WEBVTT - Sun, Wind and Pink Tides in Latin America 0:00:00.280 --> 0:00:02.640 This is Dana Perkins and you're listening to Switched on 0:00:02.880 --> 0:00:05.640 the Bennif podcast. As with the rest of the world, 0:00:05.720 --> 0:00:08.440 over the last year, Latin America has been contending with 0:00:08.480 --> 0:00:12.160 inflationary pressures and high energy prices. But what has been 0:00:12.240 --> 0:00:15.560 the region's reaction to the global crisis and how of 0:00:15.640 --> 0:00:19.680 its nations gone about securing affordable domestic energy while also 0:00:19.720 --> 0:00:23.320 looking for new export opportunities. Earlier this month, BEANEF put 0:00:23.320 --> 0:00:27.560 out our region's clean energy policy, supply and installations under 0:00:27.560 --> 0:00:30.920 a microscope when we released the Latin America Market Outlook 0:00:30.960 --> 0:00:33.559 for the first half of twenty twenty three. In addition 0:00:33.720 --> 0:00:37.360 to the market outlook, BENEF also has been researching something 0:00:37.360 --> 0:00:40.240 that has the potential for a huge impact on the region, 0:00:40.640 --> 0:00:43.479 green hydrogen. To find out more, I sat down with 0:00:43.520 --> 0:00:46.559 beanef's head of Latin America Research, James Ellis, and a 0:00:46.600 --> 0:00:49.640 member of benef's team from the saal Pallo office, Associate 0:00:49.720 --> 0:00:53.479 Natalia Cassillos Rebel. Together we discussed a range of topics, 0:00:53.560 --> 0:00:56.800 including key findings from the Latin America Market Outlook, digging 0:00:56.880 --> 0:00:59.960 into the details, and assessing whether last year's record breaking 0:01:00.160 --> 0:01:03.280 solar and winds installations could be surpassed in the future. 0:01:03.680 --> 0:01:06.759 We went into the opportunity for green hydrogen and ammonia 0:01:06.880 --> 0:01:09.800 produced in South America and which countries are at the 0:01:09.840 --> 0:01:13.319 forefront of the potential boom. We also discussed Brazil's small 0:01:13.319 --> 0:01:19.199 scale photovoltaic revolution, Chile's continued clean energy drive, Columbia's renewables rise, 0:01:19.520 --> 0:01:22.759 and some of Mexico's recent failings in this space. If 0:01:22.760 --> 0:01:25.320 you like this podcast, make sure to subscribe to receive 0:01:25.400 --> 0:01:28.600 updates on future episodes and consider giving us a review. 0:01:29.120 --> 0:01:31.440 But right now, let's speak with James and Atalia about 0:01:31.480 --> 0:01:44.800 Latin America. Natalia, thank you for joining. 0:01:45.200 --> 0:01:46.880 Hi everyone, thank you so much. 0:01:47.000 --> 0:01:49.440 Denna and James, thank you for coming back to the show. 0:01:49.680 --> 0:01:51.000 Hey, Dana, it's a pleasure. 0:01:51.440 --> 0:01:53.600 So we're here to talk about Latin America. And we 0:01:53.760 --> 0:01:57.120 just recently put out one of our regular Latin American 0:01:57.160 --> 0:02:00.000 Market outlooks. It's certainly a story of growth right now, 0:02:00.080 --> 0:02:02.520 and James, can you give us some context around that, 0:02:02.600 --> 0:02:04.280 given that this report recently came out. 0:02:04.640 --> 0:02:04.960 Sure. 0:02:05.120 --> 0:02:05.360 Yeah. 0:02:05.400 --> 0:02:07.880 The Latin America Market Outlook is really our flagship publication 0:02:07.960 --> 0:02:11.560 in which we take stock capacity, generation, investment, energy transition 0:02:11.600 --> 0:02:13.520 policy and all the sort of key trends that have 0:02:13.560 --> 0:02:15.639 been happening in the region over the past six months. 0:02:15.760 --> 0:02:17.720 And if there's one thing I would just sort of 0:02:17.720 --> 0:02:20.680 pull out for you as a main finding, it's a 0:02:20.720 --> 0:02:22.560 story of wind and solar growth. As in much of 0:02:22.560 --> 0:02:25.040 the world, wind and solar really just continues to boom 0:02:25.040 --> 0:02:27.919 in Latin America in often spectacular fashion, and really when 0:02:27.960 --> 0:02:30.800 you look at it cumulatively as a region, it only grows. 