First Green Hydrogen Project in Uruguay

The Global Context of Green Hydrogen

• Hydrogen (H₂) is a gas used both as a fuel and as an industrial raw material. When produced using renewable energy, it”s called green hydrogen and is key to replacing fossil-fuel-based hydrogen or fuel in hard-to-decarbonize sectors, like heavy industry, fertilizers, and long-haul heavy transport.

• Although more than 1,000 green hydrogen projects have been announced globally, less than 5% have secured the necessary investment.

• To date, long-term purchase agreements have been closed for only about 2 million metric tons per year of green hydrogen—a small figure compared to the current market of 100 million metric tons of traditional hydrogen.

The Major Obstacles:

• The high upfront costs of equipment (like electrolyzers).
• Limited availability of stable, competitively priced renewable energy.
• A scarcity of projects proving long-term technical and commercial viability.
• Infrastructure and distribution networks that are not yet ready.
• The urgent need for clearer, more stable regulatory frameworks to guarantee sustained demand.
• The need for financial and fiscal incentives from governments.

Uruguay, Clean Energy Pioneer

• Uruguay is a leader in renewable energy, with over 90% of its electricity coming from clean sources.
• The country has already nearly eliminated fossil fuels from its electricity grid, drastically reducing emissions that cause climate change.
• Transport is now the main challenge, accounting for 11% of national emissions. Green hydrogen is one of the solutions to advance its decarbonization.
• An investment of $19 billion USD is projected through 2040 to develop this new industry.

The Kahirós Project

Kahirós is the name of Uruguay’s first green hydrogen pilot project. It’s a system that will power a fleet of six electric trucks (using hydrogen fuel cells) that will transport wood for the forestry company Montes del Plata. The hydrogen will be produced with solar energy near Fray Bentos.

How it Works:

1. A 4.8 MW solar plant with over 8,000 panels generates clean electricity.
2. An electrolyzer uses that electricity to separate hydrogen and oxygen molecules from water. It’s expected to produce 77 tons of green hydrogen per year.
3. A refueling station (hydroliner) compresses the hydrogen, allowing the trucks to be refueled in less than an hour.
4. The trucks will travel fixed routes for much cleaner wood logistics.

Why It’s So Important:

• It’s the first green hydrogen project for heavy transport in Uruguay. 
• It will help reduce up to 870 tons of CO₂ per year, equivalent to taking over 300 cars off the road. 
• The solution is scalable and could serve as a model for other Latin American countries. 
• It marks the start of a new industrial sector combining clean energy, transport, and employment. 
• It’s the first green hydrogen project the IFC has financed globally, reaffirming Uruguay’s pioneer status within the World Bank Group.

The Role of the Involved Parties:

• Kahirós (Ventus, Hyundai, and Fraylog): The company created to operate the project.
  • Ventus: Renewable energy specialist, responsible for structuring and constructing the project.
  • Fraylog: Responsible for forestry logistics.
  • Hyundai Fidocar: Supplier of the hydrogen-electric trucks.
• Montes del Plata: The main client. They will use the hydrogen trucks for transporting wood to their pulp plant, helping to reduce emissions in their logistics chain.
• Grupo Santander: Investor and asset owner.
• IFC (World Bank Group): Providing the green loan and technical expertise.
• REIF (UN) Renewable Energy Innovation Fund: Granting a flexible $1 million USD loan and technical assistance.

Financing

• Total Project Cost/Investment by Grupo Santander: $38.7 million USD.
• IFC: $20 million USD loan to Grupo Santander.
• REIF (UN): $1 million USD loan.

Projected Impact

• Emission Reduction: 870 tons of CO₂ per year (equivalent to eliminating over 300 combustion cars).
• The green hydrogen sector is expected to generate over 30,000 direct jobs in Uruguay by 2040.
• It drives the creation of a new sustainable and competitive industry in the region.

Operations Start: End of 2026