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Speaker 1: This is Dana Perkins and you're listening to Switched on

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Speaker 1: the Bennif podcast. As with the rest of the world,

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Speaker 1: over the last year, Latin America has been contending with

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Speaker 1: inflationary pressures and high energy prices. But what has been

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Speaker 1: the region's reaction to the global crisis and how of

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Speaker 1: its nations gone about securing affordable domestic energy while also

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Speaker 1: looking for new export opportunities. Earlier this month, BEANEF put

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Speaker 1: out our region's clean energy policy, supply and installations under

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Speaker 1: a microscope when we released the Latin America Market Outlook

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Speaker 1: for the first half of twenty twenty three. In addition

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Speaker 1: to the market outlook, BENEF also has been researching something

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Speaker 1: that has the potential for a huge impact on the region,

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Speaker 1: green hydrogen. To find out more, I sat down with

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Speaker 1: beanef's head of Latin America Research, James Ellis, and a

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Speaker 1: member of benef's team from the saal Pallo office, Associate

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Speaker 1: Natalia Cassillos Rebel. Together we discussed a range of topics,

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Speaker 1: including key findings from the Latin America Market Outlook, digging

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Speaker 1: into the details, and assessing whether last year's record breaking

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Speaker 1: solar and winds installations could be surpassed in the future.

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Speaker 1: We went into the opportunity for green hydrogen and ammonia

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Speaker 1: produced in South America and which countries are at the

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Speaker 1: forefront of the potential boom. We also discussed Brazil's small

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Speaker 1: scale photovoltaic revolution, Chile's continued clean energy drive, Columbia's renewables rise,

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Speaker 1: and some of Mexico's recent failings in this space. If

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Speaker 1: you like this podcast, make sure to subscribe to receive

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Speaker 1: updates on future episodes and consider giving us a review.

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Speaker 1: But right now, let's speak with James and Atalia about

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Speaker 1: Latin America. Natalia, thank you for joining.

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Speaker 2: Hi everyone, thank you so much.

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Speaker 1: Denna and James, thank you for coming back to the show.

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Speaker 3: Hey, Dana, it's a pleasure.

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Speaker 1: So we're here to talk about Latin America. And we

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Speaker 1: just recently put out one of our regular Latin American

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Speaker 1: Market outlooks. It's certainly a story of growth right now,

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Speaker 1: and James, can you give us some context around that,

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Speaker 1: given that this report recently came out.

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Speaker 3: Sure.

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Speaker 4: Yeah.

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Speaker 3: The Latin America Market Outlook is really our flagship publication

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Speaker 3: in which we take stock capacity, generation, investment, energy transition

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Speaker 3: policy and all the sort of key trends that have

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Speaker 3: been happening in the region over the past six months.

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Speaker 3: And if there's one thing I would just sort of

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Speaker 3: pull out for you as a main finding, it's a

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Speaker 3: story of wind and solar growth. As in much of

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Speaker 3: the world, wind and solar really just continues to boom

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Speaker 3: in Latin America in often spectacular fashion, and really when

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Speaker 3: you look at it cumulatively as a region, it only grows.

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Speaker 3: So individual markets and segments, of course fluctuate from year

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Speaker 3: to year with policy or project development cycles or financial conditions,

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Speaker 3: but annual editions of renewal energy and wind and solar

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Speaker 3: specifically are getting bigger every year than the year before,

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Speaker 3: including even in twenty twenty when the pandemic hit, and

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Speaker 3: that of course means that every year is a record

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Speaker 3: year basically in terms of growth and wind and solar,

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Speaker 3: and last year was no different. Latin America commissioned twenty

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Speaker 3: two gigabouts of new wind and solar capacity, which is

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Speaker 3: about twenty percent more than the year before. And maybe

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Speaker 3: spoiler alert here, we're on track for another record year

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Speaker 3: in twenty twenty three, so we'und track.

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Speaker 1: For a record year. But I would say a lot

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Speaker 1: of what I hear regarding any sort of global trends

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Speaker 1: pass to do with inflation. There's a lot of discussion

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Speaker 1: around inflation, and then many countries that have responded in

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Speaker 1: kind to cool inflation with high interest rates. Are we

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Speaker 1: seeing the same issues in parts of Latin America or

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Speaker 1: is this growth continued on despite inflationary pressure.

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Speaker 3: Well overall, it has very much continued on in spite

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Speaker 3: of inflationary pressure. There was interesting news this week, particularly

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Speaker 3: in Brazil and Mexico, and I believe Chile as well,

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Speaker 3: that inflation is starting to come down and analysts across

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Speaker 3: the region are starting to expect central bank to lower rates.

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Speaker 3: In central banks largely across the region have kept rates high. Brazil,

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Speaker 3: according to many analysts, has had one of the more

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Speaker 3: aggressive central bank policies in the world. But this has

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Speaker 3: really done nothing to slow the growth of when it's

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Speaker 3: solar in the region, it's really just marched on.

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Speaker 1: So another thing that we've pointed out in previous podcasts

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Speaker 1: around supply chains had to do with the fact that

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Speaker 1: Mexico really stands to benefit from changes to global supply

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Speaker 1: chains and this near shoring trend that is starting. When

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Speaker 1: we're thinking specifically regarding wind and solar. Have we seen

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Speaker 1: those industries started to in some cases on shore in

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Speaker 1: let m some of the production and have supply chains

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Speaker 1: really changed And is that impacting these record breaking years

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Speaker 1: that you're talking about. Is it tied together?

