Uruguay’s government has announced that it will soon tender four sites along the country’s continental shelf, via state oil company Ancap, for the development of offshore green hydrogen production — without giving a firm timeframe for the auction.
Each of the four blocks, located around 50 kilometres from the coast, is mooted to site enough electrolyser capacity to produce 200,000 tonnes of H2.
Uruguay has long floated the potential for leasing sites offshore for co-located wind and hydrogen projects, with an eye towards exporting H2 and its derivatives.
A decree which would authorise Ancap’s auction and grant companies automatic approval for development work in the allocated sites is yet to be approved, although the oil firm has reportedly requested this decree be expedited by the executive branch, with passage expected this year.
Pilots
Offshore hydrogen projects have so far been limited to small pilots in Europe and China.
While results have been promising, with French-based developer Lhyfe’s 1MW offshore pilot seeing similar operational performance during its time at sea as its prior quayside testing period, it is still unclear how quickly these platforms can be scaled up — as well as the real-world cost impact of producing H2 offshore rather than using offshore wind to power onshore electrolysers.
The plan for green hydrogen project development following Uruguay’s auction is split into two stages.
The first, an “evaluation period”, is expected to last 10 years in total, in order for developers to complete feasibility studies and potentially install pilot projects. Following this, the companies will move on to a 30-year “development and production” period, during which gigawatt-scale offshore wind and co-located electrolysers would be built.
However, bidders will have to prove substantial experience in green hydrogen, offshore wind or the offshore production of oil and gas.
Companies looking to participate in the auction must prove as of the evaluation period that they currently have or in the past five years had owned or operated either a 50MW offshore wind farm, a green hydrogen project with more than 50 tonnes of production per year, or an offshore oil and gas rig producing 8,000 barrels of oil-equivalent per day.
Once developers move on to the 30-year development and production stage, companies with experience in H2 or oil and gas are expected to continue to build up their assets to 250 tonnes a year or 40,000 barrels of oil-equivalent per day, respectively.
Bids will also be evaluated based on the proportion of profits shared with Ancap, with these margins already subject to a 25% income tax. Offers will also be compared on the basis of Ancap participation in the project and the cost of development.
