Wind wins again in Chile

CHILE: Developers are set to invest more than $2 billion in new wind farms in Chile over the five years after winning new contracts in the country's largest ever power tender.

Wind turbines will supply around 40% of the 12,450GWh annually on offer at the tender
Wind turbines will supply around 40% of the 12,450GWh annually on offer at the tender

Wind turbines will supply around 40% of the 12,450GWh annually on offer at the tender, which represents around a third of demand from regulated clients from 2021.

Of the rest, around half was won by thermal and hydro producer Endesa Chile, a subsidiary of Italy's Enel and the country's largest power company, while another 10% went to solar power projects.

The contracts were awarded at an average price of $47.55/MWh, down 40% from the country's previous tender held late last year and well ahead of the government's target of reducing electricity prices for regulated clients by 25% by 2018.

Andres Romero, head of Chile's National Energy Commission, which organised the tender, described the results as marking a turning point for Chile's energy industry, which until recently was struggling with underinvestment and sky-high prices.

A tender in late 2013 failed to cover all the contracts on offer even at a price of almost US$130/MWh.

After that, a new government took over the running of tenders, modifying rules to make it easier for renewables to compete with conventional generators that dominated the market.

Speaking after the results of the tender had been announced, energy minister Maximo Pacheco highlighted the role that renewable energies are playing in reducing electricity prices in Chile.

Among wind developers, the biggest winner was Ireland's Mainstream Renewable Power, which won contracts to provide almost 1GW of installed capacity. The firm now plans to build seven new wind farms at a total cost of $1.65 billion.

Mainstream chief executive Eddie O'Connor said he will meet with major turbine manufacturers in the coming months "to discuss the next generation of turbines required for these projects".

Another major winner was Spain's Ibereolica, which is developing the 500MW Cabo Leones complex on the edge of the Atacama Desert.

Germany's Wpd won contracts for its Malleco (270MW), Negrete 36MW), and Santa Fe (204.6MW) wind farms in the southern Biobio region, while Spain's Acciona won a contract to supply 506GWh annually, which it will fulfil with the construction of the 183MW San Gabriel in neighbouring Araucania region.

"The tender results shows our renewable energy solutions are very competitive even against conventional technologies," said Acciona Energia Chile CEO Jose Antonio Escobar.

It is not the first time that wind energy has dominated a major power tender in Chile.

Aela Energia, a joint venture between Mainstream RP and emerging markets fund Actis, won two-thirds of the contracts on offer in October 2015 and is now building two wind farms with 265MW of installed capacity.

Have you registered with us yet?

Register now to enjoy more articles
and free email bulletins.

Sign up now
Already registered?
Sign in