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Speaker 3: The Mexican story is a really interesting story because there

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Speaker 3: are a number of factors that are pushing in opposite directions.

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Speaker 3: On the one hand, there's a narrative that the country

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Speaker 3: stands to benefit disproportionately from changes in global trade and

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Speaker 3: near shoring, and that is largely true, particularly in the

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Speaker 3: automotive segment, or has been true. And the main data

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Speaker 3: point that you could kind of point to would be

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Speaker 3: the announcement of Tesla's new factory that is planned in Monterey,

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Speaker 3: Mexico along the border, which will be its first in

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Speaker 3: Latin America. But on the other hand, the current administration,

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Speaker 3: which has been in power since twenty eighteen, has been

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Speaker 3: tremendously hostile to private investment in the energy sector, and

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Speaker 3: this is really stunted what had been previously one of

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Speaker 3: the most exciting markets for wind at solar development in

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Speaker 3: Latin America. So overall, net Mexico is actually not in

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Speaker 3: a fantastic place in terms of in terms of energy

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Speaker 3: transition investment because of these conflict conflicting factors.

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Speaker 1: And really so in terms of the industries that we

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Speaker 1: cover in some respects in this automotive and batteries of

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Speaker 1: therefore storage space. But really we're not seeing the onshoring

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Speaker 1: of wind and solar manufacturing, but we are seeing deployment.

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Speaker 1: So let's go in into deployments part of things. What

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Speaker 1: countries are really standouts. You mentioned that we're going to

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Speaker 1: be entering the year where we're probably going to continue

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Speaker 1: to break records. Where are you seeing the most activity.

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Speaker 3: It's a story about Brazil now, and this is the

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Speaker 3: drivers of growth of clean energy growth in Latin America

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Speaker 3: have really changed from a couple of years ago. As

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Speaker 3: recently as twenty twenty, clean energy in the region was

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Speaker 3: a story for principal markets, all contributing pretty significantly, and

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Speaker 3: those being Argentina, Brazil, in Mexico. But as I mentioned,

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Speaker 3: what we see today as a market that is much

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Speaker 3: much more concentrated, and that's really concentrated within Brazil, which

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Speaker 3: contributed about three quarters of regional new build and specifically

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Speaker 3: we're talking about growth in solar in the sub five

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Speaker 3: megawat market that is the key driver of regional activity.

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Speaker 3: I sort of hesitate to call that small scale or

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Speaker 3: rooftop just because Brazil's net metering policy is quite generous

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Speaker 3: and goes up to five megawats. So it's really growth

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Speaker 3: in this five megawats solar market that's the key driver

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Speaker 3: of regional activity. And just to kind of put some

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Speaker 3: numbers around that that I think will give much much

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Speaker 3: needed context, that segment added more capacity than total solar

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Speaker 3: additions in the rest of Latin America combined, and that's

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Speaker 3: including Brazil's own utility scale solar gains, and it provided

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Speaker 3: about a half of overall regional wind and solar capacity growth.

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Speaker 3: So we're talking about eleven gigawatts of solar that's all

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Speaker 3: under five megawat systems, and that's just completely crazy growth

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Speaker 3: because it also dwarfs Brazil's own utility scale solar editions,

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Speaker 3: which were just about three and a half gigawatts. And

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Speaker 3: the reason why that's sort of unusual is in most

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Speaker 3: markets around the world, it's really the other way around.

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Speaker 3: Utility scale is generally much more dominant in a much

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Speaker 3: larger share of the solar market. There are some other

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Speaker 3: exceptions like Australia, but in general, like in the inner market,

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Speaker 3: like the US, utility scale is much bigger. So those

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Speaker 3: eleven gigawottes of small scale let's call it PV in

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Speaker 3: Brazil is much bigger than about the eight and a

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Speaker 3: half that was installed in the US last year, and

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Speaker 3: many many times greater than the two and a half

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Speaker 3: gigawatts of a residential commercial solo that was installed in India.

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Speaker 3: So we're talking at this point about a very very

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Speaker 3: big market by global standards. Brazil installed the fourth most

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Speaker 3: solar in the world in twenty twenty two.

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Speaker 1: That you're hesitant to call it residential solar. These not

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Speaker 1: residential projects.

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Speaker 3: Well a lot of them are residential, a lot of

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Speaker 3: them are commercial as well, and that's largely because, as

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Speaker 3: I said, you know, maybe a typical household system, we're

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Speaker 3: thinking of something in the high single digits or very

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Speaker 3: low double digits in the kilowatts. And in Brazil the

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Speaker 3: net metering benefit extends up to five megwats. So in

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Speaker 3: some countries, as our head of Solar Jenny Chase says,

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Speaker 3: in some countries that would be large scale solar, and

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Speaker 3: it can also be claimed either like locally like local

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Speaker 3: net metering i e. Located in the same location as

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Speaker 3: the consumer, or remote net metering, that is, the plant

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Speaker 3: can be located in a completely different location from the consumer.