0:02:31.040 --> 0:02:34.280 So individual markets and segments, of course fluctuate from year 0:02:34.320 --> 0:02:37.720 to year with policy or project development cycles or financial conditions, 0:02:37.760 --> 0:02:40.720 but annual editions of renewal energy and wind and solar 0:02:40.760 --> 0:02:44.680 specifically are getting bigger every year than the year before, 0:02:44.840 --> 0:02:48.000 including even in twenty twenty when the pandemic hit, and 0:02:48.240 --> 0:02:51.240 that of course means that every year is a record 0:02:51.320 --> 0:02:54.160 year basically in terms of growth and wind and solar, 0:02:54.160 --> 0:02:57.040 and last year was no different. Latin America commissioned twenty 0:02:57.080 --> 0:02:59.160 two gigabouts of new wind and solar capacity, which is 0:02:59.200 --> 0:03:01.840 about twenty percent more than the year before. And maybe 0:03:02.160 --> 0:03:04.799 spoiler alert here, we're on track for another record year 0:03:04.800 --> 0:03:06.920 in twenty twenty three, so we'und track. 0:03:06.680 --> 0:03:08.240 For a record year. But I would say a lot 0:03:08.280 --> 0:03:11.679 of what I hear regarding any sort of global trends 0:03:11.840 --> 0:03:14.680 pass to do with inflation. There's a lot of discussion 0:03:14.680 --> 0:03:17.200 around inflation, and then many countries that have responded in 0:03:17.280 --> 0:03:20.480 kind to cool inflation with high interest rates. Are we 0:03:20.600 --> 0:03:24.200 seeing the same issues in parts of Latin America or 0:03:24.480 --> 0:03:27.600 is this growth continued on despite inflationary pressure. 0:03:27.960 --> 0:03:31.040 Well overall, it has very much continued on in spite 0:03:31.080 --> 0:03:34.560 of inflationary pressure. There was interesting news this week, particularly 0:03:34.760 --> 0:03:37.640 in Brazil and Mexico, and I believe Chile as well, 0:03:37.760 --> 0:03:40.880 that inflation is starting to come down and analysts across 0:03:40.920 --> 0:03:43.440 the region are starting to expect central bank to lower rates. 0:03:43.520 --> 0:03:46.960 In central banks largely across the region have kept rates high. Brazil, 0:03:47.560 --> 0:03:49.800 according to many analysts, has had one of the more 0:03:49.840 --> 0:03:53.400 aggressive central bank policies in the world. But this has 0:03:53.440 --> 0:03:56.280 really done nothing to slow the growth of when it's 0:03:56.320 --> 0:03:58.240 solar in the region, it's really just marched on. 0:03:58.600 --> 0:04:01.520 So another thing that we've pointed out in previous podcasts 0:04:01.560 --> 0:04:03.560 around supply chains had to do with the fact that 0:04:03.880 --> 0:04:07.640 Mexico really stands to benefit from changes to global supply 0:04:07.720 --> 0:04:11.080 chains and this near shoring trend that is starting. When 0:04:11.080 --> 0:04:14.480 we're thinking specifically regarding wind and solar. Have we seen 0:04:14.960 --> 0:04:18.760 those industries started to in some cases on shore in 0:04:18.920 --> 0:04:22.200 let m some of the production and have supply chains 0:04:22.240 --> 0:04:26.279 really changed And is that impacting these record breaking years 0:04:26.520 --> 0:04:28.640 that you're talking about. Is it tied together? 0:04:29.080 --> 0:04:31.680 The Mexican story is a really interesting story because there 0:04:31.760 --> 0:04:34.200 are a number of factors that are pushing in opposite directions. 0:04:34.279 --> 0:04:36.320 On the one hand, there's a narrative that the country 0:04:36.320 --> 0:04:39.640 stands to benefit disproportionately from changes in global trade and 0:04:39.680 --> 0:04:44.000 near shoring, and that is largely true, particularly in the 0:04:44.000 --> 0:04:46.800 automotive segment, or has been true. And the main data 0:04:46.839 --> 0:04:48.720 point that you could kind of point to would be 0:04:48.720 --> 0:04:52.200 the announcement of Tesla's new factory that is planned in Monterey, 0:04:52.279 --> 0:04:54.120 Mexico along the border, which will be its first in 0:04:54.200 --> 0:04:56.760 Latin America. But on the other hand, the current administration, 0:04:56.839 --> 0:04:58.960 which has been in power since twenty eighteen, has been 0:04:59.000 --> 0:05:02.359 tremendously hostile to private investment in the energy sector, and 0:05:02.400 --> 0:05:05.480 this is really stunted what had been previously one of 0:05:05.520 --> 0:05:07.480 the most exciting markets for wind at solar development in 0:05:07.520 --> 0:05:11.520 Latin America. So overall, net Mexico is actually not in 0:05:11.560 --> 0:05:14.480 a fantastic place in terms of in terms of energy 0:05:14.560 --> 0:05:19.200 transition investment because of these conflict conflicting factors. 0:05:19.040 --> 0:05:20.919 And really so in terms of the industries that we 0:05:21.040 --> 0:05:24.240 cover in some respects in this automotive and batteries of 0:05:24.279 --> 0:05:27.960 therefore storage space. But really we're not seeing the onshoring 0:05:28.160 --> 0:05:32.799 of wind and solar manufacturing, but we are seeing deployment. 0:05:33.000 --> 0:05:36.320 So let's go in into deployments part of things. What 0:05:36.480 --> 0:05:40.000 countries are really standouts. You mentioned that we're going to 0:05:40.040 --> 0:05:42.520 be entering the year where we're probably going to continue 0:05:42.560 --> 0:05:45.960 to break records. Where are you seeing the most activity. 0:05:46.360 --> 0:05:48.200 It's a story about Brazil now, and this is the 0:05:48.279 --> 0:05:50.200 drivers of growth of clean energy growth in Latin America 0:05:50.240 --> 0:05:52.000 have really changed from a couple of years ago. As 0:05:52.000 --> 0:05:54.640 recently as twenty twenty, clean energy in the region was 0:05:54.640 --> 0:05:58.120 a story for principal markets, all contributing pretty significantly, and 0:05:58.160 --> 0:06:01.800 those being Argentina, Brazil, in Mexico. But as I mentioned, 0:06:01.839 --> 0:06:03.919 what we see today as a market that is much 0:06:04.240 --> 0:06:07.719 much more concentrated, and that's really concentrated within Brazil, which 0:06:07.760 --> 0:06:11.440 contributed about three quarters of regional new build and specifically 0:06:11.640 --> 0:06:14.719 we're talking about growth in solar in the sub five 0:06:14.880 --> 0:06:19.000 megawat market that is the key driver of regional activity. 0:06:19.240 --> 0:06:21.400 I sort of hesitate to call that small scale or 0:06:21.480 --> 0:06:25.279 rooftop just because Brazil's net metering policy is quite generous 0:06:25.440 --> 0:06:28.400 and goes up to five megawats. So it's really growth 0:06:28.440 --> 0:06:31.080 in this five megawats solar market that's the key driver 0:06:31.120 --> 0:06:32.960 of regional activity. And just to kind of put some 0:06:33.040 --> 0:06:36.159 numbers around that that I think will give much much 0:06:36.200 --> 0:06:39.880 needed context, that segment added more capacity than total solar 0:06:39.880 --> 0:06:42.280 additions in the rest of Latin America combined, and that's 0:06:42.320 --> 0:06:45.480 including Brazil's own utility scale solar gains, and it provided 0:06:45.480 --> 0:06:49.360 about a half of overall regional wind and solar capacity growth. 0:06:49.560 --> 0:06:52.960 So we're talking about eleven gigawatts of solar that's all 0:06:53.080 --> 0:06:56.760 under five megawat systems, and that's just completely crazy growth 0:06:56.960 --> 0:07:00.800 because it also dwarfs Brazil's own utility scale solar editions, 0:07:00.800 --> 0:07:03.040 which were just about three and a half gigawatts. And 0:07:03.080 --> 0:07:04.840 the reason why that's sort of unusual is in most 0:07:04.920 --> 0:07:06.840 markets around the world, it's really the other way around. 0:07:07.080 --> 0:07:09.800 Utility scale is generally much more dominant in a much 0:07:09.880 --> 0:07:11.960 larger share of the solar market. There are some other 0:07:12.000 --> 0:07:14.720 exceptions like Australia, but in general, like in the inner market, 0:07:14.760 --> 0:07:17.720 like the US, utility scale is much bigger. So those 0:07:17.720 --> 0:07:20.640 eleven gigawottes of small scale let's call it PV in 0:07:20.640 --> 0:07:23.440 Brazil is much bigger than about the eight and a 0:07:23.480 --> 0:07:25.800 half that was installed in the US last year, and 0:07:26.120 --> 0:07:28.800 many many times greater than the two and a half 0:07:28.800 --> 0:07:31.960 gigawatts of a residential commercial solo that was installed in India. 0:07:32.040 --> 0:07:34.520 So we're talking at this point about a very very 0:07:34.520 --> 0:07:37.760 big market by global standards. Brazil installed the fourth most 0:07:37.760 --> 0:07:39.120 solar in the world in twenty twenty two. 0:07:39.160 --> 0:07:41.360 That you're hesitant to call it residential solar. These not 0:07:41.440 --> 0:07:42.480 residential projects. 0:07:43.040 --> 0:07:45.680 Well a lot of them are residential, a lot of 0:07:45.680 --> 0:07:50.320 them are commercial as well, and that's largely because, as 0:07:50.360 --> 0:07:52.840 I said, you know, maybe a typical household system, we're 0:07:52.880 --> 0:07:55.240 thinking of something in the high single digits or very 0:07:55.280 --> 0:07:57.600 low double digits in the kilowatts. And in Brazil the 0:07:58.600 --> 0:08:01.280 net metering benefit extends up to five megwats. So in 0:08:01.600 --> 0:08:04.360 some countries, as our head of Solar Jenny Chase says, 0:08:04.360 --> 0:08:07.040 in some countries that would be large scale solar, and 0:08:07.320 --> 0:08:09.679 it can also be claimed either like locally like local 0:08:09.680 --> 0:08:12.360 net metering i e. Located in the same location as 0:08:12.400 --> 0:08:14.680 the consumer, or remote net metering, that is, the plant 0:08:14.720 --> 0:08:17.160 can be located in a completely different location from the consumer. 0:08:17.240 --> 0:08:19.560 So this is sort of allowed consumers across Brazil, whether 0:08:19.600 --> 0:08:23.640 residential or commercial, install pretty large sized solar systems all 0:08:23.640 --> 0:08:26.240 over the country and benefit tremendously because power prices are 0:08:26.240 --> 0:08:28.200 pretty high in Brazil and the country has great sun, 0:08:28.360 --> 0:08:31.240 and those factors together have really helped kick off a 0:08:31.240 --> 0:08:33.760 boom that has had an impact on the solar market 0:08:33.800 --> 0:08:36.920 in the region. Who are financing these projects, well, you know, 0:08:36.960 --> 0:08:39.280 at this point the market's quite mature. So I mean, 0:08:40.080 --> 0:08:42.440 I couldn't I couldn't pinpoint just one sort of subsector. 0:08:42.480 --> 0:08:44.760 I mean, it's buy in large private banks, but. 0:08:44.760 --> 0:08:48.400 It's largely diverse, and it's largely coming from utilities kicking 0:08:48.440 --> 0:08:51.640 things off and then build or project developers kicking things off, 0:08:51.679 --> 0:08:54.319 even at this smaller scale, doing a number of small 0:08:54.320 --> 0:08:57.400 projects in a number of different locations, and then either 0:08:57.920 --> 0:08:59.200 operating them or selling them on. 0:08:59.360 --> 0:09:02.959 Yeah, it's house it's businesses seeking to lower their power bills. 0:09:03.240 --> 0:09:06.760 That there are developers involved, there's community solar arrangements. There 0:09:06.800 --> 0:09:09.240 really are a variety of different schemes. As I said, 0:09:09.240 --> 0:09:11.079 this was a market that was about Brazil. I think 0:09:11.080 --> 0:09:13.480 at twenty nineteen sold about two gigattes of small scale TV, 0:09:13.679 --> 0:09:16.160 and now it's eleven. So I think that point that 0:09:16.200 --> 0:09:17.960 a lot of markets around the world have reached where 0:09:17.960 --> 0:09:20.560 it's in headlong kind of solar growth. And I'll have 0:09:20.600 --> 0:09:22.120 to say it came in quite a bit higher than 0:09:22.120 --> 0:09:24.080 our forecast for this year, which originally were around nine 0:09:24.120 --> 0:09:26.880 or ten gigaotts for twenty twenty two. So there's so 0:09:26.960 --> 0:09:29.480 much solar being installed in Brazil in this segment that 0:09:29.679 --> 0:09:32.200 the regulator itself is having a hard time keeping track 0:09:32.240 --> 0:09:34.240 of all of them. So the historical numbers also keep 0:09:34.280 --> 0:09:36.320 going up, which makes it kind of difficult to keep 0:09:36.360 --> 0:09:37.239 track of things. 