Expanding into green hydrogen represents a strategic and logical evolution for renewable energy companies, with software playing a crucial role in managing the complexities of this new domain, according to insights shared with BNamericas.
Renewable energy generators are central to green hydrogen and its derivative projects, which see approximately 60% of production costs attributed to electricity. The remaining 40% of expenses are associated with the subsequent stage: producing green hydrogen, which can then be converted into e-fuels or green ammonia through carbon or nitrogen combinations.
Felipe Gallardo, CEO of Stockholm-based hydrogen project development platform Southern Lights, emphasized the complexity of integrating this new element. “For renewable firms, while integrating the missing part of the process might seem straightforward, the remaining 40% of costs present significant challenges,” Gallardo explained. “This involves dealing with unfamiliar technology, new engineering terminology, and producing a final product that differs from their core business of electricity.”
Southern Lights offers a suite of agile digital tools designed to assist developers in planning, configuring, modeling, permitting, and selecting technologies. The platform also provides project optimization in collaboration with business specialists to enhance financial competitiveness.
Gallardo, who previously led an Italian consultancy and worked with Chilean state development agency Corfo, noted that energy companies are adept at designing profitable projects. However, incorporating hydrogen introduces new complexities. “Southern Lights aims to help renewables companies make this transition without failure, as it involves considerable risks and potential errors,” he said. Recently, Gallardo signed a Memorandum of Understanding (MOU) with Chilean renewables and storage association Acera, reflecting growing interest among Acera members in the hydrogen sector.
Chile is at the forefront of this expansion, with around 70 publicly announced green hydrogen and derivatives projects. These projects primarily focus on harnessing the country’s premier renewable energy resources in the Magallanes and Antofagasta regions, with additional projects in the Biobío region aimed at local decarbonization.
Chile’s green hydrogen sector is poised to progress on two fronts: large-scale plants geared towards export markets and smaller-scale initiatives for local economic decarbonization. The country is already home to pilot projects, such as the Haru Oni synthetic gasoline demonstration plant, with larger-scale facility construction anticipated to begin in the latter half of the decade. Environmental reviews are underway, and the primary challenge now is securing offtakers and reducing costs to compete with conventional natural gas.
Southern Lights, which has been operational for two years and has attracted venture capital funding, is currently supporting clients in the US, Europe, and Chile. Gallardo views Chile as a launching pad for broader expansion into other Latin American markets.