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Speaker 3: So this is sort of allowed consumers across Brazil, whether

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Speaker 3: residential or commercial, install pretty large sized solar systems all

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Speaker 3: over the country and benefit tremendously because power prices are

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Speaker 3: pretty high in Brazil and the country has great sun,

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Speaker 3: and those factors together have really helped kick off a

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Speaker 3: boom that has had an impact on the solar market

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Speaker 3: in the region. Who are financing these projects, well, you know,

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Speaker 3: at this point the market's quite mature. So I mean,

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Speaker 3: I couldn't I couldn't pinpoint just one sort of subsector.

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Speaker 3: I mean, it's buy in large private banks, but.

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Speaker 1: It's largely diverse, and it's largely coming from utilities kicking

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Speaker 1: things off and then build or project developers kicking things off,

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Speaker 1: even at this smaller scale, doing a number of small

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Speaker 1: projects in a number of different locations, and then either

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Speaker 1: operating them or selling them on.

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Speaker 3: Yeah, it's house it's businesses seeking to lower their power bills.

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Speaker 3: That there are developers involved, there's community solar arrangements. There

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Speaker 3: really are a variety of different schemes. As I said,

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Speaker 3: this was a market that was about Brazil. I think

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Speaker 3: at twenty nineteen sold about two gigattes of small scale TV,

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Speaker 3: and now it's eleven. So I think that point that

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Speaker 3: a lot of markets around the world have reached where

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Speaker 3: it's in headlong kind of solar growth. And I'll have

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Speaker 3: to say it came in quite a bit higher than

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Speaker 3: our forecast for this year, which originally were around nine

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Speaker 3: or ten gigaotts for twenty twenty two. So there's so

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Speaker 3: much solar being installed in Brazil in this segment that

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Speaker 3: the regulator itself is having a hard time keeping track

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Speaker 3: of all of them. So the historical numbers also keep

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Speaker 3: going up, which makes it kind of difficult to keep

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Speaker 3: track of things.

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Speaker 1: So really fragmented, which is really exciting to see so

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Speaker 1: many things happening all at once, and then looking at

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Speaker 1: this and we're seeing essentially a number of different projects

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Speaker 1: happening across the country. Really what it makes me think

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Speaker 1: of is a number of different projects require a number

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Speaker 1: of different permitting processes and a lot more paperwork because

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Speaker 1: they're different projects. So surely there must be some very

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Speaker 1: strong government incentive to bring these sorts of things up online.

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Speaker 1: Why are things moving so quickly and so well in

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Speaker 1: Brazil in particular.

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Speaker 3: Well, for a brief period under the past government, when

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Speaker 3: the debate over how to reform the net metering program

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Speaker 3: was underway, there was a brief window in which the

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Speaker 3: policy environment became quite contentious and the net metering program

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Speaker 3: became controversial and a little bit politicized. There was a

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Speaker 3: don't tax the sun A bit humorous, humorous to say that,

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Speaker 3: but there.

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Speaker 1: Was a don't tax side it was it works well,

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Speaker 1: and it did work.

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Speaker 3: The way that net metering was reformed was done in

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Speaker 3: a way that I would argue was pretty generous to

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Speaker 3: solar overall. It largely provided continuity to existing rules. So

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Speaker 3: the market continues to boom on. Existing systems are kind

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Speaker 3: of eligible for net metering through twenty forty five, and

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Speaker 3: those that are installed in this year are starting to

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Speaker 3: pay a very small, almost negligible part of the tariff

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Speaker 3: for use of the grid, and they're sort of phased

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Speaker 3: in over a six year period, and it's going up.

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Speaker 3: I think the grid fees usually are about thirty percent

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Speaker 3: of the total bill, and so customers who install solar

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Speaker 3: are going to start paying fifteen percent of thirty percent

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Speaker 3: of their bill, So overall, it's a very sort of

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Speaker 3: soft rule and it remains a very attractive thing to do.

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Speaker 3: So that is part of the reason why overall wind

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Speaker 3: and solar growth in Latin America we're looking at another

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Speaker 3: record year in twenty twenty three.

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Speaker 1: So let's pivot to another country that is definitely also

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Speaker 1: a solar powerhouse. Snowpun intended. What's happening in Chile.

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Speaker 3: So Chile is very much it's important. I'm glad you

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Speaker 3: brought up Chile. It's really important Mark can talk about.

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Speaker 3: It's obviously a much smaller power market overall than Brazil.

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Speaker 3: It's thirty two gigawatts total installed capacity versus one hundred

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Speaker 3: and ninety three for Brazil, so much much smaller in

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Speaker 3: terms of overall impact on the region. But as a market,

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Speaker 3: it's really out in front in the region in terms

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Speaker 3: of policy and even compared to the rest of the world.

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Speaker 3: Chile also had record wind and solar editions last year.

