A number of countries with suitable characteristics will stand out as the export-driven clean energy hubs that will underpin a low-carbon energy future and attract investments, according to US private equity player EIG.
A combination of access to cheap renewable-generated energy, logistics infrastructure, connections to major consuming markets and a stable political environment can underpin the development of what the investment giant expects to see emerge as the “green hubs” of clean energy supply.
In an exclusive interview with Upstream, EIG chief executive Blair Thomas named the Middle East, Western Australia, North Africa, south-west US and Chile as the regions that are expected to be most successful in harnessing local conditions to drive low-carbon energy development and exports, attracting investment accordingly.
Read more
“If you think about Europe as primary demand centre, Europe is the centre of gravity for energy transition,” as a leading consuming market, said Thomas. “[It will be places such as] southern Chile and the Middle East that will serve that market.”
Chile — a country Thomas describes as a “microcosm of what the future looks like” — is viewed as something of a hot spot for future energy investments, with ideal conditions for solar photovoltaics in the northern Atacama region and for wind power in Patagonia, as well as hosting important mineral reserves including copper and lithium employed in battery technology.
"You can have two hubs in Chile: the Atacama in the north, and the area around Punta Arenas and Patagonia in the south," Thomas said.
Chile is already EIG’s single largest destination for renewable investment, with $1.7 billion allocated in energy transition assets in the country.
The asset manager has stakes in several domestic ventures including AME — a power producers with assets in development in Chile and Peru — and Grupo Cerro, a new entity that brings together EIG-owned Cerro Dominador’s solar plants and the recently acquired ANPAC, which owns a portfolio of hydroelectric power plants in the country.
Having suitable conditions for renewables power generation is key for green hydrogen infrastructure, said Thomas, who is developing one such project in Chile, and exports to Europe are the holy grail.
“Green hydrogen in western Europe doesn’t make a lot of sense,” he said. “You need to have it where you have cheap renewables and access to deep-water ports, so that you can move it and ship it to demand centres.”
“Our view is that green hydrogen is going to develop in hubs where renewables are advantaged. There is no reason to put hydrogen when you don’t have renewables.”
Chile is one of those places, he believes — supported by political stability, strategic location and advanced logistics terminals.
The country has multiple large-scale ports across its coastline and extensive shipping connections to major markets in North America, Europe and Asia.
EIG is looking to target these hubs as a central part of its own investment strategies, according to Thomas.
Read more
