You need to active Javascript on your
BusinessDay
Nigeria's leading finance and market intelligence news report.

Chile shows Nigeria how to become global hydrogen powerhouse

Chile has not been a significant player in global energy markets. But the sun-drenched, wind-rich South American country is building structures to become a titan in the burgeoning green hydrogen economy, a template Nigeria can learn from.

Globally, the hydrogen economy is still taking shape, and the world is waiting for the costs of the technology to fall. However, some forward-thinking nations are taking proactive steps by putting policies to create the cheapest green hydrogen on the planet by 2030.

The Chilean government is offering up its country as a laboratory of sorts for multinational companies to use the country’s rich renewable energy resources to make breakthroughs in green hydrogen and take advantage of potential government subsidies.

“We aspire to become the world’s most competitive producer of green hydrogen,” Juan Carlos Jobet, Chile’s minister of energy and mining, told S&P Global Market Intelligence.

Mining trucks will represent roughly one-third of hydrogen consumption in Chile by 2050, Jobet projected.

Read Also: Nigeria dithers as world’s largest oil region turns hydrogen hub

Beyond mining, companies are using Chile as a testing ground to create both ammonia and synthetic fuels from green hydrogen.

“There is a race for hydrogen production, and Chile, in particular, has a big comparative advantage in terms of producing it at a cheaper cost,” Amir Lebdioui, a development economist at the London School of Economics, said in an interview.

Chile is “one of the most advanced hydrogen markets, not only because of its potential low cost for energy production but also because of its regulatory stability, open market approach, advanced financing market and regulatory support by the Government of Chile,” Luis Sarrás, green hydrogen and fuels director for AES South America, said in an email.

Chile’s hydrogen strategy envisions prices between $1.30 and $1.80 per kilogram by 2030, which would make it competitive with fossil fuels such as natural gas. Sarrás said such prices were possible but only if electrolyzer prices fell, similar to what happened with solar panels.

As of June, roughly half of Chile’s installed power generation capacity for 2021 was sourced from renewable energy resources, making the production of green hydrogen easier — as opposed to its dirtier cousins produced with fossil fuels.

Operators of coal-fired plants in the country, including international firms AES Corp., Enel SpA and Engie SA, have announced plans in 2021 to shut down such facilities and increase investments in renewables.

Read Also: Nigeria watches as countries unveil projects for hydrogen economy

“Green hydrogen will enable us to export our renewable energy to a world that is quickly progressing toward decarbonisation and that needs affordable clean energy,” Chilean President Sebastian Piñera said during the official launching of the country’s National Green Hydrogen Strategy in November 2020.

While Chile seems obsessed with developing hydrogen projects and bringing costs down, Nigeria seems docile, save for the mention of hydrogen in the 2018 National Energy Policy.

“Nigeria needs a national strategy either through production of hydrogen from fossil fuels as a short-term measure or developing a hydrogen infrastructure or ultimately clean production of hydrogen from renewable energy sources,” Ademola Adegun, a Lagos-based renewable expert said.

In 2021, countries are already making green hydrogen a priority for their energy needs, with lots of cost attributed to the country’s natural resources, such as Chile, which is investing in hydrogen infrastructure due to its optimal wind resources.

Wind energy development in Nigeria is still at an infant stage and the few wind energy technologies found in the country are mainly windmills that are used for irrigation water pumping in some rural communities in the Northern region.

Some studies have opined that if 1 percent of Nigeria’s landmass is used for solar PV electricity generation, it is capable of producing around 207,000GWh of electricity per year, which is more than enough to satisfy Nigeria’s energy requirements. Despite the high potential, there is no grid-connected solar plant in the country currently.

One way or another, most experts say Nigeria must face up to a future without oil, which the country can choose through a voluntary transition from a petro-state to a more balanced and productive economy, or through dragging, kicking and screaming, into the post-oil age.

Nigeria is Africa’s largest oil producer, but its oil wealth has been a curse. Rife, corruption and environmental damage have plagued Nigeria’s oil history for decades.

Whatsapp mobile

Get real time updates directly on you device, subscribe now.