Chile should prioritise electricity grid expansion and modernisation if it wants to realise large-scale production of renewable hydrogen and derivatives, according to a new policy proposal from the country's infrastructure policy council (CPI).
In a discussion paper outlining a roadmap for Chile's energy transition through to 2035, CPI argues that the country's main energy challenge is no longer renewable power generation but the transmission, distribution and storage infrastructure needed to support it.
Chile has rapidly expanded renewable generation in recent years, but increasing volumes of renewable electricity are being curtailed because of transmission constraints. Curtailment reached 6,205GWh in 2025, equivalent to about 7.3pc of total electricity generation, according to CPI.
CPI proposes stronger electrification across transport, industry and residential heating, alongside investment in transmission infrastructure and battery storage.
It identifies renewable hydrogen and derivatives such as ammonia as strategic long-term industries that could support domestic decarbonisation. But it argues that a rapid shift to renewable hydrogen is not economically viable in the near term.
Ammonia could play a strategic role in hard-to-abate sectors such as shipping and heavy transport, while domestic production could also help supply Chile's mining industry, CPI said.
CPI proposes producing ammonia using natural gas from Argentina's Vaca Muerta shale reserves, arguing this would allow Chile to build industrial capabilities and reduce dependence on imports before renewable hydrogen production scales up.
Chile currently imports all of the ammonia used by its mining industry to produce ammonium nitrate for explosives, CPI noted. The country's copper mining sector could become a key early-stage consumer of domestically produced hydrogen and derivatives, industry association H2 Chile has previously said.
CPI is calling for measures to accelerate transmission and storage deployment, alongside reforms designed to support electrification and create the conditions for large-scale renewable hydrogen and ammonia production over the longer term. The Chilean government will work with CPI and the Inter-American Development Bank to develop proposals for power-sector reform.
The infrastructure challenge is not unique to Chile. Grid constraints have also emerged as a bottleneck for hydrogen projects in countries including Brazil and Spain, where developers have struggled to secure grid access for large-scale electrolysis projects.
