The National Green Hydrogen Strategy of Chile

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The National

Green Hydrogen Strategy of Chile

June, 2021

Korea – Chile Energy

Cooperation Webinar

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MINISTERIO DE ENERGÍA | 2

Green hydrogen in Google Trends

Interest in this clean energy carrier has skyrocketed in the past 12 months

Source: Google Trends (2021).

Google searches for “green hydrogen” over time

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Hydrogen in the press

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>200

Projects

>30

Countries have published a hydrogen strategy/roadmap

Renewed momentum

Source: Hydrogen Council 2021.

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Ministerio de Energía | 5

Countries that amount to more than 70% of global GDP already have a hydrogen strategy or roadmap

(*) Sara Aagesen: Secretaria de Estado de Energía / España Source: Bloomberg NEF.

Things are getting very competitive

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Projects have sprung in Chile too

Blending into gas grids Forklifts

Clean energy & food

District heating

Bus transport for personel

Forestry trucks

Isolated grid

power

Small vessels

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65

0 40 80 120

2015 2020 2030 2040 2050

MM tCO2_e

Reference scenario

Carbon-neutral scenario

⁵⁰^%

(65 MMtCO2e)50% (65 MMtCO2e)

130

65

Industry (25%)

Coal phase-out (13%)

Energy efficiency(7%) Additional Forest Capture

Forest Capture

Sustainable Building(17%) Electromobility (17%)

Hydrogen (21%)

Green hydrogen will be key for Chile to reach

net-zero emissions by 2050

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The cheapest green hydrogen on the planet

will unlock cost-effective emissions reductions…

Levelized cost of production by 2030

(USD/kg H

₂

)

*Does not consider conditioning, transport, storage nor distribution costs.

1.3 1,4

Middle

Chile East Australia EU USA

1,8 1,7

2,2

2,6

2,1

China

Source: McKinsey & Company.

Levelized cost of green hydrogen (USD/kg H

₂

)

Potential for a 160 Mton yearly green hydrogen production

*

Center

North South

1.0

0 0.5 2.0

1.5 2.5

30 35 45

2020 25 40 2050

*Source: International Energy Agency.

1.2 1.1 1.3

1.5 1.8

2.6

2.0

1.7 1.4

1.3 1.2

1.1 1.1

1.0 1.1

0.9 1.0 0.8

2020 analysis

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2021 analysis update shows greater promise

Levelized cost of production by 2030

(USD/kg H

₂

)

*Does not consider conditioning, transport, storage nor distribution costs.

0.95 1.05

Middle

Chile East Australia EU USA

1.3 1.2

1.5

1.8

1.4

China

Levelized cost of green hydrogen (USD/kg H

₂

)

Potential for a 160 Mton yearly green hydrogen production

*

*Source: International Energy Agency.

25 02020

30 1.0

35 40 45 2050

0.5 1.5

2.0 1.6-1.8

Center

North South

1.2-1.4

1.1-1.2

1.0-1.1 0.9-1.0 0.8-0.9 1.2-1.4

1.1-1.2

0.8-0.9 0.9-1.0

0.75-0.85 0.8-0.9

0.7-0.8 0.75-0.85

0.65-0.7 0.7-0.8 0.95-1.05

0.95-1.05

for competitive green hydrogen production in Chile

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Large-scale export of green products will be enabled

Cost of liquid H

₂

at port of destination, 2030

(USD/kg H

₂

)

(Source: McKinsey & Co)

Chile to Korea/Japan

Chile to US Australia to

Korea/Japan Russia to EU

Norway to EU

Middle East to US

Middle East to EU

Distribution Production

1.0 1.7

1.2

1.3 2.0

0.9

2.7 2.5

Shipping Liquefaction

0.6 0.6

2.2

1.3

Renewable energy carriers being considered by

developers and investors

Liquid hydrogen

Green copper and other green exports

Green ammonia

Green methanol / eFuels

LH2

Cu NH3

CH3OH

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Projection of Chilean markets for green hydrogen and its derivatives (BUSD)

3

11 5 16 19 24

7

8

9

1

2

5

16

23

28 33 CAGR +15%

Associated renewable capacity (GW)

2045

2025 2030 2035 2040 2050

5-8 40 145 200 250 300

Domestic applications Exports & maritime fuels

Cumulative necessary investment (BUSD)

8 45 150 220 270 330

Clean industry of the scale of our mining sector

A unique opportunity

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Our ambition

BUSD/year 2.5 25

<1.5 GW USD/kg

destination for Top green hydrogen

investment in

LATAM Electrolysis capacity operating and under

development

Production in at least 2 hydrogen

valleys in Chile

BUSD 5 200

kton/year GW 5

The cheapest green hydrogen on the

planet Leaders in

export of green hydrogen and

derivatives

Leaders in production of green hydrogen

via electrolysis

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Wave I: 2020-2025

Domestic ramp up and export preparation

1. Annual sales. Considers the full transition to hydrogen of the energy demand in each application.

Source: Based in analyses from McKinsey & Company.

