Ignis Energy, a prominent Spanish renewable energy company, has announced a significant recalibration of its ambitious green hydrogen and ammonia project in Chile's Magallanes region, citing economic challenges and a global slowdown in the hydrogen sector. The company has opted to suspend and resize the project, a move driven by soaring logistics costs and a re-evaluation of the industry's timeline.

The initial plan, which aimed to establish a gigawatt-scale green hydrogen and ammonia complex powered by a massive 4.5GW wind farm across 100,000 hectares, has been drastically altered. Ignis had previously secured lease agreements for 50,000 hectares in Tierra del Fuego, the southernmost part of Chile, signifying a substantial commitment to the region. However, the company has now terminated over 13 land lease contracts.

Ignis attributed the decision to the slow progress and diminished profitability of the project, acknowledging that the global hydrogen sector is developing at a slower pace than initially anticipated. In a statement to the EFE agency, the company emphasized its continued belief in the long-term viability of green hydrogen but stated that "the company is considering a longer time frame than initially planned and a reduction in the project to adapt it to this new reality."

The project is currently undergoing a comprehensive review to reassess its size, land use, and potential sites. Despite the scaling back, Ignis has reaffirmed its commitment to the Magallanes region, dispelling any rumors of a complete withdrawal. It intends to adapt its projects to better align with current industry trends and challenges, focusing on a more sustainable and economically viable approach.

The challenges faced by Ignis highlight the broader obstacles hindering the development of green hydrogen projects in Chile. Christian Gallardo, a former regional ministerial secretary of Finance, pointed to excessive bureaucracy, permit delays, high logistics costs, and insufficient infrastructure as key impediments. These factors, he argued, are making Chile less competitive compared to neighboring countries like Argentina, Brazil, Uruguay, and Colombia.

Gallardo called for streamlined permits, increased infrastructure investment, and enhanced regulatory certainty to secure Chile's position as a leader in green hydrogen. He emphasized the need for a more supportive regulatory environment to attract and retain investments in this crucial sector.

Ignis Energy, a major player in the renewable energy sector, operates the largest solar project in Europe and maintains a strong presence across multiple continents. With over 550 professionals and a portfolio of over 150 projects, the company remains a significant force in the global renewable energy landscape. However, the decision to scale back its Chilean project underscores the complexities and uncertainties associated with the nascent green hydrogen industry.