0:09:37.360 --> 0:09:39.640 So really fragmented, which is really exciting to see so 0:09:39.720 --> 0:09:41.880 many things happening all at once, and then looking at 0:09:41.920 --> 0:09:44.720 this and we're seeing essentially a number of different projects 0:09:44.720 --> 0:09:48.720 happening across the country. Really what it makes me think 0:09:48.760 --> 0:09:51.160 of is a number of different projects require a number 0:09:51.200 --> 0:09:54.439 of different permitting processes and a lot more paperwork because 0:09:54.440 --> 0:09:57.560 they're different projects. So surely there must be some very 0:09:57.559 --> 0:10:00.559 strong government incentive to bring these sorts of things up online. 0:10:00.679 --> 0:10:03.000 Why are things moving so quickly and so well in 0:10:03.040 --> 0:10:04.559 Brazil in particular. 0:10:04.240 --> 0:10:07.120 Well, for a brief period under the past government, when 0:10:07.160 --> 0:10:10.880 the debate over how to reform the net metering program 0:10:10.960 --> 0:10:13.360 was underway, there was a brief window in which the 0:10:13.400 --> 0:10:17.120 policy environment became quite contentious and the net metering program 0:10:17.160 --> 0:10:19.440 became controversial and a little bit politicized. There was a 0:10:19.480 --> 0:10:22.440 don't tax the sun A bit humorous, humorous to say that, 0:10:23.000 --> 0:10:23.440 but there. 0:10:23.320 --> 0:10:27.760 Was a don't tax side it was it works well, 0:10:27.960 --> 0:10:28.760 and it did work. 0:10:29.320 --> 0:10:32.200 The way that net metering was reformed was done in 0:10:32.240 --> 0:10:34.040 a way that I would argue was pretty generous to 0:10:34.440 --> 0:10:38.960 solar overall. It largely provided continuity to existing rules. So 0:10:39.280 --> 0:10:42.880 the market continues to boom on. Existing systems are kind 0:10:42.920 --> 0:10:45.199 of eligible for net metering through twenty forty five, and 0:10:45.200 --> 0:10:48.120 those that are installed in this year are starting to 0:10:48.120 --> 0:10:50.880 pay a very small, almost negligible part of the tariff 0:10:51.040 --> 0:10:53.360 for use of the grid, and they're sort of phased 0:10:53.360 --> 0:10:55.200 in over a six year period, and it's going up. 0:10:55.440 --> 0:10:57.800 I think the grid fees usually are about thirty percent 0:10:57.960 --> 0:11:00.480 of the total bill, and so customers who install solar 0:11:00.480 --> 0:11:02.959 are going to start paying fifteen percent of thirty percent 0:11:02.960 --> 0:11:05.720 of their bill, So overall, it's a very sort of 0:11:05.760 --> 0:11:09.400 soft rule and it remains a very attractive thing to do. 0:11:09.679 --> 0:11:12.200 So that is part of the reason why overall wind 0:11:12.200 --> 0:11:14.720 and solar growth in Latin America we're looking at another 0:11:14.760 --> 0:11:16.120 record year in twenty twenty three. 0:11:16.200 --> 0:11:19.200 So let's pivot to another country that is definitely also 0:11:19.400 --> 0:11:23.079 a solar powerhouse. Snowpun intended. What's happening in Chile. 0:11:23.559 --> 0:11:27.280 So Chile is very much it's important. I'm glad you 0:11:27.280 --> 0:11:29.120 brought up Chile. It's really important Mark can talk about. 0:11:29.120 --> 0:11:32.000 It's obviously a much smaller power market overall than Brazil. 0:11:32.040 --> 0:11:35.480 It's thirty two gigawatts total installed capacity versus one hundred 0:11:35.480 --> 0:11:38.439 and ninety three for Brazil, so much much smaller in 0:11:38.559 --> 0:11:41.080 terms of overall impact on the region. But as a market, 0:11:41.120 --> 0:11:43.000 it's really out in front in the region in terms 0:11:43.000 --> 0:11:44.920 of policy and even compared to the rest of the world. 