Latin America Report: Chile’s Road To Solar Grid Parity

Chile has become one of the planet’s most promising solar markets, leading a wave of regions that will begin achieving grid parity, where solar is at equal cost or cheaper than traditional energy sources, in the near future. High electricity prices ($0.15-0.25/kWh), high irradiation, and rising energy demand all play in Chile’s favor, but connection and policy hurdles remain if the country wants to really start tapping into that resource.

A third of the overall country is hydro-based, but almost all of it is in the south. Most of the coming solar capacity, says Deutsche Bank analyst Vishal Shah in a recent report, will be in the Sistema Interconectado Del Norte Grande (SING) which is currently dominated by hydrocarbon generation (45 percent coal, 8 percent oil), as opposed to the Sistema Interconectado Central’s (SIC) nearly 50 percent hydro portfolio. Days ago Chile upped its renewable energy target to 20 percent by 2025.

Only three solar projects with 3.5-MW grid-connected capacity are currently operating in Chile; 70 MW of projects are under construction, and there’s a 3.1-GW pipeline backlog, much of which targets the northern SING region. Development is likely to ramp quickly with system costs at ~$2-3/W. Installations are likely to double or even triple in 2014 to 300-400 MW — plus 100-MW in off-grid self-generation projects in the mining sector — depending on legislation pending by the end of this year. Most projects are debt-heavy (70-80 percent), but Shah sees equity-funded solar installations that achieved permitting to generate LCOEs of $0.12-$0.18/kwh, cost-competitive with other forms of energy generation.

Two hurdles for Chilean solar deployment are transmission constraints and permitting and siting delays. And Shah points out that beyond environmental impact statements, surface land and mining concessions may be difficult to come by. In the northern region, finding land without a previously granted mining concession is key. Since the government is the largest landholder in the region, a separate land-use concession, which must now be obtained through a competitive bidding process, is required. Together these two steps likely will add 1-3 years to solar development plans.

Chile’s mining sector produces a third of the world’s copper, representing more than half the country’s annual exports and a fifth of its GDP. The sector’s energy consumption has increased 60 percent over the last decade to nearly 24 TWh, and is expected to nearly double again by 2020 as copper output continues to soar. Desalination needs are growing need as well, Shah points out. Mining companies have been signing long-term PPAs “in the $100-120/MWh range, which is competitive with gas (~$120s/MWh) and coal (~$80s/MWh), with no commodity risk,” he writes. All these factors point to increasing investment in large PV projects.

Shah spotlights an early example of Chile’s solar grid parity: SunEdison’s 50-MW project in the Atacama region, with a projected cost of $142 million (helped by World Bank funding), and generating electricity at an LCOE of $0.12/kWh using mostly equity financing — and selling into the spot market without incentives. SunEdison also is developing a 100-MW project for mining company CAP in the Atacama Desert. First Solar also is making inroads into Chile through M&A of a 1.5-GW pipeline of mostly early-stage projects which still require permitting and PPAs, and Shah says these are likely in the northern SING grid.


Brazil Renewable Energy Auctions In Full Swing: Brazil’s A-5 auction held Aug. 29 accepted hydro and biomass projects totaling 1.26 GW of installed capacity to meet projected demand for utilities in 2018. Ten of the projects are hydro (618 MW) contracted at 114.48 reais/MWh, with nine biomass plants (647 MW) contracted at R$ 135.58/MWh. ANEEL also held an auction for power reserve on Aug. 23, agreeing to terms for 1.5 GW of power from 66 wind energy projects. Average pricing for the 20-year contracts, which start in Sept. 2015, was R$ 110.51/MWh. This auction involved stricter rules, requiring access to existing transmissions, and with guarantees of 90 percent generation. “We usually add 2 gigawatts per year in wind power and we got almost that in one single auction,” with more still to come this year, said Elbia Melo, president of Brasileira de Energia Eolica, quoted by Bloomberg. And registrations are in for Brazil’s upcoming November 18 “A-3” auction for power plants coming online in 2016, with wind and solar representing nearly all the slots at 15 GW and 3 GW respectively. It’s the country’s first auction to include solar plants.