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Speaker 3: It has nothing to do with small scale though, it's

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Speaker 3: almost completely utility scale winded solar editions that we're talking

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Speaker 3: about in terms of scale that's about three gigawats. But

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Speaker 3: more importantly, it's starting to hit some really cool milestones,

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Speaker 3: and a couple of those are so lar actually became

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Speaker 3: the largest power generation technology by capacity in the country

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Speaker 3: last year with about twenty two percent of total capacity

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Speaker 3: in Chile is now solar, so that just sort of

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Speaker 3: edged out large hydro. And then the other thing that

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Speaker 3: I think is very cool by regional and global standards

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Speaker 3: is that wind and solar combined provided a whopping twenty

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Speaker 3: eight percent of total generation in Chile last year, So

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Speaker 3: that is really really high. And for context, in Brazil

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Speaker 3: that is about fifteen percent fifteen percent of generation comes

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Speaker 3: from wind and solar utility scale, and in Argentina and

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Speaker 3: Mexico it's about eleven eleven twelve percent. So Chile is

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Speaker 3: also in many ways very much a regional leader.

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Speaker 1: Wow. And then speaking of regional leaders, Lynn the category

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Speaker 1: of maybe biggest mover, where would you put Columbia.

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Speaker 3: Colombia is fascinating as a market because, as I mentioned

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Speaker 3: when we were talking about the top line winded solar

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Speaker 3: growth in the region, there are some important fluctuations in

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Speaker 3: other markets that have kind of lent Brazil outsize importance,

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Speaker 3: And what I was alluding to really was the fact

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Speaker 3: that Mexico and Argentina are both at a low for

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Speaker 3: very different reasons, at a low in terms of clean

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Speaker 3: energy deployment. And Colombia is a very interesting market to

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Speaker 3: look at right now because it's sort of filling in

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Speaker 3: the gap and it's really just starting to get going

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Speaker 3: and about to kick off a multi year what we

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Speaker 3: forecasted to be a multi year boom and wind and

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Speaker 3: solar installation. But one important data point to look at

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Speaker 3: here is that for the first time in twenty twenty two,

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Speaker 3: Columbia end of the year among the top three destinations

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Speaker 3: for new investment in the region for the very first time,

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Speaker 3: it's mostly tied to utility scale solar at this point.

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Speaker 3: There have been some really significant delays tied to wind

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Speaker 3: just because the wind resource, as in most markets, it's

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Speaker 3: very geographically concentrated in a particular part of Columbia where

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Speaker 3: there have been significant delays tied to transmission interconnectivity. But yeah,

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Speaker 3: I don't know, Natalia, do you want to come in there? Yeah?

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Speaker 2: Sure, Well, as you mentioned, there has been some of

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Speaker 2: the delays in terms of transmission connection in this region,

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Speaker 2: which is going to be the area where all the

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Speaker 2: wind farms are concentrated called Labajira, a region with very

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Speaker 2: poor infrastructure over.

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Speaker 5: And also projects.

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Speaker 2: Both the wind developers and also transmission developers are facing

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Speaker 2: challenges in terms of negotiating with local communities to get

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Speaker 2: the permits that they need in order to build their

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Speaker 2: assets in that region. And just to give some stats

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Speaker 2: on that, the company that is developing the transmission line

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Speaker 2: had to negotiate with more than two hundred local communities

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Speaker 2: and that is a process that took much much longer

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Speaker 2: than it was actually predicted, and it's causing delays of

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Speaker 2: this transmission line. And because of that, a lot of

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Speaker 2: the wind farms that are planned for their region are

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Speaker 2: also going to be delayed. So that is a downsign

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Speaker 2: for Columbia as all of the wind farms is concentrated

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Speaker 2: in this region. But for the solar side, the good

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Speaker 2: news is that the resourcers are more spread out us

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Speaker 2: the country, so the developer zone face the same challenge

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Speaker 2: and we are seeing more deployment of solar projects. Year

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Speaker 2: by year, we're seeing growth on that.

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Speaker 1: So, Natalia, let's go into a space that you've spent

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Speaker 1: some time looking at very recently, which is hydrogen, and

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Speaker 1: this is intrinsically linked to this clean energy that we

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Speaker 1: are seeing installed. So with this wind and solar capacity

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Speaker 1: comes the potential for green hydrogen and hydrogen made from

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Speaker 1: renewable sources. Can you talk a little bit about some

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Speaker 1: of the countries that have been the leaders in this

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Speaker 1: space in terms of really looking at green hydrogen is

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Speaker 1: a really big market opportunity.

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Speaker 5: Sure.

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Speaker 2: I'd like to start saying why green hydrogen is so

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Speaker 2: relevant for the region, and that is because we have

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Speaker 2: the best renewable resources in the world in many countries.

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Speaker 5: So in Brazil we have.

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Speaker 2: The best capacity factors for wind farms and in Chile

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Speaker 2: we have the best capacity factors for sol. So that

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Speaker 2: means these two countries they can produce very cheap renewable

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Speaker 2: power and that is a key element to produce cheap

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Speaker 2: hydrogen as well. So according to our projections, we see

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Speaker 2: Brazil and Chile having the lowest l COH the levelized

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Speaker 2: costs of hydrogen in the world today and in twenty

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Speaker 2: thirty and in twenty and fifty, and that is basically

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Speaker 2: because of the great renewable resources that we have in

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Speaker 2: these two countries.

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Speaker 1: So We've got a lot being installed and it's incredibly efficient.

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Speaker 1: So countries and companies are looking at ways to better

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Speaker 1: use these high capacity factors for their wind and solar,

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Speaker 1: which I'm sure is driving part of it. But then

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Speaker 1: with hydrogen itself, so are the conditions right to store use.

