Brazil has extended significant tax exemptions to a groundbreaking 3GW green hydrogen and ammonia project. Developed by Solatio, a key player in the solar energy industry, this ambitious endeavor has received approval from the National Council of Export Processing Zones (CZPE) for substantial CAPEX and OPEX tax benefits. These incentives arrive as Solatio gears up to make its final investment decision (FID) within the year, setting the stage for a transformative shift in the green hydrogen landscape.
Markedly, Solatio’s project, a massive undertaking in the Parnaíba Export Processing Zone in Piauí, is projected to unfold across three consecutive phases, each contributing 1GW annually. The first phase is anticipated to initiate operations by January 2029. This strategic phasing aligns with the broader market goals, targeting a substantial export footprint primarily aimed at the European and Asian markets, regions that are actively diversifying their energy portfolios with green hydrogen. Despite ongoing negotiations around offtake agreements, the project has already garnered considerable attention.
The comprehensive engineering blueprint, crafted by Australia’s Worley, estimates the project’s CAPEX to reach $4.3 billion, highlighting the substantial investment needed to position Brazil at the forefront of green energy production. However, the benefits of tax exemptions could alleviate some financial strain, driving down the costs associated with both initiation and ongoing operations.
August’s green light from the Brazilian National Secretariat for Energy, Transition, and Planning ensured a dependable 3GW grid connection, facilitating access to a continuous renewable energy supply. This integration underscores Brazil’s commitment to adhering to international green hydrogen standards, exemplified by the project’s innovative strategy to balance energy loads through energy “exchanges” with wind and hydro sources during daylight and off-peak hours.
Importantly, the ambition to reduce the levelized cost of hydrogen (LCOH) below $3/kg positions this project as a potential leader in the cost-competitive production of green hydrogen globally. In this context, Pedro Vaquer, CEO of Solatio, emphasized the project’s pivotal role in advancing Brazil’s standing as a major green hydrogen and ammonia producer on the world stage.
As Solatio navigates the complex stages of environmental licensing, an anticipated FID in 2025 looms on the horizon. This development is not solitary but adds to an expanding portfolio of green hydrogen projects within Brazil poised for global export. Imminently, the European Union and other international markets are likely to turn to Brazil, lauded for its affordable renewable energy, as a crucial ally in their transition to sustainable energy.
