Chile power auction delay will help renewables firms

Carlos Finat explains how transmission undertainty has held back renewables. Credit: ACERA

Chile’s energy regulator CNE has delayed its power auction to 25 July this year, in a move that should benefit renewable energy companies looking for certainty over transmission rules.

The delay will ensure that a law on transmission, which is currently being discussed at the Chilean Congress, will be approved before the bidding from the participating power companies, said Carlos Finat, executive director of the Chilean Renewable Energy Association (ACERA).

In February, Finat had explained that the main regulatory issue in Chile today regards a “total update” of regulation around the transmission system. Its current transport capacity and lack of development stands as a major barrier for the progress of renewable energy in the South American country.

At present, investments in transmission are being delayed due to specific regulations for expanding the system, said Finat. It takes around three years just to plan expansions and a further five to six years to build any lines. The new law being considered will allow for a more considered analysis of requirements of the power generation systems so that infrastructure can be built in advance of rising demand. It will also help to incorporate best practices from abroad.

Chile has four main separate networks, which means that the high penetration of utility-scale solar in the desert regions of the north cannot be used to benefit the most populated central regions around Santiago until the northern and central grids are interlinked. As a result major project is underway to connect the Northern Interconnected System (SING) grid with the Central Interconnected System (SIC) grid. This is due for completion in mid-2017.

The new transmission law was entered into the Congress in October 2015 and Chilean authorities had expected it to be approved by this month, however the power auction is being held back to account for a delay.

Finat said: “This delay is in line with requests from different companies and organizations, including ACERA.

“Having the transmission law approved will bring a larger degree of certainty to the potential risks that generators see coming from a transmission system that so far has been underdeveloped and thus has become a barrier to competition and a source of volatility of marginal costs.”

Earlier this year, Chile surpassed the 1GW solar deployment milestone.

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