and transforming the country into a producer of electricity and renewable energy.
Some studies project that by 2035, Chile could contribute 30% of the electricity consumed in South America by generating this energy from solar sources in the Atacama Desert, using a surface area of less than 5%. It is therefore necessary to make progress in attracting investments that allow the exploitation of our renewable energy sources and to advance in the milestones defined in the national green hydrogen strategy, as Chile will be a key player in the production of clean and renewable energy for a carbon neutral planet.