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Speaker 1: What's the domestic circumstances both physically and from a demand

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Speaker 1: standpoint for this.

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Speaker 5: That's a very important question.

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Speaker 2: So for now we are seeing most of the projects

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Speaker 2: being developed in the region mainly focused on exports, so

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Speaker 2: the domestic demand signs are not here yet. So basically

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Speaker 2: Europe and Asia are giving the first concrete signs of demand,

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Speaker 2: and the company is developing green hydrogen projects both in

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Speaker 2: Brazil and Chile are mainly focusing on exporting for these

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Speaker 2: two areas of the world. But that actually imposes a

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Speaker 2: risk because it's actually a little bit uncertain how much

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Speaker 2: is going to be the.

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Speaker 5: International demand for green hydrogen. So in my.

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Speaker 2: Opinion Blomberg's opinion, we think that these two countries Brazil

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Speaker 2: and Chile, or whatever country that is actually planning to

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Speaker 2: produce green hydrogen, they need to start thinking about policystems

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Speaker 2: centervized local demand as well and there are some sectors

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Speaker 2: in the region in Brazil and Chile mainly that could

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Speaker 2: be a potential domestic demand, big potential demand, which.

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Speaker 5: Are still and fertilizers.

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Speaker 2: So Brazil is a huge market for the agriculture sector

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Speaker 2: right and because of that, it consumes a lot of fertilizers,

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Speaker 2: but seventy six percent of the nitrogen fertilizers are important today,

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Speaker 2: so there's a huge opportunity therefore Brazil start to producing

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Speaker 2: their own fertilizer and producing in a green way. So

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Speaker 2: and especially if we see this green fertilizer market to

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Speaker 2: flourish in the future, Brazil could even start producing locally

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Speaker 2: and exporting to other markets.

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Speaker 1: Are the conditions right geologically speaking to store hydrogen?

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Speaker 5: No?

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Speaker 2: Not, Actually, we are not talking so much about storage

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Speaker 2: of hydrogen.

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Speaker 5: Mainly, all the.

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Speaker 2: Green hydrogen projects being developed they have some sort of

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Speaker 2: facility to transform convert the hydrogen into something else, a derivative.

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Speaker 2: That could be ammonia, that could be methanol, and these

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Speaker 2: two materials that could be further use for other uses. Ammonia,

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Speaker 2: for instance, would be applied mainly in the fertilizer markets,

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Speaker 2: but it could also.

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Speaker 5: Be used as a fuel methanol.

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Speaker 2: It could be used as a fuel or as a

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Speaker 2: raw material for other processes as well. So there's a

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Speaker 2: very interesting project in Chile, for instance, that they actually

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Speaker 2: already commission that they are producing methanol from green hydrogen

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Speaker 2: and capturing CO two from the atmosphere, producing methanol and

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Speaker 2: then transforming the methanol into synthetic gasoline, and that synthetic

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Speaker 2: gasoline is going to be exported to Europe. That's one

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Speaker 2: example of how the international demand is going to play out.

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Speaker 1: For use cases like aviation for example.

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Speaker 2: Aviation as well, Yeah, and ship transportation. Both methanol and

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Speaker 2: ammonia could be applied.

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Speaker 1: So it's either user or ship it, which then brings

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Speaker 1: us all the way back to supply chains again and

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Speaker 1: seemingly a very hot topic this year. And my question

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Speaker 1: is when it's being shipped, is it being shipped as methanol?

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Speaker 1: Is it being shipped as ammonia? Are we actually shipping

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Speaker 1: tankers of hydrogen.

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Speaker 2: Now we're shipping as ammonia or methanol. It depends on

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Speaker 2: what the off taker is planning to do with the derivative.

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Speaker 2: So this first case in Chile, they're shipping as a

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Speaker 2: synthetic gasoline already, so the product is already finalized and ready.

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Speaker 5: To be used in Europe.

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Speaker 2: The many projects are aiming to ship as ammonia and

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Speaker 2: then in Europe first they would transform the pemonia into

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Speaker 2: other fertilizers and methanol the same case.

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Speaker 1: So what are the policies in place that are really

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Speaker 1: spurring hydrogen on in the region, and perhaps pick the

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Speaker 1: countries where you see the most favorable environments.

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Speaker 2: So for now, we see very little concrete policy in

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Speaker 2: the region. We see hydrogen strategies, which are not actually policies.

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Speaker 2: They are they are a plan that the country put

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Speaker 2: out to give signs for the private sector and also for.

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Speaker 5: Development banks for instance.

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Speaker 2: But I see Chile as the more mature market in

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Speaker 2: the region, as they put the first green hydrogen strategy

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Speaker 2: in Latin America in twenty twenty, and.

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Speaker 5: It was a very well structured strategy.

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Speaker 2: They have very well defined goals for electoralizer capacity and

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Speaker 2: very ambitions goes.

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Speaker 5: It's actually the most ambitions goals if.