Oil refineries Ammonia

Mining haul trucks (CAEX)

Heavy-duty trucking

Long-range buses

Blending into gas grids (up to 20%)

Application 1

2

3

4

5

6

Total potential market¹

(BUSD by 2050) 2025 2030 2035 2040

2.0

Potential adoption curve to achieve 100%.

Targeted breakeven through action and start of piloting.

Estimated breakeven without additional action.

We will accelerate the deployment of green hydrogen in 6

prioritized

applications to build local supply chains and acquire

experience.

^0.8

1.6 0.5

0.2

0.3

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Waves II & III: 2025-2030 & 2030+

Scaling up to capture global markets

Estimated market size for Chilean exports

(BUSD) ^Europe China Japan/Korea ^USA LATAM

2040

2025 2030 2035 2045 2050

2040

2025 2030 2035 2045 2050

Green ammonia exports

1 Green hydrogen and e-fuel

exports 2

0.4 2.5 11 16 19 24

Total size

0.4 2 4 5 5 5

0 0.5

7

11

14

19

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PRODUCTION

PROJECT OWNER AND PARTNERS

H ID R O G EN P R O JE CT S H EE T

POWER TO METHANOL

PROJECT OWNER

PARTNER COMPANIES

OFFTAKE

MABANAFT is the trading division of Marquard & Bahls and concentrates on physical oil trading. They announced an MOU to the purchase and sale of up to 500 million liters of carbon neutral E- Fuels per year from the project’s commercial phases.

PROJECTIONS

Pilot Phase

2022 130.000

2024

70

^million

2026

2000 ^million

1st Phase 2nd Phase

Liters e-fuel per year Liters e-fuel per year Liters e-fuel per year

Wind

power Green

hydrogen E-Methanol E-Fuel Applications

LOCATION

Pilot phase is currently under evaluation by the Environmental

Evaluation Service.

Pilot operation is expected for 2022.

38 million USD

Total investment Pilot phase

STATUS

Magallanes Region Siemens received a grant of 8 million euros for the

project from the German Federal Ministry of Economics and Energy.

PORSCHE will start with an initial investment of 20 million euros and is planning to use the E- Fuels from Chile in Porsche’s motorsport fleet, at Porsche Experience Centers and, later, in series production sports cars.

Chile

Germany CO₂captured

from the air

(*) All thecontentof this sheet has been obtained from the official websites of the partners involved in the project and from the Chilean Environmental Evaluation Service.

SIEMENS

ENERGY : Co-developer, partner, and technology provider.

ENEL : Renewable power developer and supplier.

ENAP : Chilean National Oil company. Transport, storage, and port service and infrastructure provider.

PORSCHE : Investor and Offtaker.

Haru Oni is expected to yield the world’s first integrated, commercial, industrial-scale plant for making synthetic climate-neutral fuels (E- Fuels)

Wind power is used to split water obtained from well through an electrolysis process, obtaining oxygen and hydrogen. The hydrogen is combined with captured carbon dioxide to produce synthetic methanol. Finally, part of the methanol is then converted into synthetic gasoline, termed by the project developer as E-Fuel.

 

Well water

HOW IT WORKS

POWER TO LIQUIDS

HARU ONI PROJECT

HIF is an SPV owned by

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We have prioritized 4 lines of action to execute this National Green Hydrogen Strategy

Regulation and

permits Finance and incentives Domestic market and international

partnerships

Local value

1 2 3 4

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International demand & investment | 3 work streams for 2021

Companies Government

Goals

Sign green hydrogen “Government- to-government” agreements to foster

knowledge and business

Facilitate deal making between project developers and investors with

offtakers and new partners

Enabling organizations

• Foreign Affairs Ministry

• Embassies

• Ministry of

Energy/Economy/Trade in other countries

• ProChile / InvestChile

• Hydrogen associations¹

• Companies w/international reach²

Attract new sources of finance to the Chilean clean energy ecosystem, especially concessional debt and VC

Financing Partners

Country Focus

1. E.g. Hydrogen Council 2. E.g. BCG, McKinsey 3. May also consider interactions with key industry players (e.g. lead electrolyzer developers)

• Embassies

• ProChile

• InvestChile

• Investment funds

• Development banks

Active!

In conversations Active!

In conversations In conversations In conversations In conversations

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