Chile tops up green hydrogen fund to $1bn and pledges to protect producers against certain 'financial risks'
Development agency adds $250m to the $750m in loans it has already bagged from European and American banks
Chile will open a $1bn fund aimed at de-risking green hydrogen projects in the second half of 2024, after its national development agency added $250m to the funding it has secured from international banks, the Chilean government announced yesterday (Monday).
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The country has built up a pipeline of around 40 projects, but progress has been slow owing to lenders’ reluctance to back green hydrogen projects due to the fledgling sector’s high risk, particularly in the absence of offtake agreements.
PFCH2V will provide long-term financing on favourable terms, as well as “coverage against financial risks”, according to finance minister Mario Marcel.
The fund will be open to both local and international companies developing green hydrogen projects within Chile’s borders.
It will also finance reserves to cover potential non-payments throughout the supply chain or technical deviations in the plant’s expected performance.
The government confirmed the following finance behind the fund:
- $150m loaned from the World Bank
- $400m from IDB
- $100m from KfW
- $109.67m from EIB
- $16.45m from the EU’s Latin America and Caribbean Investment Facility
- $830,000 for “technical assistance” from the EU — although it is unclear whether this is the first part of a promised $8m announced last week
- $250m from government development agency Corfo
This adds up to just under $1.03bn, although it is unclear whether the difference from the $1bn budget will cover previous subsidy commitments or just administration costs.
Corfo’s executive vice-president José Miguel Benavente added that the fund will also support the use of H2 in the domestic mining and agricultural industries.
Chile’s mining sector currently uses grey ammonia produced from fossil gas — both of which the country primarily imports — to produce ammonium nitrate explosives.
In addition, green H2 could be used to make low-carbon fertilisers.
Corfo has already opened a program to co-finance up to 60% of the cost of projects demonstrating the use of hydrogen in local industries, with a budget of 3.5bn Chilean pesos ($4.4m), due to close to applicants this August.
The PFCH2V fund is also expected back local manufacturing of components and equipment such as electrolysers. However, details on whether companies seeking to access the fund for any of these three purposes will be subject to rules such as local content requirements have not been released.
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