Spanish solar and green hydrogen developer Solatio is awaiting a decision from Brazil’s grid operator ONS before it can advance a 26bn-real (US$4.8bn) project in Piauí state.
The green hydrogen project would also involve the construction of a port terminal. The 3GW electrolysis facility is planned to produce 400,000t/y of green hydrogen and 2.2Mt/y of green ammonia.
Earlier this year, ONS rejected the company’s request for grid connection. Subsequently, electric power regulator Aneel partially approved Solatio’s request to suspend the effects of the decision, ordering the suspension of other processes that could potentially conflict with the project.
Solatio’s director of business development, Eduardo Azevedo, talked to BNamericas on the sidelines of an industry event about the details of the initiative and the hurdles that large projects seeking grid connection face.
BNamericas: What’s the status of your project in Piauí and what are the main challenges?
Azevedo: The project has 3GW, divided into three tranches of 1GW each, with deliveries scheduled for 2029, 2030 and 2031. Initially, the first delivery was planned for 2028, but delays prevented this.
As a consequence, we will lose part of the tax benefits expected for 2028. Industry association [ABH2] is fighting to have this deadline extended by at least one year.
The project has already gone through [scope selection and development], showing advanced maturity and is now starting [execution planning].
We have competitive prices and favorable conditions, but there’s also a major infrastructure challenge.
Piauí doesn’t have a port with the capacity for this project. This means that without enabling the construction of a terminal, we won’t be able to export, and the project would have to be resized to serve only the local market.
BNamericas: Why was Piauí chosen to host the project?
Azevedo: Because, together with Ceará state, it offers the best renewable energy conditions. Both are close to consumer markets in Europe and the US and have proactive governors supporting the sector.
BNamericas: What’s the crucial step now that will define whether the project will be 3GW or smaller?
Azevedo: The access report. It was issued in July and rejected, but it’s now under review by ONS, with Aneel acting as an intermediary. The updated report should show the real connection capacity. Whatever is decided will be sovereign.
BNamericas: What happens if the capacity defined in the access report is less than the planned 3GW?
Azevedo: If it’s 2,700MW, for example, it would still make sense to invest, even with some losses, because we would have priority in the expansion compared to other projects in the region. But if it were only 200MW, the project wouldn’t be viable and would be discarded.
BNamericas: What are Solatio’s next steps regarding the project?
Azevedo: The project is already pre-approved and has pre-defined resources. The next step will be to present the result to the investors and set construction start dates together with the financiers.
BNamericas: Who are the potential offtakers of the green hydrogen to be produced?
Azevedo: In Europe, there are port operators, industries, refineries and even hydrogen-natural gas blending projects that are interested. There are also major traders who would buy for resale.
We already have four non-binding contracts, which haven’t yet been formalized due to the lack of a guaranteed start of construction.
BNamericas: Where would the port terminal for exports be built?
Azevedo: In Parnaíba municipality near Luís Correia port. Today, it doesn’t have sufficient draft, so a complementary offshore terminal would need to be built. Since we do not have expertise in port operations, we’re seeking partners, including for co-investment in the port’s operation.
BNamericas: How will you finance the investment?
Azevedo: The resources will come from abroad, partly as financing and partly as investment. Solatio can’t fund the project alone, so it will rely on partners who will also bring part of the structured loan.
BNamericas: Does the company have other green hydrogen projects in its pipeline besides the one in Piauí?
Azevedo: Yes. We have projects in Minas Gerais and Rio Grande do Sul, which are smaller, totaling almost 2GW, but they’re still at earlier stages compared to our Piauí project.
BNamericas: How do you see the outlook for green hydrogen projects in Brazil, given some signs of delays?
Azevedo: The projects will happen but at a slower pace.
The lack of infrastructure has delayed purchase decisions worldwide. Without offtakers, the projects don’t move forward.
BNamericas: Do green hydrogen projects face competition regarding the use of the electricity grid?
Azevedo: Yes. Data center projects have emerged as major competitors, demanding large amounts of energy in short timeframes. If these projects aren’t supplied with infrastructure within two or three years, Brazil will lose ground.
These projects are also highly competitive in terms of attracting investment. For comparison, a 3GW green hydrogen project costs 26bn reais, while 3GW in data centers costs 70bn reais and involves higher added value and lower risk. That’s why, even without direct intervention, ONS tends to prioritize more mature projects for grid access, such as data centers,