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Speaker 2: We compare other strategies in the world. They aim to

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Speaker 2: have twenty five giga OTTs of electoralizers by thirty for instance,

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Speaker 2: and they also have other very well defined goals such

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Speaker 2: as the levelized costs of hydrogen at one point five

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Speaker 2: dollars per kilogram of hydrogen which occur into our projections

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Speaker 2: is realistic. And they also put up plans of what

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Speaker 2: the demand would be if it would be more focused

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Speaker 2: on domestic market or international market. According to their strategy,

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Speaker 2: they would first focus on domestic demand and then in

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Speaker 2: the midtime they would become a large exporter. But in reality,

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Speaker 2: what we are seeing is that projects are they are

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Speaker 2: planning more to be exported first, as a domestic demand

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Speaker 2: signs are not here yet.

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Speaker 1: So Natalia with these stated goals, that's great, but how

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Speaker 1: do they actually get translated into action in the region

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Speaker 1: without clearly defined policies.

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Speaker 5: Yeah, it's a good question.

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Speaker 2: What we see so far is that the strategy that

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Speaker 2: was established in Chilea was important to give concrete signs

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Speaker 2: for both the private markets and for development banks to

436
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Speaker 2: support these projects. And when we compare the capacity to

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Speaker 2: plan in Latin America overall, across all countries, we see

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Speaker 2: the largest pipeline is in Chile, and I believe that

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Speaker 2: it's clearly linked with the fact that Chile positioned themselves

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Speaker 2: in twenty twenty with well defined goals, and with that

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Speaker 2: we also saw multilateral development banks coming to support these

442
00:23:22,280 --> 00:23:26,880
Speaker 2: projects as well. So initially we saw a very symbolic

443
00:23:27,320 --> 00:23:31,520
Speaker 2: support with only fifty million dollars to support these projects,

444
00:23:31,720 --> 00:23:34,919
Speaker 2: which is actually nothing. But now we are seeing more

445
00:23:35,320 --> 00:23:38,600
Speaker 2: deals being revealed. IDB and the World Bank are going

446
00:23:38,640 --> 00:23:43,840
Speaker 2: to follow up with more significant support for these projects.

447
00:23:44,160 --> 00:23:47,000
Speaker 1: So really development banks are providing a lot of the financing.

448
00:23:47,119 --> 00:23:49,960
Speaker 1: But then at the same time you're really seeing well,

449
00:23:50,040 --> 00:23:54,520
Speaker 1: essentially the countries making perhaps an easier permitting process and

450
00:23:54,600 --> 00:23:59,040
Speaker 1: moving things along. Is that fair to say, Yes and no.

451
00:24:00,200 --> 00:24:05,840
Speaker 2: Chile they plan to have two main hubs of hydrogen,

452
00:24:06,240 --> 00:24:08,199
Speaker 2: one in the north and one in the south. The

453
00:24:08,320 --> 00:24:12,560
Speaker 2: north would be mainly powered by solar and in the

454
00:24:12,640 --> 00:24:16,720
Speaker 2: south it would be powered by wind, which could reach

455
00:24:16,960 --> 00:24:21,359
Speaker 2: up to seventy percent capacity factor, which would be the

456
00:24:21,480 --> 00:24:22,480
Speaker 2: highest in the world.

457
00:24:22,760 --> 00:24:24,160
Speaker 5: However, we haven't.

458
00:24:23,880 --> 00:24:28,399
Speaker 2: Seen like concrete wind farms actually being operating in the

459
00:24:28,640 --> 00:24:31,920
Speaker 2: area right now, and that is in Patagonia, so there

460
00:24:31,960 --> 00:24:36,280
Speaker 2: is a big debate right now if projects in the

461
00:24:36,480 --> 00:24:41,360
Speaker 2: area they're actually going to be able to acquire environmental

462
00:24:41,400 --> 00:24:45,280
Speaker 2: permit because it's a really protected area. There's no so

463
00:24:45,400 --> 00:24:49,560
Speaker 2: much infrastructure in the region, and the government wants to

464
00:24:50,359 --> 00:24:55,600
Speaker 2: both protect the area but also allow this industry to

465
00:24:56,040 --> 00:24:59,600
Speaker 2: flourish in the market. So it's a really a big

466
00:24:59,680 --> 00:25:04,240
Speaker 2: challenge for the current administration, and we still need to

467
00:25:04,240 --> 00:25:06,240
Speaker 2: see how it's going to be developed.

468
00:25:06,920 --> 00:25:10,280
Speaker 1: So there are goals without necessarily policy incentives. So my

469
00:25:10,359 --> 00:25:12,760
Speaker 1: question really is do you think, given that the goals

470
00:25:12,760 --> 00:25:15,760
Speaker 1: are considered fairly ambitious, that they're going to reach them

471
00:25:16,080 --> 00:25:18,919
Speaker 1: or are they really more of a stated objective and

472
00:25:19,000 --> 00:25:21,760
Speaker 1: a direction of travel for some of these countries.

473
00:25:22,200 --> 00:25:23,639
Speaker 5: Yeah, the latter, definitely.

474
00:25:24,119 --> 00:25:27,199
Speaker 2: We don't believe that Chile is going to achieve the

475
00:25:27,280 --> 00:25:31,359
Speaker 2: twenty five gigawatts target because it's too ambitious.

476
00:25:30,800 --> 00:25:33,720
Speaker 5: And even if all the support was put in.