0:11:45.120 --> 0:11:48.880 Chile also had record wind and solar editions last year. 0:11:48.960 --> 0:11:50.920 It has nothing to do with small scale though, it's 0:11:51.160 --> 0:11:53.920 almost completely utility scale winded solar editions that we're talking 0:11:53.920 --> 0:11:56.360 about in terms of scale that's about three gigawats. But 0:11:56.400 --> 0:11:58.800 more importantly, it's starting to hit some really cool milestones, 0:11:58.960 --> 0:12:00.800 and a couple of those are so lar actually became 0:12:00.840 --> 0:12:03.920 the largest power generation technology by capacity in the country 0:12:04.000 --> 0:12:07.000 last year with about twenty two percent of total capacity 0:12:07.000 --> 0:12:08.800 in Chile is now solar, so that just sort of 0:12:08.920 --> 0:12:11.400 edged out large hydro. And then the other thing that 0:12:11.400 --> 0:12:14.240 I think is very cool by regional and global standards 0:12:14.280 --> 0:12:17.440 is that wind and solar combined provided a whopping twenty 0:12:17.480 --> 0:12:21.080 eight percent of total generation in Chile last year, So 0:12:21.320 --> 0:12:23.840 that is really really high. And for context, in Brazil 0:12:24.120 --> 0:12:26.800 that is about fifteen percent fifteen percent of generation comes 0:12:26.840 --> 0:12:29.680 from wind and solar utility scale, and in Argentina and 0:12:29.800 --> 0:12:32.880 Mexico it's about eleven eleven twelve percent. So Chile is 0:12:33.000 --> 0:12:35.200 also in many ways very much a regional leader. 0:12:35.559 --> 0:12:38.600 Wow. And then speaking of regional leaders, Lynn the category 0:12:38.640 --> 0:12:41.680 of maybe biggest mover, where would you put Columbia. 0:12:42.280 --> 0:12:45.120 Colombia is fascinating as a market because, as I mentioned 0:12:45.160 --> 0:12:47.480 when we were talking about the top line winded solar 0:12:47.480 --> 0:12:51.679 growth in the region, there are some important fluctuations in 0:12:51.760 --> 0:12:54.560 other markets that have kind of lent Brazil outsize importance, 0:12:54.720 --> 0:12:57.000 And what I was alluding to really was the fact 0:12:57.000 --> 0:13:00.240 that Mexico and Argentina are both at a low for 0:13:00.320 --> 0:13:02.480 very different reasons, at a low in terms of clean 0:13:02.559 --> 0:13:05.920 energy deployment. And Colombia is a very interesting market to 0:13:05.960 --> 0:13:08.120 look at right now because it's sort of filling in 0:13:08.120 --> 0:13:11.440 the gap and it's really just starting to get going 0:13:11.640 --> 0:13:14.120 and about to kick off a multi year what we 0:13:14.160 --> 0:13:16.319 forecasted to be a multi year boom and wind and 0:13:16.360 --> 0:13:19.320 solar installation. But one important data point to look at 0:13:19.320 --> 0:13:21.319 here is that for the first time in twenty twenty two, 0:13:21.480 --> 0:13:24.320 Columbia end of the year among the top three destinations 0:13:24.320 --> 0:13:26.760 for new investment in the region for the very first time, 0:13:27.000 --> 0:13:29.959 it's mostly tied to utility scale solar at this point. 0:13:30.080 --> 0:13:32.200 There have been some really significant delays tied to wind 0:13:32.320 --> 0:13:34.439 just because the wind resource, as in most markets, it's 0:13:34.559 --> 0:13:37.760 very geographically concentrated in a particular part of Columbia where 0:13:37.760 --> 0:13:40.920 there have been significant delays tied to transmission interconnectivity. But yeah, 0:13:41.200 --> 0:13:43.280 I don't know, Natalia, do you want to come in there? Yeah? 0:13:43.360 --> 0:13:45.920 Sure, Well, as you mentioned, there has been some of 0:13:46.000 --> 0:13:50.160 the delays in terms of transmission connection in this region, 0:13:50.200 --> 0:13:53.840 which is going to be the area where all the 0:13:53.880 --> 0:13:58.240 wind farms are concentrated called Labajira, a region with very 0:13:58.360 --> 0:14:00.000 poor infrastructure over. 0:14:00.840 --> 0:14:03.040 And also projects. 