Renewables push prices to record low in Chile tender

CHILE: Wind and solar have dominated the latest electricity supply tender, with contracts awarded at an average price of $32.50/MWh, compared with $47.30/MWh in the previous tender.

Enel dominated the auction with wind and solar capacity bids
Enel dominated the auction with wind and solar capacity bids

Energy minister Andres Rebolledo attributed the price drop to increased competition following a change in rules, noting the average price achieved marks a fall of 75% from the peak of $130/MWh reached in 2013.

The contracts will run for 20 years from 2024.

The government had originally planned to tender 4.2TWh annually from 2023, but cut the size of the auction to just 2.2TWh due to a decrease in forecast demand, following a slowdown in the economy and the migration of larger clients to direct contracts with generators.

Enel Generacion Chile, the country's largest power firm, dominated the contest, winning 54% of the demand on offer.

The electricity will be supplied by around 240MW of new wind, solar and geothermal projects developed by its sister company Enel Green Power, said James Lee Stancampiano, EGP's head of business development for Chile, Colombia and Peru.

The rest was taken by Verano Capital (25%) Atacama Solar (10%), Spain's Cox Energia (6%) and Atacama Energy Holdings (5%).

While Verano plans to cover the demand through a mix of wind and solar, Atacama Energy's bid is based on wind energy, while Cox and Atacama Solar will invest in solar projects, the National Energy Commission said.

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