Source: European Investment Bank
A combination of characteristics makes Chile a potential leader in the production of green hydrogen in Latin America and the Caribbean (alongside Brazil and Colombia).
Green hydrogen is produced using electrolysers, which split water into hydrogen and oxygen through a process that requires substantial electricity. To qualify as green, this electricity must come entirely from renewable energy sources.
“Around 65% of the cost of green hydrogen production is related to electricity,” explains Enrique Rodriguez Flores, an energy transition specialist at the European Investment Bank. “The electricity needs to be green, so we look for places with the best renewable energy conditions for electricity generation. Wind and solar are intermittent by nature, but in some areas of Chile, especially in Patagonia in the south and in Atacama in the north, the conditions are so good that they offer a degree of stability.”
Chile also has political and economic stability. “Promoting billions of euros in private investment requires a secure environment for making investments,” Rodriguez Flores says. “This includes regulation, government support and other such aspects.”
The Green Hydrogen Fund for Chile – a Team Europe initiative by the European Investment Bank, the German development bank KfW and the EU delegation in Chile – will support a wide range of hydrogen projects, from water desalination and renewable power generation to storage and transport. As part of this initiative, the European Investment Bank is providing a €100 million loan to Chile to support private sector projects.
“The plan is to have the private sector develop green hydrogen, initially with the support from the public sector, via subsidies and other support from multilateral development banks, which offer more than just financing,” says Gorriño Larrañaga, the EIB loan officer. “They also offer their expertise and high environmental and social standards.”