477
00:25:33,720 --> 00:25:38,960
Speaker 2: Place, they don't have right now the planned capacity to

478
00:25:39,119 --> 00:25:42,560
Speaker 2: reach that goal. And they also don't have all the

479
00:25:43,040 --> 00:25:50,000
Speaker 2: environmental permit policies that they need, concrete signs and port infrastructure.

480
00:25:49,560 --> 00:25:52,119
Speaker 5: And many many aspects are missaying.

481
00:25:52,320 --> 00:25:54,200
Speaker 3: Still, can I just bring in what I think is

482
00:25:54,200 --> 00:25:57,080
Speaker 3: a relevant point just to kind of add to what

483
00:25:57,160 --> 00:26:01,760
Speaker 3: Natalia is saying, which is that Chile's hydrogen strategy was amazing.

484
00:26:01,960 --> 00:26:05,280
Speaker 3: It came early on, it was very ambitious. The electrilizer

485
00:26:05,359 --> 00:26:08,480
Speaker 3: target was like similar in scale to the EUS, so

486
00:26:08,560 --> 00:26:11,680
Speaker 3: it was ambitious and it came out in December twenty twenty. Brazil,

487
00:26:11,720 --> 00:26:16,280
Speaker 3: for example, still doesn't have a fully elaborated national hydrogen strategy,

488
00:26:16,280 --> 00:26:18,680
Speaker 3: although one is coming soon. But one thing I wanted

489
00:26:18,680 --> 00:26:20,480
Speaker 3: to point out that I think is very optimistic and

490
00:26:20,520 --> 00:26:23,600
Speaker 3: positive for the region, which is that Chile's hydrogen strategy

491
00:26:23,640 --> 00:26:25,720
Speaker 3: came out under the past administration, which was of a

492
00:26:25,800 --> 00:26:28,560
Speaker 3: very different political orientation than the current one than Borich

493
00:26:28,560 --> 00:26:31,560
Speaker 3: who's currently president, you know, very kind of famous and

494
00:26:31,680 --> 00:26:34,800
Speaker 3: kind of rock starish president of Chile, guys in his thirties.

495
00:26:34,840 --> 00:26:38,680
Speaker 3: And similarly, there have been very significant sort of political

496
00:26:38,680 --> 00:26:41,600
Speaker 3: swings in much of the region. But the positive and

497
00:26:41,640 --> 00:26:43,320
Speaker 3: what I think is a key point here is that

498
00:26:43,600 --> 00:26:45,560
Speaker 3: although you know, this has been called a pink tide

499
00:26:45,600 --> 00:26:47,960
Speaker 3: in Latin America where the political pendulum has swung to

500
00:26:47,960 --> 00:26:51,840
Speaker 3: the left, basically the energy transition policies and plans that

501
00:26:51,880 --> 00:26:55,119
Speaker 3: have been put in place under past administrations have seen continuity.

502
00:26:55,600 --> 00:26:57,640
Speaker 3: There hasn't been like an abandonment of goals that were

503
00:26:57,680 --> 00:27:01,119
Speaker 3: put in place by by governments of different directions. Mexico

504
00:27:01,160 --> 00:27:03,480
Speaker 3: being an exception. So I just think that's sort of

505
00:27:03,480 --> 00:27:06,600
Speaker 3: like an important macro point about the region, and it's

506
00:27:06,640 --> 00:27:10,040
Speaker 3: relevant for hydrogen and Chile, as it is for wind

507
00:27:10,040 --> 00:27:10,840
Speaker 3: and solar in Brazil.

508
00:27:11,000 --> 00:27:12,879
Speaker 1: And as much as I'd like to see domestic energy

509
00:27:12,920 --> 00:27:16,320
Speaker 1: production coming from some of these sources not being politicized,

510
00:27:16,400 --> 00:27:19,520
Speaker 1: certainly they do tend to fall on this left leaning

511
00:27:19,600 --> 00:27:22,240
Speaker 1: government space. So for those who are not familiar, can

512
00:27:22,240 --> 00:27:24,560
Speaker 1: you just expand a little bit on what is the

513
00:27:24,560 --> 00:27:25,320
Speaker 1: pink tide?

514
00:27:25,440 --> 00:27:27,560
Speaker 3: Sure you could argue that it began a couple of

515
00:27:27,600 --> 00:27:31,720
Speaker 3: years ago with the elections in Mexico, in Argentina of

516
00:27:31,760 --> 00:27:35,600
Speaker 3: Amblo and Fernandez respectively, certainly sort of left leaning administrations

517
00:27:35,600 --> 00:27:38,480
Speaker 3: in those countries, and then more recently the election of

518
00:27:38,640 --> 00:27:41,600
Speaker 3: Petro in Colombia, Borich and Chile, and then Lula most

519
00:27:41,600 --> 00:27:44,399
Speaker 3: recently in Brazil. So pink tide is I think a

520
00:27:44,440 --> 00:27:47,760
Speaker 3: funny way of putting it, but referring to leftists or

521
00:27:47,800 --> 00:27:51,320
Speaker 3: censor leftist governments across the major markets or major economies

522
00:27:51,359 --> 00:27:53,760
Speaker 3: of the region. And there are a number of other examples.

523
00:27:53,800 --> 00:27:55,639
Speaker 3: Those are just the big ones.

524
00:27:56,160 --> 00:27:57,760
Speaker 1: So I'm actually going to lead us to a last

525
00:27:57,760 --> 00:28:00,679
Speaker 1: section where I'm going to ask you a couple questions

526
00:28:00,800 --> 00:28:03,199
Speaker 1: on whether or not we should keep watching something or

527
00:28:03,240 --> 00:28:05,199
Speaker 1: it's kind of something that we shay ignore because we

528
00:28:05,359 --> 00:28:07,639
Speaker 1: be and ef we keep our eye on a number

529
00:28:07,640 --> 00:28:10,439
Speaker 1: of different things across different regions around the world, and

530
00:28:10,480 --> 00:28:13,280
Speaker 1: that can come from business all the way through to policy.

531
00:28:13,520 --> 00:28:17,120
Speaker 1: And so in the watch or ignore category, should we

532
00:28:17,359 --> 00:28:21,400
Speaker 1: be watching or ignoring? Voluntary carbon offsets.

533
00:28:21,240 --> 00:28:24,720
Speaker 3: One hundred percent watching and one hundred percent watching in Brazil.

534
00:28:24,520 --> 00:28:27,320
Speaker 3: So Brazil accounted for just a few I think. I

535
00:28:27,320 --> 00:28:28,840
Speaker 3: think as recently as two years ago was like a

536
00:28:28,840 --> 00:28:31,920
Speaker 3: couple percentage share of the global voluntary carbon market. I

537
00:28:31,920 --> 00:28:34,280
Speaker 3: think last year was twelve or thirteen percent. It has

538
00:28:34,359 --> 00:28:37,800
Speaker 3: some of the largest potential globally to produce offsets, tied

539
00:28:37,840 --> 00:28:41,080
Speaker 3: to obviously being home to the largest rainforest in the world.

540
00:28:41,240 --> 00:28:44,680
Speaker 1: Also, in watching and ignore, any changes to the auction space.

541
00:28:44,680 --> 00:28:49,320
Speaker 2: Watching definitely, well, we're going to see auction auctions is

542
00:28:49,360 --> 00:28:52,040
Speaker 2: a very important thing for the region overall. I would

543
00:28:52,040 --> 00:28:56,440
Speaker 2: say Chill is going to be holding a very big

544
00:28:56,840 --> 00:28:59,960
Speaker 2: auction this year that we haven't seen since should tell

545
00:29:00,120 --> 00:29:05,680
Speaker 2: than fifteen And with that came as some important modifications

546
00:29:06,000 --> 00:29:12,560
Speaker 2: which is going to increase the competitiveness of renewables and starch.

547
00:29:12,920 --> 00:29:15,720
Speaker 2: So for now we have a touch on this. But

548
00:29:15,880 --> 00:29:19,960
Speaker 2: Chile has a big problem in terms of transmission bottlenecks,

549
00:29:20,080 --> 00:29:25,440
Speaker 2: and advancing transmission lines and allowing more storage projects are

550
00:29:25,840 --> 00:29:30,200
Speaker 2: solutions to increase grit flexibility. So that is why these

551
00:29:30,320 --> 00:29:33,920
Speaker 2: next auctions in Chile are going to be very much

552
00:29:33,960 --> 00:29:34,600
Speaker 2: focused on that.

553
00:29:35,160 --> 00:29:37,960
Speaker 1: Okay, and so this last one something that we've been

554
00:29:38,000 --> 00:29:41,120
Speaker 1: globally watching that given what's rolling out in Latin America,

555
00:29:41,360 --> 00:29:44,000
Speaker 1: watch or ignore? Should the region Maybe not US, because

556
00:29:44,000 --> 00:29:46,360
Speaker 1: we certainly are looking at this, but is Latin America

557
00:29:46,400 --> 00:29:49,120
Speaker 1: closely watching or ignoring natural gas prices?

558
00:29:49,560 --> 00:29:53,040
Speaker 3: So it's difficult to generalize, but in Mexico natural gas

559
00:29:53,160 --> 00:29:55,280
Speaker 3: is very cheap and abundant thanks to proximity to the US.

560
00:29:55,320 --> 00:29:57,680
Speaker 3: In the case of Brazil, it's very important in years

561
00:29:57,760 --> 00:30:00,320
Speaker 3: of low rainfall when hydrogeneration is down and then it

562
00:30:00,320 --> 00:30:02,400
Speaker 3: has a huge impact on the market. So right now

563
00:30:02,560 --> 00:30:06,080
Speaker 3: probably ignoring, but next year possibly watching, particularly in the

564
00:30:06,080 --> 00:30:06,680
Speaker 3: case of Brazil.

565
00:30:07,280 --> 00:30:09,520
Speaker 1: Okay, Natalia and James, thank you so much for joining

566
00:30:09,600 --> 00:30:10,040
Speaker 1: us today.

567
00:30:10,200 --> 00:30:10,880
Speaker 5: Thank you so much.

568
00:30:11,560 --> 00:30:21,960
Speaker 4: Thank you. Dana Bloomberg.

569
00:30:22,040 --> 00:30:24,800
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00:30:24,960 --> 00:30:28,360
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