Blackouts in Venezuela, Brazil Highlight Grid Challenges: Two major blackouts last week called attention to grid maintenance and power quality. More than two-thirds of Venezuela suffered a blackout on Sept. 3, attributed to a failure in the transmission carrying electricity from the Bajo Caroni region where most of the nation’s power is generated. Fourteen out of 23 states lost power for much of the day, including Caracas, home to a sixth of the nation’s population. Meanwhile, a fire in Brazil’s Piaui state downed several transmission lines and knocked much of country’s northeastern region off the power grid, including the states of Bahia, Piaui, Pernambuco, Maranhao, Ceara, Rio Grande do Norte, Paraiba, Alagoas, and Sergipe. The National Agency of Electric Energy (ANEEL) attributed the cause to vegetation overgrowth at transmission lines in the Santa Clara region.

Wind Turbine Makers Adding Brazil Plants To Satisfy Local Content Rules: Acciona Windpower is building a nacelle assembly plant for its 3-MW turbines in Brazil’s Bahia state, slated to begin operations in 2014, to meet the nation’s domestic content requirements. Earlier this spring the company opened a turbine hub plant in Bahia. The company already supplies a 120-MW project by CPFL in Rio Grande do Sul, and next year has two wind projects totaling 10-MW in Río Grande do Norte. GE, meanwhile, is expanding its Brazilian nacelle facility in Campinas, São Paulo for its 1.7-100 and 1.85-82.5 wind turbines. The company, which just installed its 500th turbine in the country, opened two wind services centers this summer in Bahia and Río Grande do Norte.

VW Inks PPA for Mexico Wind Energy: Volkswagen Mexico and Mexico Power Group have signed a 20-year agreement to buy 130-MW of energy from the La Bufa wind farm development in Zacatecas, projected to save Volkswagen more than 45 million pesos (US $3.6 million) in annual electricity costs. The ~4.5 billion peso ($360 million) La Bufa wind farm is expected to be completed at the end of 2014.

EDF Commissions Mexico Wind Farm: EDF Energies Nouvelles has commissioned its 164-MW Bii Stinu wind farm in Oaxaca, not far from where it already operates the 67-MW La Mata Ventosa site. Gamesa is supplying the 2-MW turbines for the new facility, which has a 15-year PPA with several international and domestic groups: Arcelor Mittal Steel Lazaro Cardenas, Walmart Mexico, Grupo Modelo, Grupo Herdez, and Continental Automotive Guadalajara. EDF currently has 231 MW (gross) installed capacity in Mexico and another 160 MW under construction.

Cuba Goes Solar: Cuba’s first solar power plant, a 14,100 panel-project in Cantarrana, Cienfuegos province, is now in operation. State-owned Hidroenergia build the plant, which actually began operating in April but was not announced by the government until recently. Six other plants are planned to come online in the coming months.

Altom Supplying Turbines for Brazilian Wind Project: Alstom has signed a €25 million contract to supply ten wind turbines to Enerplan’s Pontal wind project in Viamão, in Rio Grande do Sul State. Commissioning is slated for the end of 2015. The ECO 122 (2.7-MW) turbines feature a 122-meter rotor diameter, swept area of 11,700 m2 and up to 42 percent capacity factor. Nacelles will be made at Alstom’s plant in Bahia state, and the towers at its new facility in Canoas.


Bidding Nears End for Uruguay Solar Farms: Bidding closes on Oct. 3 for the nation’s first two large-scale solar farms, a 1-MW and 5-MW project; winners will be chosen by year’s end. Last year the government began soliciting proposals for selling energy from large solar plants at $91.50/MWh. State power company UTE plans to have 300-MW of wind turbines installed by 2014 (vs. 50 now), and is set to purchase at least 900-MW of power from wind farms coming online through 2016 at rates as low as $62.35/MWh.

Panama Wind Farm Gets Financing: Goldwind has secured financing for the 55-MW Penome wind farm in Panama’s Coclé province, the largest wind energy project using the company’s turbines and financed by Western lenders (led by Banco Internacional de Costa Rica and Banco Espirito Santo de Investimento). It’s the first phase of a total planned 220-MW project, to be completed in 2014 as the largest wind energy project in Central America.


Solar On The Ground In Guatemala: Time Magazine takes a look at how solar energy is impacting lives in Guatemala: in this case, helping a Guatemalan farmer run a tailoring business and stay in touch with relatives in the U.S.


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Lead image: Road in Atacama, via Shutterstock

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Jim is Contributing Editor for, covering the solar and wind beats. He previously was associate editor for Solid State Technology and Photovoltaics World, and has covered semiconductor manufacturing and related industries, renewable energy and industrial lasers since 2003. His work has earned both internal awards and an Azbee Award from the American Society of Business Press Editors. Jim has 17 years of experience in producing websites and e-Newsletters in various technology markets.

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