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Chile

Chile

Parliament to vote on renewables drive

CHILE: Chile's upper house is considering a bill that could boost the country's wind industry tenfold by raising the percentage of renewable energy producers are obliged to supply to 20% by 2020, making good on an election campaign promise made by president Sebastian Pinera.

The bill could clear the Senate this year and the lower legislative house early next year. It also contains a measure that would allow renewable-energy producers to inject power into Chile's privately owned grid, which should help remove a key obstacle to increasing wind-power production.

"Right now there aren't appropriate regulations, and developers find it hard to access power purchasing agreements," said Alfredo Solar, president of the Chilean renewable-energy association Acera.

If the law succeeds in raising renewableenergy production to 20% of the national total, that would mean 4GW capacity, Solar estimated. Wind capacity could rise to 1.5-2GW from around 200MW at present.

Chile's current renewables law was passed under Pinera's predecessor, Michelle Bachelet, in 2008. It demands a minimum of 5% of power produced from renewable sources rising in stages to 10% by 2024.

The law was passed in the wake of a breakdown of an agreement with neighbouring Argentina to supply natural gas for power production, which led to much greater reliance on fossil fuels, including diesel and coal.

"Chile uses a great deal of expensive fossil fuels," Solar said. "Chilean society needs to replace these with lower-cost renewables."

The market allows companies that can promise a stable supply to pass on the cost of volatile international fuel prices to customers. Renewable-energy producers receive the most expensive spot price at any given time when connecting to customers via the various private grids, but struggle to get backing because the amount of power they produce varies with the weather.

Chile does not have a state energy company to run tenders, which means that the market takes decisions based on the interests of a small group of actors, Solar said. The bill would assign regulator Centro de Despacho Economico de Carga to fill that gap. Wholesale power prices averaged $154/MWh in August, according to Chilean engineering consultancy Systep.

Solar contrasted this with Uruguay, where contracts for wind farms were recently secured at less than $70/MWh by state energy company Usinas y Transmisiones Electricas (UTE). "The regulator needs to act to take care of the nation's long-term interests," said Solar.

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