Solar takes at least 6% of Chile’s largest power auction with record low tariffs

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Together wind and solar accounted for more than 2GW of capacity, but wind dominated. Credit: Pattern Energy

Solar developers have won at least 720GWh (6%) of capacity awarded in Chile’s largest ever power auction.

Wind power dominated the 12,430GWh of power on offer from the Chile National Energy Commission (CNE) with at least 5,781.6GWh. Along with 10.4 GWh from hydro, renewable energy technologies took more than half of the capacity. Conventional sources took 5,852GWh.

Endesa, a majority-owned subsidiary of Enel won about 47% of the tender with an offer that is not tied to specific projects, according to Carlos Finat, executive director of the Chilean Renewable Energy Association (ACERA). While this capacity was entered into the conventional energy category it is not clear how much solar will be included, but Finat said it was highly likely to include some solar.

While the median price for the auction was US$47.6/MWh, solar came through with a record breaking low tariff of US$29.1/MWh for the Maria Elena solar plant.

Finat said: “More than 50% has been awarded to non-conventional renewable energy (NCRE) companies, mainly wind and solar.  This result is a milestone for the NCRE industry and for the Chilean energy sector, as it confirms that NCREs are here to stay, competing and winning against conventional sources under an auction where price was the decision factor, with no subsidies.”

Finat said that the price of US$47.6/MWh was “unthinkable” in the country two years ago and the new lows were the result of strong competition brought by renewables in this period. Based on the results, Chile can now meet its 2025 renewables target of 20% at least five years early.

Energy minister Maximo Pacheco said the auction was “a victory for Chile” – adding that the government had made consistent policies which had been worked openly with the public.

In a statement, Acciona Energia said it will build 183MW of wind in La Araucanía.

Winners must now provide energy for consumers connected to the SIC and SING grids in the North and Central regions of the country for 20 years from 2021.

In July, 84 companies put in submissions and bids were invited for the supply of energy in ‘time blocks’.

Executive secretary of the CNE, Andres Romero, said: “We have successfully culminated the largest power tender held in the country, which has called for a level of competition never seen before, which mark future trends and produces a paradigm shift in the Chilean electricity market, resulting in lower prices – all for the benefit of our families and small and medium enterprises in Chile.”

CNE will enact another tender for 3,800GWh to start delivering power in 2023. Further auctions of 7,200GWh will take place in 2017 and 8,900GWh in 2018.

Chile also recently passed a law involving a major upheaval of its transmission system that had been widely regarded as a critical hindrance to the deployment of renewables and the power sector at large.

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