Chile has achieved remarkable progress in recent years as it transitions towards a cleaner and more decentralised power supply system.
Installed renewable energy generation capacity has grown rapidly from just 2% in 2012 to 28% in March 2022. Chile has almost unlimited solar and wind resources, rapidly growing experience and know-how, and is consistently ranked globally as one of the best investment destinations for renewable energy projects. According to Bloomberg New Energy Finance’s Climatescope 2020 ranking, Chile ranks first among the most attractive economies to invest in renewable energy, among 108 emerging and 29 developed countries. In 2018 electricity generation accounted for 30% of the total national greenhouse gas emissions.
Since the privatisation of the Chilean electricity sector in 1980, all generation, transmission and distribution activities have been in private hands.
Until recently Chile’s generation matrix was dominated by large scale hydro electric dams, coal fired power plants, combined cycle gas plants and smaller diesel peak lopping plants. All of the fossil fuel burnt had to be imported, making Chile vulnerable to price fluctuations and supply risks.
More recently Chile has started to capitalise on its own significant renewable energy sources. Chile is estimated to have the potential energy sources from 1,800 GW solar, 37 GW wind, 14,6 GW hydro, 2 GW geothermal, and 2 GW biomass. To put this in perspective, the total installed generation capacity in July 2021 was approximately 28.4 GW.(Comisión Nacional de Energía – CNE)
Chile’s high voltage transmission network is composed of a single interconnected grid known as the Sistema Eléctrico Nacional (SEN), and two small separate grids in Aysen and Magallanes in the far south.
Electricity is sold to the end customers by regional distribution companies, who bid for future supply contracts via auctions. Some of the larger commercial end users buy directly from the generating companies via future supply contracts. With the incorporation of renewable energy into the matrix, the winning bids for the 2021 auction were some of the lowest ever seen globally at under US$24 per MWH.
The Superintendent of Electricity and Fuels (SEC) acts on behalf of the Energy Ministry to promote the industry and ensure safe quality services to the public. It supervises compliance with the laws and regulations relating to electricity and fuels.
The operation of the transmission system is controlled by the National Energy Commission (CNE), which is a decentralised public institution created in 1978. Its role is to ensure a safe and sufficient energy supply compatible with the most economic operation. It sets prices and tariffs, schedules grid inputs and defines the technical norms under which the generating and distribution companies within the system must comply.
Worthy of specific mention is the current focus on the emerging opportunity to convert Chile’s rich renewable energy resources into green hydrogen, for many the fuel of the future for all mobile applications. It will also give Chile autonomy from imported fossil fuels, and with potential to export.
The government launched its National Green Hydrogen Strategy in November 2020, setting out its roadmap to become one of the world’s top three exporters of green hydrogen by 2040. In 2021, it launched the first green hydrogen accelerator in the country, supported and co-financed ( US $300 million) by the Energy Sustainability Agency. The accelerator will work within the National Green Hydrogen Strategy framework to promote hydrogen production and exports.
The demand for energy is expected to increase 3.3% per year until 2027, driven primarily from manufacturing and mining requirements.
To address this increase in the demand, the Cámara Chilena de la Construcción (CChC) developed an investment plan for critical electric infrastructure. It has settled investment requirements up to US $8,900 million from 2018 to 2027, of which US $6,619 million are targeted for spending in between 2018 and 2022 split between Generation 58.7 %; Distribution 21.7 %; and Transmission 20.1%.
|AES Gener (US)||AES Corp. (US)||EEPA (Chile)|
|Colbún (Chile)||Colbún (Netherlands)||Chilquinta (China)|
|EDF (France)||ISA (Colombia)||CGE (China)|
|Enel (Italy)||Enel (Italy)||Enel-D (Italy)|
|Engie (France)||Engie (France)||Abengoa (Spain)|
|Latin America Power (Netherlands)||Transelec (Canada)||Saesa (Canada-CL)|
|GPG (Spain)||Abeinsa (Spain)|
|Stratkraft (Norway)||Transnet (China)|
|Pacifichydro (China)||Pacifichydro (China)|
|Siemens Gamesa (Spain)||Transemel (China)|
|AELA Energía (UK-Ireland)||Transchile (Brazil)|
|Tamakaya Energy S.A (UK)|
|Enfragen LLC (US)|
|Cerro Dominador, EIG (US)|
|The EDG Group (France)|
|Inkia Energy (Perú)|
|Grupo Ibereólica (Spain)|