Opportunities for the development of a solar hydrogen industry in the Atacama and Antofagasta regions: Innovations for 100% renewable energy system
Scope and Objectives
The purpose of this study is to develop a 100% renewable energy vision for the north of Chile, in specific for the regions of Antofagasta and Atacama, with the purpose of contribute towards a low emissions mining. During the development of this vision, current and future business opportunities related to the development of solar energy and the production of hydrogen were identified. The special focus given to solar energy is based mainly on the excellent solar resource present in these regions, which have the best irradiation levels in the world.
The specific objectives of the study are:
- Establish a short and long-term vision to achieve a 100% renewable energy matrix in the regions of Antofagasta and Atacama to contribute to the development of low emissions mining.
- Evaluate the performance of a 100% renewable matrix in the regions of Antofagasta and Atacama.
- Design and propose a transition strategy oriented to a 100% renewable matrix, considering the inclusion of specific indicators to measure their progress.
- Raise relevant information related to the production of hydrogen from renewable energies, including the most relevant actors worldwide.
- Identify opportunities for the development of an economy based on 100% renewable energies, prioritizing solutions based on the use of hydrogen as an energy vector.
The study is divided into two sections:
- 100% Renewable Energy Vision, which implies not only electricity but also the fuels related to all the four energy economic sectors: Mining, Industry, Transport, and Commercial-Public-Residential (CPR). In order to do so, the following methodology was followed:
- Hydrogen Economy & Business Cases Screening: This section aims at screening the business cases that could boost the transition of the northern regions towards the concretization of the 100% Renewable Energy vision.
Both the renewable vision and the identified business cases were formulated for a shot and long-term scenario, defined at 2023 and 2035 respectively.
For both Antofagasta and Atacama, the status of the energy system is analyzed for 2016. The energy demand for Antofagasta y Atacama is mainly composed of electricity and diesel with an added value of 90% and 78% respectively. Another way, fossil fuels represent 62% and 64 for Antofagasta and Atacama respectively. In Antofagasta, more than 85% of the energy is consumed by mining and transportation. The mining sector alone accounts for more than 85% of electricity consumption, as the transport sector mainly uses fossils fuels. In Atacama, the mining and transport sector consumes 70% of all energy, and there is a 25% share of energy consumption due to the industry. Mining and industry account for more than 90% of electricity consumption.
For the 100% renewable energy vision in 2035, fossil fuels can be substituted by renewable hydrogen, renewable electricity, and solar thermal process heat, for all applications except marine and aviation. Also, all electricity production can be renewable by 2035. As a result, electricity and hydrogen will be the dominating energy vectors in 2035, with hydrogen supplying more than 40% of the energy needs of Antofagasta and Atacama. A small but noticeable fraction of solar thermal process heat is present as well, for thermal processes in the mining and industrial sector.
The power generation is dominated by PV and CSP for the 100% renewable energy vision in 2035. PV provides the lowest-cost electricity if it can be consumed instantaneously, while CSP provides the lowest-cost dispatchable electricity, thanks to the multi-hour thermal storage capabilities. In Antofagasta, CSP will provide around 70% of the electricity production, and PV will account around 30% of power production. In Atacama, PV will provide more than 90% of the power production, and CSP accounts for less than 10%. Furthermore, around 10% of the produced power production if Atacama is passing through battery energy storage.
The development to a 100% renewable scenario in the northern regions of Chile will be dominated by CSP and VP.
The largest investments in electricity generation assets are in PV and CSP technology. Photovoltaic solar provides the lowest cost of electricity that is consumed during sunny hours (no battery storage is required). Additionally, CSP provides the lowest disposable energy cost thanks to the thermal storage capacity to provide electricity in hours without solar resource.
Given the excellent solar irradiation levels in the northern regions, the combination of PV and CSP results in the lowest LCOE of all renewable technologies. The electrical demand that can be supplied directly with PV energy is the lowest cost option, for demand in hours where there is no solar resource, CSP is the cheapest solution.
The production of hydrogen is made from PV generation
The results of the long-term capacity expansion model indicate that hydrogen is produced by electrolyzers only during sun hours with electricity produced by PV parks. This intermittent operation is more cost optimal than having electrolyzers producing base hydrogen (24/7) with renewable energy from a PV and CSP mix.
This implies that the infrastructure to produce hydrogen can be developed independently of the electrical infrastructure because the electrolyzers can be fed with a dedicated PV plant. In this way, any change in the demand for hydrogen will not impact the development of renewable electricity generation infrastructure and vice versa.
The renewable potential of the northern regions largely exceeds local needs
The Atacama Desert area needed to decarbonize the northern regions and to deliver more than a third of the electricity demand of the rest of Chile is less than 1%. This means that there is a high potential for a greater incorporation of PV and/or CSP. As a result, the long-term capacity expansion model indicates the sequential installation of CSP and PV to provide renewable energy to the rest of Chile. The combination of CSP and PV produces surplus electricity during the day and night, maximizing the amount of energy that can be used by the rest of Chile.
The main short-term opportunities are related to mobility
Diesel/hydrogen blending for high-tonnage trucks offers a great opportunity to replace a significant fraction of diesel demand in the short term by converting existing diesel engines to support blending. Furthermore, several truck manufacturers are planning to introduce their first fuel-cell electric trucks into the market in the coming years. For passenger vehicles, the incorporation of electric vehicles and batteries can replace internal combustion engines in the short term, there is also a wide range of these commercially available vehicles at affordable prices with great autonomy.
The greatest long-term opportunities are dominated by mobility and the production of 100% renewable electricity
Fuel cell vehicles offer the opportunity to replace all fossil fuels in high-tonnage trucks, assuming a mature commercial availability in the long-term. Compared to hydrogen-fueled combustion engines, fuel cells offer the advantage of a higher energy conversion efficiency. For mobility applications with low energy consumption, electric vehicles with batteries are a better option. The transition to a 100% renewable system, which is mainly base on the combination of PV and CSP, is a cost-effective option in the long-term. This is due to a large amount of investment in infrastructure several years are required to be carried out. In any case, these must begin in the short term to reach the final objective.
The production of Green ammonia and applications of high temperature solar thermal energy represent potential long-term opportunities with a special interest in Antofagasta and Atacama.
Under certain scenarios, business cases for green ammonia production and high temperature solar thermal applications provide a positive operating margin. As both applications are highly related to the mining industry, they represent a great opportunity to be considered in both regions.