CELA (Clean Energy Latin America) foresees a significant drop in the cost of green hydrogen in Brazil, the consultancy’s CEO, Camila Ramos, told BNamericas.
The updated cost range for low-carbon fuel in the country calculated by CELA will be included in a study to be released soon.
In this interview, Ramos also analyzed the main challenges facing the sector, the outstanding regulatory issues, and the impact of grid access restrictions.
BNamericas: What are the main challenges for the green hydrogen market today?
Ramos: I would say that the challenges are organized on several fronts, and they need to move forward together.
The first is legal certainty: the Hydrogen Legal Framework still needs to finalize its regulations, and any retroactive change in the incentive rules jeopardizes a project that has a horizon of 20, 25 years.
Read also: Brazil’s hydrogen regulatory framework represents progress, but there are still obstacles, says Bird & Bird
The second is whether the power sector is ready for this type of load. Electrolysis is a heavy and, ideally, flexible load – this requires planning for grid access, transmission, self-production rules and, above all, management of generation curtailment that is compatible with this consumption profile. Without this, the energy cost for those who want to produce green hydrogen rises in a way that makes the project unfeasible.
The third is long-term financing and demand: those who move first bear the risk of the initial projects, and there is a lack of targeted public instruments for this.
The fourth is industrial policy – encouraging domestic suppliers and shared infrastructure without imposing local content right from the start, which would make the initial phase unfeasible.
In the end, Brazil has the cheapest input in the world to produce green hydrogen, which is abundant renewable energy — what still needs to be tied together is the regulatory and financial framework to turn this potential into projects getting off the drawing board.
BNamericas: Are there any regulatory pending issues?
Ramos: Yes, and the main one is precisely to finalize what the 2024 hydrogen law left to be defined by secondary regulation. The decree signed this year provides the main legal framework, but opens a second layer of technical rules that is still under development – it is the ANP that will authorize production and be responsible for certifying low-carbon hydrogen, using as a reference the experience it already has with RenovaBio.
This certification, SBCH2, depends on specific ANP resolutions, with Inmetro acting as the accreditor and CCEE handling the records – and this detailed framework is not yet finalized. Until it is issued, it is difficult for the investor to price the project with confidence, because they do not know exactly under which rules they will operate when production actually begins.
BNamericas: Does the cost of green hydrogen in Brazil still range between US$2.83 and US$6.16/kg, according to CELA’s latest study?
Ramos: I’m still using that range as a reference until we have new numbers. It’s just that we’re already updating this study now, with publication scheduled for the next few weeks, and the expectation is for significant changes – the cost scenario for renewable energy, equipment, and project scale has changed a lot since the last round. I’d rather not anticipate a new number before finalizing the methodology, but the indication is that this range should shift.
BNamericas: The number of announced projects is still 111, with 454 billion reais (US$90.5bn) in investments?
Ramos: This number is already outdated – our Green Hydrogen Project Map, which we continuously update at CELA Research, currently shows 123 initiatives mapped in Brazil. Of these, 66 have already disclosed investment values, totaling 456.5 billion reais, and 37 have already disclosed capacity, totaling around 90 GW.
It is worth noting that a large part of these initiatives is still concentrated in the Northeast, driven by the availability of cheap renewable energy in the region — which reinforces the previous point: potential only actually turns into a real project when regulation and financing provide the certainty that is lacking today.
Read also: What is still needed to make US$290bn in hydrogen projects viable in Brazil?
BNamericas: Do access restrictions to the grid and curtailmentaffect the projects?
Ramos: They do affect it, and this is one of the most concrete issues for those who already have a project in an advanced stage. An electrolysis plant depends on guaranteed access to the grid and on renewable energy under competitive and predictable conditions – and today the power system still needs to advance in planning for access, transmission, charges and, above all, in the management of curtailment of generation, so that this is compatible with such an electricity‑intensive load.
When the generator is curtailed, it loses revenue – and this makes the remaining energy available more expensive for those who want to contract it in a firm, long-term way, which is exactly the type of contract a green hydrogen project needs to get off the drawing board. Solving curtailment is not just an agenda for the renewable sector – it is a precondition for Brazil to truly compete in the hydrogen race.
(The original version of this content was written in Portuguese)
