Levelized cost analysis for renewable ammonia production in Chile

Renewable ammonia production is a crucial step towards decarbonizing energy-intensive industries, but its economic viability is hindered by high capital costs and renewable resource availability. We develop a stochastic optimization framework to estimate the levelized cost of ammonia (LCOA) in any location in the world, accounting for the variability of wind and solar energy. The methodology is based on optimizing the portfolio of renewable sources and the capacity of the ammonia production facility while ensuring the three pillars of renewable fuel production: additionality, temporal matching, and geographic correlation. Formulated as a stochastic linear program, the model also accounts for inter-annual climate variability. This framework is applied to assess the economic feasibility of renewable ammonia production in Chile, identifying optimal locations for facilities based on renewable energy availability and cost. Our numerical experiments show that, depending on the discount rate utilized, the LCOA in competitive Chilean locations could range from 270 to 380 USD/tNH3 by 2040, and 250 to 350 USD/tNH3 by 2050, positioning Chile as a competitive player in the global market. Moreover, our results show that a reduction in the CAPEX of ammonia production has a greater impact on the LCOA than an improvement in electricity-to-ammonia efficiency. This underscores the importance of prioritizing the reduction of investment costs.

POZO CAMARA David;  SAUMA Enzo;  BOLADO LAVIN Ricardo; 

2025-08-21

PERGAMON-ELSEVIER SCIENCE LTD

JRC137365

1873-6785 (online),   

https://www.sciencedirect.com/science/article/pii/S0360544225031962,    https://publications.jrc.ec.europa.eu/repository/handle/JRC137365,   

10.1016/j.energy.2025.137554 (online),