The World's #1 Renewable Energy Network for News, Information, and Companies.

Renewable Year-end Focus: Chile

As the renewable energy market shifts and evolves each year, industry experts need to know where the next hot region will be in order to keep up with the changing tides.

Luckily, global consultancy Ernst & Young has released its Country Attractiveness Indices each year since 2003, which gives a numerical ranking to 30 global renewable energy markets by scoring renewable energy investment strategies and resource availability. The indices are updated on a quarterly basis and the most recent report can be found here.

Double or nothing. The doubling of Chile’s renewable energy target has rightly generated significant headlines. The requirement for utilities with more than 200 MW of capacity to generate at least 20 percent of energy from renewable resources by 2025 was signed into law on 14 October, replacing the previous obligation to secure 10 percent by 2024 (both excluding hydropower plants over 40 MW). This is equivalent to around 6.5 GW of renewables capacity, up from 1 GW.

The change is good news for developers, since it effectively guarantees demand for an ambitious amount of clean energy. The Chilean renewable energy institute estimates the country is currently generating around 5 percent–6 percent of energy from renewable sources, leaving significant opportunities for new capacity over the next decade to meet the target.

Climbing down. The 20 percent by 2025 target represents a compromise though, after an earlier version of the bill calling for 20 percent by 2020 was passed by the lower house but opposed by energy minister Jorge Bunster. The reason given was the transmission system’s inability to cope with the additional capacity needed to meet the target, particularly given the distance of urban load centers from anticipated solar and wind sites. The shift to 2025 buys time to create a more robust transmission infrastructure, but represents a slight climb down in ambition.

Auction back-up. The new legislation also allows for the Government to hold annual auctions to award 10 year power contracts to renewables projects from 2015, which may be necessary if utilities fail to meet the new targets. While credits must be purchased by those energy providers not meeting the quota, the current surplus of clean energy (relative to the current 5% quota) could drive prices down this year, from an average of US$12/MWh between 2010 and 2012.

Unsubsidized and proud. The other news putting Chile firmly in the headlines has been the announcement that it will host the world’s largest unsubsidized solar PV project. The 70-MW plant will be developed by Swiss renewable energy producer Etrion, French energy giant Total SA and Spain’s Solventus Energías Renovables, taking equity stakes of 70 percent, 20 percent and 10 percent respectively. Construction will start in Q4, with operations expected in early 2015, when it will sell to the spot market, but with the potential for future PPAs. Overseas Private Investment Corporation (OPIC), the US Government’s development finance institution, will contribute 70 percent of funding for the US$200 million project in US dollar denominated debt, with the rest coming from equity.

Setting records. Other high-profile solar announcements include the financial close of SunEdison's 100-MW solar PV plant, expected to be the largest in Latin America once complete in Q1 2014. Funding for the Amanecer Solar CAP plant comprised US$212.5 million of non-recourse debt from OPIC and the World Bank’s International Finance Corp. based on a 70:30 split and a local Chilean Peso VAT facility worth US$45 million.

Breaking records. SunEdison may not hold the record for long, however. In September, Pattern Energy requested an environmental license for its proposed 306-MW Conejo solar park, which will be developed in three phases at a cost of US$819 million. Meanwhile, First Solar Inc., the largest US solar panel manufacturer by shipments, has applied for permits to build a 162.4-MW PV plant in the Atacama Desert, comprising 1.7 million solar panels at an estimated cost of US$370 million. In July, the country’s Foreign Investment Committee approved a further US$1.1b investment in PV and awarded land concessions for 17 solar projects with combined capacity of 604 MW in August.

From goal to grid. It seems that Chile’s solar pipeline just won’t stop growing, but ironically, current installed capacity still stands at less than 10 MW, and construction is yet to begin on over 4 GW of approved solar projects, according to the Centro de Energias Renovable. With an estimated solar power potential of up to 200 GW, developers need to pick up the pace to get projects from goal to grid. Thus, it is perhaps timely that the recent publication of Chile’s Electrical Concessions Law will cut the time developers have to wait to get permits to connect projects to the grid to 150 days from 700 via a more streamlined permitting process.

Wind woes. Wind power has been forced to take a bit of a backseat for the moment in Chile’s energy revolution given much of the impetus behind solar has been driven by the energy-intensive mining industry — coastal wind have not been a good fit for resources required in often remote inland desert regions. However, with an estimated 5 GW of potential, Chile’s wind sector is still very attractive.

Wind takes the wheel. Late October saw Pattern Energy install the first turbine for its 115-MW El Arrayan wind farm, which the company claims will become Chile’s largest once operational in 2014. The high-profile JV between Mainstream Renewable Power and private equity firm Actis, formed earlier this year, has committed to develop around 450 MW of wind projects, and in August, the Government approved land concessions for seven
wind farms totaling 889 MW. This is compared to a current installed wind capacity of just over 300 MW.

Marine wades in. Another renewable resource not prepared to let solar steal the limelight is ocean energy. The Government announced in early October that it will invite bids from developers for US$14 million of grants to build the country's first wave and tidal pilot projects. The winners will be required to match the investment in the pilot projects, with an additional US$2.4m available from the Inter-American Development Bank. With an estimated 200 GW of marine power along its coastline — more than 10 times the capacity of the country’s grid — this is one competing technology that will not be silenced by the waves.

Lead image: Puerto Varas, Chile via Shutterstock

RELATED ARTICLES

Is the Spanish Government Putting the Brakes on Solar PV?

US Capitol

Republicans and Democrats Back Bill to Level the Playing Field for Renewable Energy

Vince Font, Contributing Editor U.S. Senators Chris Coons and Jerry Moran are leading a bipartisan effort to reintroduce tax code legislation aimed at leveling the playing field for renewable energy investment. The Master Limited Partnerships Parity Act w...
Solar thermal desalination

Solar Thermal Desalination Now Underway in Water-hungry California

Susan Kraemer, Correspondent Regional droughts are being exacerbated by climate change, which is mostly caused by what is tasked with bailing them out — fossil fuels. Israel, Australia, and now southern California have all turned to expensive energy-gu...
Memo pad on table

IRS Issues Solar Tax Equity Memo Stating the Obvious

David Burton and Richard Page, Akin Gump On Friday, the IRS issued a heavily redacted Chief Counsel Advice (“CCA”) memorandum, that addresses the intersection of solar investment tax credit partnership flip transactions and the wind production tax credit part...

CURRENT MAGAZINE ISSUE

Volume 18, Issue 3
1505REW_C11

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

Doing Business in South Africa – in partnership with GWEC, the Glob...

Wind Energy in South Africa has been expanding dramatically, growing fro...

CanWEA Winter Solstice Fundraising Dinner

CanWEA Winter Solstice Fundraising Dinner December 1, 2015 Toronto, Ontario

CanWEA Annual Conference and Exhibition

The annual CanWEA Conference & Exhibition has helped companies marke...

COMPANY BLOGS

What Solar Markets Around the World Look Like in 2015

Solar power has gained international attention as one of the best clean-...

Solar Energy Vs. Wind Energy: How Do They Compare?

Solar energy and wind energy are both excellent alternative sources of p...

Why is GreenLancer Changing the World of Solar Designs? EVP Michael...

“Why does GreenLancer focus on changing the way Solar Designs are ...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS