Not long ago, Chile revised the Energy Act, the largest such change to the Chilean energy sector in 35 years. The primary goal is that 70% of national electricity generation is to come from renewable sources by 2050. In addition, it is intended that there will be a 25% reduction in consumer power prices by 2021, with all households having continuous access to quality energy services.
A few weeks ago, Chile´s latest renewable energy auction was awarded and the country has moved closer to its goals.
Under the supply tender, around one third of the current consumption of the country's regulated grid-supplied consumers was up for grabs starting in 2021. Well over-subscribed – by a factor of about seven – 84 companies submitted 85,000 GWh of bids for the just over 12 TWh of available contracts. Contracts were awarded at an average price of US$47.6/ MWH.
Among the winning bidders were developers such as Mainstream Renewable Power, which won seven of the government contracts on offer to the collective tune of 1 GW of new wind power projects. With an overall investment worth US$1.65 billion, Mainstream plans to build and operate seven utility-scale projects located throughout Chile.
However, the lowest offer was revealed as coming from Solarpack, which won a 280 GWh/year slice of the pie with a record-breaking bid of $29.1/ MWh from a 120 MWp photovoltaic (PV) solar installation, the lowest price reported from a solar project world-wide to date. Solarpack, through its subsidiary Maria Elena Solar S.A, will construct the Granja Solar project, which will be located in the region of Tarapaca. It is expected to enter commercial operation in 2019.
Although quite exciting, success does not come easy or without risks for those entering or operating in the Chilean energy market.
Transmission capacity restrictions exist in the northern part of the SIC, which prevents the transmission of energy from both wind and solar for several hours a day and has seen spot market power prices fall to zero for...