Chile Hydrogen Spotlight – USD$11bn Green Ammonia Project

Chile has been very clear abouts its lofty goals to build a hydrogen industry. Plans created by the government envisions 25 GW of electrolysis capacity operating, producing at least 200k/tons of hydrogen per year, and reaching a price of US$1.50 per kilogram. ?

Achieving these milestones would mean that Chile has the cheapest production on the planet by 2030, one of the main global exporters, and will be a leading global producer measured by electrolysis.

Until now, there have only been demonstration plants and other pilots operating in Chile. One of the more important and well known is HIF’s?Haru Oni?e-fuels facility in the far south. There are currently 6 projects have now entered the environmental review system. A healthy pipeline that is advancing is necessary if Chile is to its meet’s goals.

The latest project to be submitted for the environmental review is AustriaEnergy, HNH Energy Project. It is also the largest project to be submitted by far with an estimated US$11 billon investment required.

HNH Energy?Project – Green Ammonia

• The project will be built in the San Gregorio district, which sits about 120km northeast of Punta Arenas in the far south of Chile.
• Planned green ammonia production capacity is estimated at 6,600t/d. It aims to produce 270,000 t/year of hydrogen and 1.3?Mt/year of ammonia annually, with a storage capacity of 60,000 t/year.?
• The project will start construction in 2027, be commissioned in 2030 and have a 50-year lifespan.
• The development will occur in two stages due to land occupation uncertainties. The first stage includes the wind farm, hydrogen production, and associated infrastructure, while the second stage will add a 2.1?GW wind project to ensure full operational capacity.
• Since this is a single project which includes a green ammonia production facility, desalination plant, pipelines and a port, the whole evaluation process will set a precedent for the country. This is the largest investment project that has entered the Environmental Impact Assessment System to date
• Some of the work includes a seawater desalination plant, a wind farm, a multi-purpose port, underground electrical transmission lines, and various support infrastructures. These include ammonia and desalinated water transport ducts, facilities for the storage of hydrogen and ammonia, and a camp for workers.
• The wind farm will be made up of 194 wind turbines on an approximate area of 17,000ha and will be carried out in two phases. In addition, an underground high voltage network will be built that will connect the wind generators with all the components of the project
• A desalination plant will provide water for the production of hydrogen and ammonia, as well as the drinking water necessary for consumption inside the complex facilities for both the construction process and its operation.
• The creation of a significant number of jobs is anticipated, with an average workforce of 2,446 workers in the construction phase and 1,472 in the operation phase, reaching peaks of up to 3,998 and 1,777 workers respectively.

?

Conclusion

The HNH Energy?Project is a huge project but there is a sense of caution for those who understand the complexities that lay ahead. A project of this magnitude has never been reviewed by the agency and involves many components such energy, desalination, production plant, and port. All with different risks and considerations that will need to be addressed.

There are already more then 30 environmental and ecological organizations who expressed their rejection for the project. They stated that

“it is an out-of-scale project for the territory, which will generate irreparable impacts in the area. The wind farm alone is 1.4 GW with 194 wind turbines, as a reference that in all of Chile there is a little more than 4.5 GW of wind energy installed.”

Regardless of what lays ahead for the HNH Energy?Project, it is a good sign that the hydrogen pipeline is advancing with now 6 projects entering the environmental review process. There are another 60 + projects that are also being discussed at various stages of development. Not all projects will be approved but as experience grows and the regulators become more comfortable, it should increase the odds for future projects.

Chile has set lofty goals for an industry that is still in its infancy stage. The main challenges facing developers today concern driving down unit costs and securing solid offtake contracts. Chile has the right conditions to be a leading hydrogen producer but there is still a long road ahead with many questions to be answered.

Ax Legal helps industrial technology, engineering, and service companies to navigate the legal and commercial aspects of operating their business in Latin America. With deep knowledge of the industrial and natural resource sectors, we provide actionable and practical advice to help streamline our clients’ entries into Latin America, improve how they operate in the region, and to protect their interests.

Over the years, our team of legal and commercial advisors have developed a track record of working with companies of all sizes from Australia, Canada, the U.S., and Europe. The one common factor that connects our clients is that they are leaders in their field, providing innovative technologies and services to the industrial sectors.

To better understand how we can support you in the Region, please contact Cody Mcfarlane at?[email protected]

?

?

?

?