Uruguay could become a hydrogen exporter by the end of the decade if it can convince private-sector investors to back efforts to use the country’s abundant renewable-energy assets to produce the green fuel, according to the state-run oil company Ancap.
The government is developing guidelines and incentives such as tax breaks for its first hydrogen fuel test project and plans to pitch it to investors as soon as this month. At least one backer will probably be selected through a competitive process this year, Alejandro Stipanicic, Ancap’s chairman, said in an interview.
So-called green hydrogen, which uses renewable electricity to split water into hydrogen and oxygen, is emerging as a potential alternative energy source to help reduce greenhouse gases. Uruguay has a glut of clean energy from wind, solar and hydropower projects, as well as a deepwater Atlantic Ocean port that would give the nation access to key export markets, Stipanicic said.
“We are going to introduce hydrogen as a source of renewable energy” for domestic use, Stipanicic said. “But the big bet is hydrogen exports.”
Investors poured billions into developing wind, solar and biomass power plants in the past decade. Along with hydropower, they supplied about 93% of the country’s electricity last year. Uruguay also has a significant electricity surplus, some of which it currently exports, but which could be used instead for producing hydrogen. Electrolyzing equipment costs are falling and converting hydrogen to ammonia would make it economical to transport by ship, according to a BloombergNEF report.
“The idea is for Ancap to have some sort of participation” in the hydrogen business, Stipanicic said. “But we aren’t going to lead the investment. The private sector will make the investment.”
Idle Capacity
Ancap has had preliminary talks with more than three South American companies, including refinery operators, since last March to gauge interest in business ventures such as swapping products, joint exports or the leasing of logistical infrastructure, he said.
Uruguay’s Ancap Explores Refining Venture to Gain Regional Clout
Stipanicic is optimistic Ancap could strike a deal as soon as this year that would help it mop up unused refining and distribution capacity before the global shift away from fossil fuels makes those assets obsolete.