Chile's green hydrogen boom

Chile has emerged as one of Latin America’s most advanced green hydrogen markets, driven by bold government targets and a wealth of renewable resources. The country’s National Hydrogen Strategy, launched in 2020, has the ambitious goal of producing 1m tonnes of green hydrogen per year by 2030, with a total of 25GW of electrolysis capacity.

Chile’s green promise

Abundant solar radiation in the Atacama Desert and powerful Patagonian winds in the Magallanes region make Chile a prime location for green hydrogen production. With more than 1,800GW of renewable energy potential – 70 times its current energy demand – the country is positioned to produce highly cost-competitive green hydrogen. By 2030, it aims to offer the world’s cheapest green hydrogen at less than US$1.5 per kg. While commercial-scale production is still in its early stages, pilot projects such as Haru Oni, a 3.4MW wind-powered demonstration plant operated by HIF, have already proved their early feasibility by successfully exporting synthetic fuels to Europe.

Policy, plans, progress

The Chilean government has developed a robust policy framework to bolster its green hydrogen sector. Launched in 2024, the Green Hydrogen Action Plan 2023–2030 builds on targets set in the 2020 strategy with 81 priority measures. Major initiatives to encourage private investment include a streamlined permitting process, enhanced access to green hydrogen project financing, the development of standards, and the introduction of subsidies, tax incentives and investment support.

A forthcoming regulatory roadmap is planned to close legal gaps and create or update 20 hydrogen-related regulations. Fiscal incentives are comprehensive, with the US$1bn H2V Chile financing facility leading the way to help de-risk projects and trim capital costs. It is funded by the Chilean Economic Development Agency (CORFO) with support from the Inter-American Development Bank, World Bank, EU and other partners. Additional measures include VAT exemptions, R&D tax credits, and up to 60% co-financing for electrolyser manufacturing facilities.

Challenges and constraints

Despite the strong momentum, Chile faces structural challenges. Infrastructure gaps persist, especially as electrolysis capacity may be situated in remote regions that are rich in renewable energy but lack transmission grids and port infrastructure. Water scarcity is another constraint; electrolysis requires substantial amounts of water, and many regions are already under high stress. Lengthy permitting processes further hinder progress; HNH Energy, for instance, spent four years preparing its environmental application. Additionally, local opposition in Magallanes, where projects threaten ecotourism and ranching, underscores the importance of sensitive development.

Deals and developments

These challenges, however, do not undermine Chile’s potential to become a global leader in the hydrogen market. Multiple geopolitical agreements reinforce its ambitions. The government has signed memorandums of understanding with more than 12 nations, including Germany, the Netherlands, Japan and Belgium, aiming to create green hydrogen corridors and funding mechanisms. The Team Europe Initiative and Global Gateway Fund exemplify strategic partnerships that are driving infrastructure and certification standards for the country’s hydrogen sector.

Chile’s political stability, transparent governance and extensive trade agreements make it a reliable export partner. Ports and shipping infrastructure are evolving to support ammonia and methanol exports, while domestically, industrial sectors, including mining, logistics and gas processing facilities, are potential offtakers.

Five projects have already secured offtake agreements, with deals split between national and international buyers. Notable projects include HNH Energy’s US$6bn green ammonia project, which has signed a 10-year contract to supply approximately 350,000 tonnes of ammonia annually to global agribusiness company Ameropa. Similarly, the Cabo Negro green hydrogen project, developed by HIF and Enel, has signed a supply agreement with Faro del Sur for the export of clean fuels and methanol.

Domestically, the MowiUACh green hydrogen pilot project will use its hydrogen output to decarbonise Norwegian seafood company Mowi’s aquaculture operations in the Aysén region. Similarly, the Port of San Antonio green hydrogen project has entered an agreement to support the decarbonisation of port operations. In contrast, the HyEx green ammonia project, a collaboration between Engie and Enaex, will produce green ammonia for use in the mining industry.

Exciting future ahead

Chile currently has less than 900MW of green hydrogen capacity due online by 2026. Although this falls short of 2030 targets, projections indicate a sharp ramp-up between 2030 and 2032, driven by mega-projects such as TotalEnergies’ US$16.3bn H2 Magallanes and the HNH Energy project. There are opportunities across the entire supply chain, spanning electrolysis production, water management solutions, transport logistics, and engineering, procurement and construction services.

In March 2025, CORFO awarded grants totalling US$25.6m to Chinese electrolyser manufacturers Hygreen Energy and Guofu and Spanish firm Joltech Solutions to establish local production facilities. This initiative seeks to develop a domestic electrolyser supply chain for industrial-scale green hydrogen production and its derivatives, creating a major opportunity for Chile’s supply chain. While foreign companies currently dominate the market, CORFO’s incentives are expected to accelerate the emergence of local players in the near future.

Chile’s hydrogen market is open to innovation, collaboration, and growth. There has never been a better time for forward-looking businesses to invest, build partnerships and help shape a clean energy future in South America.

Are you ready to export? Email: marco.maedo@the-eic.com

Image credit | Getty