Chile slashes emissions taxes for renewables to boost investment

Chile’s National Energy Commission has issued a ruling to drastically reduce the taxes on emissions paid by renewable power generators to accelerate investment in clean energy technologies.

Developers of renewables projects in Chile will see the emissions taxes they paid drastically cut

Since 2018, when the tax came into force, part of the cost was shared equally between all generators connected to Chile’s central grid. According to the commission, renewable generators paid CLP3.1 billion (€3.6 million) under the tax last year but this figure would fall to less than €20,000 under the new rules.

Further support

The ruling is the first among a raft of measures announced by energy minister Diego Pardow to support the transition to a grid based on 100% renewable energy by 2030.

They include new rules and guidance for energy storage, making state land available for energy infrastructure, and updating rules for tenders to supply regulated clients although many of these will take until 2024 to be implemented.

As well as the change to the emission tax rules, the government has also promised to step up scrutiny of the minimum generation levels requested by thermoelectric plants which renewable generators say limited their participation.

Industry reaction 

The agenda has been welcomed by developers in Chile although is seen as insufficient and too slow.

“[Changes to the emissions tax and scrutiny of thermoelectric plants] won’t take affect this year and, in any case, will not do enough improve the financial situation that is affecting renewable energy projects,” said Ana Lia Rojas, executive director of Chile’s renewables energy association ACERA.

Many renewable energy projects are facing financial difficulties because a rapid rollout and constrained transmission capacity has left many unable to inject power into the grid or forced them to give away electricity for free.

“This will de-risk to some extent the situation of developers. But we will see the real situation when the new tender rules are published later this year,” Enrique Alvarez-Uria, country manager for EDP Renewables, told Windpower Monthly.