Uruguay plans $4 billion green hydrogen facility investment

May 19, 2023

By Lucinda Elliott

MONTEVIDEO (Reuters) – Uruguay's state oil company Ancap announced on Thursday a feasibility study for a new $4 billion green hydrogen project, part of a broader government plan to produce low-cost renewable energy.

"Here in Uruguay, and here in Paysandu, we are going to benefit from this investment," President Luis Lacalle Pou told reporters in the department of Paysandu, a key area for the country's eucalyptus pulp mill industry.

The planned green hydrogen and e-fuel facility would initially be aimed at trucks used in the forestry sector, officials said.

Green hydrogen is made using renewable energy to split water by electrolysis, without producing greenhouse gases. So-called grey hydrogen, the current standard, is extracted from coal or natural gas.

Uruguay will work alongside HIF Global, backed by German car maker Porsche that already is developing eFuel facilities in Chile, Australia and the United States, Ancap said in a statement.

Work is due to begin in 2024 and will require an investment of close to $2 billion for green hydrogen and synthetic gasoline production, plus an additional $2 billion to install wind farm turbines to power the plant.

Thursday's announcement follows a bidding process that began in September last year. A smaller pilot project worth $10 million was announced in May.

Over the past decade Uruguay has dramatically shifted its energy matrix to renewable sources, placing it at the forefront of clean power in the region.

Energy companies are increasingly eyeing green hydrogen investments in Latin America as a way to help combat climate change.

(Reporting by Lucinda Elliott; editing by Diane Craft)