April 27, 2021

Green Hydrogen in Chile: Corfo’s International Tender to Develop Green Hydrogen Projects


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On April 20, 2021, the Corporation for the Promotion of Production (Corfo), Chile’s Economic Development Agency, released bidding guidelines for its first call to develop green hydrogen projects in the country (the “Tender”). The Tender aims to promote the production of green hydrogen as part of Chile’s Green Hydrogen Strategy to achieve carbon neutrality by 2050.

The Tender would award up to US$50 million for the development of new projects that install 10MW (or more) of green hydrogen production facilities that commence commercial operation by the end of 2025. No single project can receive more than US$30 million (out of the total US$50 million committed by Corfo).[1]

Corfo’s contribution may only be used for specific activities related to the production of green hydrogen projects in Chile, particularly electrolyzers and related infrastructure. Amounts contributed by Corfo may not be used for other activities such as power generation, hydrogen storage, water desalination, distribution systems or other projects related to the consumption of green hydrogen.

Below is a brief summary of the key provisions of the Tender:

  • Bidders may be domestic and foreign[2] companies that have an international credit rating (clasificación internacional de riesgo) equal to or greater than BBB- or Baa3 (as evidenced by a report issued by S&P, Fitch or Moody’s) and annual sales in 2019 and 2020 equal to or greater than 600,000 UF (which is a non-circulating currency adjusted by inflation commonly used in Chile). As of April 20, 2020, 600,000 UF is approximately US$25.2 million.
  • According to the Corfo website, interested bidders are to submit inquiries and clarifications by July 9, 2021 and to submit their applications by September 6, 2021.
  • Bidders are required to evidence financial and technical capacity and prior experience in the development of similar projects. All such information will serve as the core information that will be used by Corfo to select the projects to receive the contributions in accordance with the following criteria:



Electrolyzer’s nominal capacity

30 percent

Efficiency of the contribution requested for the project[3]

20 percent

State of maturity of the project

20 percent

Experience of the Bidder and/or its subcontractor

20 percent

Financial model of the project

10 percent

  • Within 20 business days after the effective date of the relevant agreement with Corfo (the “Corfo Agreement”), the Selected Bidder (defined below) must deliver to the entity responsible for payment of the awarded amount (SQM Salar S.A.), an irrevocable bank or surety bond in the amount equal to five percent of the amount awarded to such Selected Bidder to secure performance of all obligations under the Corfo Agreement.
  • According to the Tender, US$30 million would be available from March 2022, an additional US$10 million is expected to be available from March 2023 and the remaining US$10 million from March 2024.
  • To request the release of the amount awarded, the successful bidder must provide evidence that: (i) the nominal capacity of the Electrolyzer has been installed and is being commissioned; (ii) all the electricity will be supplied from renewable power; (iii) if the winning bidder is a foreign entity, that it has formed a company under Chilean law (the “Selected Bidder”) (i.e., a corporation, stock company or limited liability company) within 12 months after the resolution approving the Corfo Agreement and that such winning bidder retains at least 50 percent of the ownership interest in the Selected Bidder; and (iv) if the Selected Bidder is not the entity that will receive SQM Salar’s contributions and develop the project, that it has formed a company under Chilean law (the Local Developer) within 12 months after the resolution approving the Corfo Agreement and that the winning bidder retains at least 30 percent of ownership interest in such Local Developer.

Chile is considered one of the most attractive countries to produce green hydrogen in the world because of its abundant solar and wind resources and its political/legal stability. The Atacama Desert has the highest solar radiation in the world and the far south has considerable and constant wind generation potential. In this regard, in late 2020 Corfo made a call to submit requests for information (RFIs) in order to evaluate industry interest in the development of hydrogen projects in Chile and, through such RFI process, Corfo identified 18 projects representing more than US$12 billion of potential investments (note that bidders are not required to have participated in the RFI to participate in the Tender). In addition to the hydrogen-related products that could be exported, Chile’s mining sector is also viewed as one of the most likely early adopters of green hydrogen in Chile.

About Shearman & Sterling’s Project Development & Finance Practice

Recognized as a leading international law firm in project development and finance, structured finance, funds, M&A, capital markets and other key practice areas, Shearman & Sterling handles the most ground-breaking transactions across multiple jurisdictions, including Latin America. In Chile, we have more than five decades of experience executing projects and financings across multiple industry sectors, advising on some of the country’s most complex power generation projects utilizing a full variety of investment and hedging products. Shearman & Sterling was the first law firm to establish a Global Hydrogen Industry Team and, among other clients in the hydrogen market, we are currently advising NEOM on its US$5 billion green ammonia megaproject with ACWA Power and Air Products, which is the largest hydrogen project in history. We are already advising clients on all aspects of the nascent hydrogen industry, from initial MOU to JV structuring, electrolyzer and ammonia loop procurement (and related technology licensing), regulatory matters (including interaction with European regulation such as RED II, as well as regulation in the U.S. and key Asian countries), EPC, offtake, utilities supply, land arrangements and project financing. We also advise on all aspects of the hydrogen midstream and downstream supply chain.

Please contact any of the authors listed below should you have any queries.

Special thanks to visiting attorney Adriana Orellana, who co-authored this publication.


[1] Once approved by Corfo, the contributions would be actually paid by a third party, SQM Salar S.A., who committed to provide such funding under the Agreement for the Atacama Salar Project between Corfo and SQM Salar S.A.
[2] If a foreign company is awarded a contribution, it will need to incorporate a Chilean entity to develop the project within 12 months after the award
[3] The efficiency is calculated based on the ratio between the nominal capacity of the Electrolyzer committed by the Selected Bidder and the amount of the contribution requested by such Selected Bidder.