Baseload, Hydropower, Solar, Wind Power

Chile Ups Renewable Energy Target

Chile’s upper house of parliament has unanimously passed a bill revising its renewable energy targets upward, from the previous goal of sourcing 10 percent of the nation’s energy mix from renewables by 2020 to 20 percent by 2025.

Chilean utilities will now have to get 20 percent of their power from “unconventional” renewables (defined as excluding hydropower plants over 40 MW).

The bill will now be submitted for enactment into law.

Industry analysts say the bill has moved slowly since its original introduction into the lower parliamentary house in 2010. An earlier version was passed by the lower house in June but opposed by energy minister Jorge Bunster. One concern, raised in a report by the nation’s Mining Commission, was that in order to meet the previous 20/20 target an additional 4600 MW would need to be added and the transmission system would need to be upgraded. According to deputy energy secretary Sergio del Campo, a key constraint is that urban load centres are located far from where solar and wind farms are expected to be built. 

But with revisions including moving the target year to 2025 and adding a price cap of US $0.095-0.010/kWh to the bidding system – changes which Bunster described as “minor modifications” – the bill proved acceptable.

Alfredo Solar, President of the Chilean Association of Renewable Energies (ACERA), said that “the law will allow actual insertion NCRE to the matrix of the country, giving way to non-conventional renewable energy to be real part of the solution to the impending energy crisis that the country could live in the short term.”

According to a report from the Renewable Energy Centre, Chile’s installed renewable energy capacity stood at 1051 MW in August, with bioenergy the main source at 41 percent (428 MW), followed by mini-hydro with 31 percent (323 MW), wind at 28 percent (302 MW) and solar at 0.2 percent (3.5 MW). According to Chile’s renewable energy institute, the Centro de Energias Renovables, between 5 and 6 percent of the nation’s energy mix is currently sourced from renewables.

An August solar market report from Deutsche Bank noted that the nation’s high electricity prices ($0.15-0.25/kWh), rising energy demand and high solar irradiation make Chile an attractive and sustainable solar market. Deutsche Bank expects the nation’s 3.1 GW pipeline of solar projects to continue to grow, but it warned that fully built installations will be more limited by connection and policy hurdles.

Chile’s large mining industry also offers unique opportunities for solar, with poor grid reliability and rising electricity costs driving companies to consider self-generation or collaboration on solar projects, the report noted.

Veronica Munita Bennett, manager of ACESOL, Chile’s solar energy association, said in an emailed response that ACESOL “thinks [the new target] is very positive long-term, but to work it must be accompanied by effective measures in the immediate term.” Munita mentioned government support for net metering, the prompt publication of regulations for distributed generation and the urgent extension of Law 20365 which offers tax exemptions for installing solar systems in social housing.

Chile’s wind resource is also very attractive, with many global wind players currently active there. A number of new projects have recently been announced, including Enel Green Power’s (formerly Vestas’) 90 MW Talinay East project in the Coquimbo region, 250 miles north of Santiago; Pattern Energy’s 115 MW Parque Eólico El Arrayán, which the company says will become Chile’s largest wind farm when it becomes operational in 2014; and Mainstream Renewable Power’s recent $1.4 billion joint venture deal with private equity firm Actis to develop around 450 MW of wind projects, to be completed by early 2016.

Lead image: Wind farm in northern Chile in the mining regions of Atacama and Coquimbo, via Shutterstock