0:14:03.200 --> 0:14:08.439 Both the wind developers and also transmission developers are facing 0:14:08.600 --> 0:14:13.280 challenges in terms of negotiating with local communities to get 0:14:13.360 --> 0:14:16.680 the permits that they need in order to build their 0:14:16.720 --> 0:14:20.760 assets in that region. And just to give some stats 0:14:20.760 --> 0:14:24.280 on that, the company that is developing the transmission line 0:14:24.480 --> 0:14:28.359 had to negotiate with more than two hundred local communities 0:14:28.600 --> 0:14:33.000 and that is a process that took much much longer 0:14:33.040 --> 0:14:37.440 than it was actually predicted, and it's causing delays of 0:14:37.520 --> 0:14:41.360 this transmission line. And because of that, a lot of 0:14:41.400 --> 0:14:44.120 the wind farms that are planned for their region are 0:14:44.200 --> 0:14:47.800 also going to be delayed. So that is a downsign 0:14:47.960 --> 0:14:51.760 for Columbia as all of the wind farms is concentrated 0:14:51.800 --> 0:14:55.760 in this region. But for the solar side, the good 0:14:55.800 --> 0:15:00.200 news is that the resourcers are more spread out us 0:15:00.240 --> 0:15:04.840 the country, so the developer zone face the same challenge 0:15:05.000 --> 0:15:09.800 and we are seeing more deployment of solar projects. Year 0:15:09.840 --> 0:15:11.680 by year, we're seeing growth on that. 0:15:12.200 --> 0:15:14.480 So, Natalia, let's go into a space that you've spent 0:15:14.520 --> 0:15:17.400 some time looking at very recently, which is hydrogen, and 0:15:17.600 --> 0:15:21.400 this is intrinsically linked to this clean energy that we 0:15:21.440 --> 0:15:24.680 are seeing installed. So with this wind and solar capacity 0:15:25.200 --> 0:15:29.400 comes the potential for green hydrogen and hydrogen made from 0:15:29.440 --> 0:15:31.880 renewable sources. Can you talk a little bit about some 0:15:31.960 --> 0:15:34.160 of the countries that have been the leaders in this 0:15:34.280 --> 0:15:37.280 space in terms of really looking at green hydrogen is 0:15:37.360 --> 0:15:39.080 a really big market opportunity. 0:15:39.360 --> 0:15:39.680 Sure. 0:15:39.880 --> 0:15:43.720 I'd like to start saying why green hydrogen is so 0:15:44.080 --> 0:15:47.280 relevant for the region, and that is because we have 0:15:47.920 --> 0:15:51.560 the best renewable resources in the world in many countries. 0:15:51.800 --> 0:15:53.480 So in Brazil we have. 0:15:53.440 --> 0:15:57.040 The best capacity factors for wind farms and in Chile 0:15:57.360 --> 0:16:00.640 we have the best capacity factors for sol. So that 0:16:00.720 --> 0:16:05.560 means these two countries they can produce very cheap renewable 0:16:05.720 --> 0:16:10.120 power and that is a key element to produce cheap 0:16:10.400 --> 0:16:14.120 hydrogen as well. So according to our projections, we see 0:16:14.160 --> 0:16:18.640 Brazil and Chile having the lowest l COH the levelized 0:16:18.680 --> 0:16:22.920 costs of hydrogen in the world today and in twenty 0:16:23.040 --> 0:16:26.000 thirty and in twenty and fifty, and that is basically 0:16:26.040 --> 0:16:30.160 because of the great renewable resources that we have in 0:16:30.200 --> 0:16:31.160 these two countries. 0:16:32.200 --> 0:16:35.040 So We've got a lot being installed and it's incredibly efficient. 0:16:35.200 --> 0:16:39.120 So countries and companies are looking at ways to better 0:16:39.320 --> 0:16:43.000 use these high capacity factors for their wind and solar, 0:16:43.040 --> 0:16:44.920 which I'm sure is driving part of it. But then 0:16:44.960 --> 0:16:50.040 with hydrogen itself, so are the conditions right to store use. 0:16:50.200 --> 0:16:54.400 What's the domestic circumstances both physically and from a demand 0:16:54.440 --> 0:16:55.520 standpoint for this. 0:16:56.560 --> 0:16:58.560 That's a very important question. 0:16:59.080 --> 0:17:02.440 So for now we are seeing most of the projects 0:17:02.480 --> 0:17:06.680 being developed in the region mainly focused on exports, so 0:17:06.760 --> 0:17:11.920 the domestic demand signs are not here yet. So basically 0:17:12.040 --> 0:17:16.240 Europe and Asia are giving the first concrete signs of demand, 0:17:16.480 --> 0:17:20.520 and the company is developing green hydrogen projects both in 0:17:20.600 --> 0:17:24.800 Brazil and Chile are mainly focusing on exporting for these 0:17:24.840 --> 0:17:29.560 two areas of the world. But that actually imposes a 0:17:29.760 --> 0:17:33.960 risk because it's actually a little bit uncertain how much 0:17:34.119 --> 0:17:35.120 is going to be the. 0:17:35.240 --> 0:17:40.120 International demand for green hydrogen. So in my. 0:17:40.160 --> 0:17:44.920 Opinion Blomberg's opinion, we think that these two countries Brazil 0:17:45.000 --> 0:17:47.720 and Chile, or whatever country that is actually planning to 0:17:48.359 --> 0:17:51.919 produce green hydrogen, they need to start thinking about policystems 0:17:51.960 --> 0:17:55.880 centervized local demand as well and there are some sectors 0:17:55.880 --> 0:17:59.679 in the region in Brazil and Chile mainly that could 0:18:00.160 --> 0:18:04.120 be a potential domestic demand, big potential demand, which. 0:18:03.920 --> 0:18:06.560 Are still and fertilizers. 0:18:06.920 --> 0:18:12.199 So Brazil is a huge market for the agriculture sector 0:18:12.320 --> 0:18:15.480 right and because of that, it consumes a lot of fertilizers, 0:18:15.520 --> 0:18:21.480 but seventy six percent of the nitrogen fertilizers are important today, 0:18:21.920 --> 0:18:25.600 so there's a huge opportunity therefore Brazil start to producing 0:18:26.160 --> 0:18:30.840 their own fertilizer and producing in a green way. So 0:18:31.400 --> 0:18:36.040 and especially if we see this green fertilizer market to 0:18:36.160 --> 0:18:40.760 flourish in the future, Brazil could even start producing locally 0:18:40.880 --> 0:18:42.720 and exporting to other markets. 0:18:42.920 --> 0:18:46.200 Are the conditions right geologically speaking to store hydrogen? 0:18:46.840 --> 0:18:47.119 No? 0:18:47.119 --> 0:18:50.680 Not, Actually, we are not talking so much about storage 0:18:50.720 --> 0:18:51.400 of hydrogen. 0:18:51.680 --> 0:18:52.640 Mainly, all the. 0:18:52.640 --> 0:18:55.919 Green hydrogen projects being developed they have some sort of 0:18:56.280 --> 0:19:01.480 facility to transform convert the hydrogen into something else, a derivative. 0:19:01.800 --> 0:19:07.679 That could be ammonia, that could be methanol, and these 0:19:07.720 --> 0:19:13.040 two materials that could be further use for other uses. Ammonia, 0:19:13.080 --> 0:19:17.400 for instance, would be applied mainly in the fertilizer markets, 0:19:17.440 --> 0:19:18.480 but it could also. 0:19:18.280 --> 0:19:21.000 Be used as a fuel methanol. 0:19:21.200 --> 0:19:23.760 It could be used as a fuel or as a 0:19:23.840 --> 0:19:27.159 raw material for other processes as well. So there's a 0:19:27.280 --> 0:19:30.760 very interesting project in Chile, for instance, that they actually 0:19:30.960 --> 0:19:35.880 already commission that they are producing methanol from green hydrogen 0:19:36.000 --> 0:19:40.119 and capturing CO two from the atmosphere, producing methanol and 0:19:40.160 --> 0:19:44.399 then transforming the methanol into synthetic gasoline, and that synthetic 0:19:44.440 --> 0:19:48.080 gasoline is going to be exported to Europe. That's one 0:19:48.160 --> 0:19:52.600 example of how the international demand is going to play out. 0:19:52.680 --> 0:19:55.359 For use cases like aviation for example. 0:19:55.160 --> 0:20:00.280 Aviation as well, Yeah, and ship transportation. Both methanol and 0:20:00.440 --> 0:20:02.440 ammonia could be applied. 0:20:02.600 --> 0:20:05.320 So it's either user or ship it, which then brings 0:20:05.359 --> 0:20:07.000 us all the way back to supply chains again and 0:20:07.080 --> 0:20:09.840 seemingly a very hot topic this year. And my question 0:20:09.920 --> 0:20:12.480 is when it's being shipped, is it being shipped as methanol? 0:20:12.560 --> 0:20:15.640 Is it being shipped as ammonia? Are we actually shipping 0:20:16.000 --> 0:20:17.879 tankers of hydrogen. 0:20:17.600 --> 0:20:22.399 Now we're shipping as ammonia or methanol. It depends on 0:20:23.080 --> 0:20:27.040 what the off taker is planning to do with the derivative. 0:20:27.400 --> 0:20:31.439 So this first case in Chile, they're shipping as a 0:20:31.480 --> 0:20:35.800 synthetic gasoline already, so the product is already finalized and ready. 0:20:35.560 --> 0:20:36.639 To be used in Europe. 0:20:36.720 --> 0:20:41.520 The many projects are aiming to ship as ammonia and 0:20:41.560 --> 0:20:45.520 then in Europe first they would transform the pemonia into 0:20:45.640 --> 0:20:48.520 other fertilizers and methanol the same case. 0:20:48.920 --> 0:20:51.000