H2 Brazil, a project established through a partnership between the Brazilian Ministry of Mines and Energy and the German Agency for International Cooperation (GIZ), has identified at least 42 green hydrogen production projects in Brazil of varying sizes and stages of development.
The mapping project was conducted in 2021 and is expected to run until the end of 2023. It mapped more than 800 companies and institutions in 12 sectors of the green hydrogen value chain in five Brazilian regions.
The mapping project identified green hydrogen hubs in port regions as one of the main business models for developing green hydrogen in Brazil. These hubs concentrate all the demand from the port industrial complexes in one place and can also meet export demand. For transportation, the production of green ammonia is one of the main options. Most green hydrogen hubs are located in ports in the northeast of the country, where most of the country’s solar capacity is also installed.
Green hydrogen production is seen as a way to tap Brazil’s enormous potential for renewable generation. From projects currently under development, there are 99 GW of solar energy and 25 GW of wind energy capacity. However, electricity accounts for 73% of the production cost of green hydrogen.
In the last federal government auction held in October 2022, where the sources were contracted with supply starting in 2027, wind and solar were negotiated for BRL 175 ($34.72)/MWh and BRL 171/MWh, respectively. In the wholesale market, incentivized energy (which also includes small hydroelectric plants) is being negotiated at BRL 113/MWh for contracts with supply starting in 2024. For green hydrogen produced in Brazil to become competitive, the price level for renewable energy in the country should decrease to between $10/MWh and $30/MWh (BRL 149/MWh), according to estimates presented at the Intersolar Summit Nordeste.
The cost of transportation and storage will also be a differential for the production and commercialization of green hydrogen. Additionally, the geographical location of the ports in the northeast of the country and the presence of industrial consumers, which could make joint investments in infrastructure, can be significant in giving Brazil the edge in the global green hydrogen race.
Green hydrogen has significant potential in Brazil, which has abundant resources for renewable energy generation. However, to achieve competitiveness in the production of green hydrogen, the cost of renewable energy needs to decrease significantly. Furthermore, transportation and storage costs need to be minimized to promote the commercialization of green hydrogen.