81309658-Structuring the Financing Line for a Renewable Hydrogen Project (RH2) in Chile

Description of works and services to be provided:

The contract focuses on market- and project development, business cooperation and finance for renewable hydrogen (RH2), fostering market development and closing business gaps through shared experiences and best practices. The general objective is to transfer know-how to RH2 project developers and owners on using smart financial instruments within the Chilean financial market regulations.

Specifically, this includes to the implementation of new smart financial instruments (SFI) for mobilizing financing for RH2 projects in Chile, considering local financial market rules, and the design of a compensation mechanism for hydrogen projects to promote industrial-scale clean technologies like hydrogen. These objectives aim to mobilize investment for RH2 projects through the "umbrella funding line" model, with cooperation through the following work packages.

Task 1 focuses on incorporating new forms of financing and financial instruments for RH2 projects: addressing insufficient financing and lack of experience in the green hydrogen industry by incorporating new financial instruments suitable for the Chilean market, based on successful models from Europe. Activities include international benchmarking, adapting instruments for the local market, and industry meetings. This work package involves specialized consultancy and knowledge transfer and involves the following key institutions: - CMF (Financial Market Commission): Supervision, regulation, enforcement, and market development. - CNE (National Energy Commission): Analysis of prices, tariffs, and technical norms for energy services. - Ministries of Energy, Economy, and Treasury. - ABIF (Association of Banks and Financial Institutions): Improving banking procedures and representing banks. - AACH (Association of Chilean Insurance Companies): Promoting the insurance industry's growth and development.

Task 2 aims at incorporating a structure for the Financial Auction Mechanism - CHILE mechanism, by designing a financial instrument to adjust price differences between supply and demand (contract for difference). This promotes the market creation for clean hydrogen and low-emission technologies globally. The task focuses on establishing international partnerships, to replicate the support mechanism in Chile. Activities include establishing international alliances, designing the funding mechanism, developing the business model and ensuring international cooperation.

Required project and knowledge management includes selecting, training, and steering experts, providing necessary equipment and covering costs, managing costs, accounting, and invoicing per GIZ requirements.

Required monitoring and reporting requirements include regular monitoring of activity implementation, achievement of objectives, and risk management, reporting to GIZ according to applicable General Terms and Conditions.

Company-wide learning, knowledge, and innovation requirements include contributing to conferences and workshops, participating in GIZ"s sector networks-, supporting project evaluation and knowledge management and conducting debriefing sessions and submitting developed materials and reports.