Chile Energy Situation

Energy Situation

 

Electricity Generation, Transmission and Distribution

Electricty Generation:

 

Wind Assessment and Measurements

At the end of 2010 there were 170 MW of wind power installed and in operation in Chile. That puts Chile in third place in Latin America, after Brazil and Mexico. The existing wind farms account for about 1 % of the country´s total electricity generating capacity of 15.500 MW and account for roughly 0,5 % of electricity produced.
To date another 1.925 MW of wind power capacity have successfully undergone official environmental impact assessment. Another 231 MW are still awaiting environmental approval, and it can be assumed that private investors will keep showing great interest in the Chilean wind market, and will keep presenting further projects for approval in the future.

The positive development of the Chilean wind market is also reflected by the fact that numerous important wind energy companies are now present in Chile. In 2010, for example, Vestas opened an office in Santiago with a capacity for 25 employees. Also GL Garrad Hassan now has a permanent representative in Santiago. Furthermore, several German project developers are present in Chile, amongst them Eolic Partners, juwi, SoWiTec, and wpd.
However, the question is which share of the impressive project-pipeline of more than 2.000 MW of wind power projects will actually be implemented. On one hand, at times of rocketing spot-market prices, numerous projects with just mediocre wind conditions were presented for approval. On the other hand, there are several obstacles which are not always easy to overcome.
Since in Chile no feed-in-tariff exists, electricity from wind farms must be sold either through bilateral PPAs to large off-takers or simply on the spot-market. Only those projects at very good wind sites have good chances of achieving a profitable PPA. From January to October 2010 prices on the spot-market lay between 120 and 135 US$/MWh, but they are subject to volatility.
A further difficulty lies in obtaining project finance, at least when debt-financing is to be supplied by a Chilean bank. Although almost all banks in Chile show strong interest in ERNC, they are still quite reserved when it comes to actually financing projects, which has to do especially with a lack of knowledge concerning their risk-assessment.
And finally, limited grid-capacities in some areas present a further barrier to a fast implementation of wind energy projects in Chile.
Nonetheless, Chile is decidedly moving forward in the quest to increase the amount of renewable energies and reduce barriers. The current discussion about renewable energies in Chile is fuelled by president Sebastián Piñera´s proclaimed goal, to increase the share of ERNC in electricity generation to 20 % by 2020, which is clearly more than defined by the current legal quota.