Chile has embarked on an ambitious path to utilise the high solar power potential through market-based renewable energy projects

Summary

Chile has a high potential for solar power due to world record solar radiation levels. Conversely, Chile has very little oil, gas, and coal resources, and solar power therefore has become an attractive alternative to expensive imports of fossil fuels. Through free market conditions and energy policies emphasising renewable energy, Chile has created one of the worlds most important solar power markets, and is a Latin American leader in solar power.

Full Story

Chile is endowed with a very high potential for solar power with world record solar radiation intensity up to 3500KWh/m2 per year in the northern desert part of the country. Since 2014, Chile has set out to utilise this potential by including solar PV (Photo Voltaic), Concentrated Solar Power (CSP), and wind with an increasing share of the energy mix. The country has almost 75% of the installed solar power capacity in Latin America despite having only 3% of the population.

The government undertook in 2014 a process to develop and evaluate various future scenarios of the energy mix, leading to high prioritisation of especially solar power. This should be seen on the background of high fossil fuel-based energy prices as Chile has little oil, gas, and coal resources and hence is reliant on costly fuel import from abroad. Since then, the installed solar PV generating capacity has increased from 362MW in 2014 to 1,04GW in December 2016, to 1,77GW in September 2017, and to 2GW in January 2018, reaching almost 10% of installed electricity generating capacity. Chile hereby holds the Latin American record in installed solar power capacity.

The process has been significantly helped along by the falling unit price of solar based power generation and Chile set a world record in November 2017 when the winning bid for new solar PV installation was at US$21,48/MWh from a local branch of an Italian company.

The low prices are also a result of strong competition on the fully privatised electricity market with public, transparent, and non-discriminatory tender processes. It has been further helped along by a change to the electricity tender rules in 2015 which allowed companies to bid for different hour blocks (8AM to 6PM, 6PM to 11PM, and 11PM to 8AM) increasing the feasibility for making renewable energy sources competitive. The blocks correspond more or less to ideal times for solar PV, CSP, and wind respectively. Also, the contract terms were prolonged to 20 years which helps renewable energy projects amortize the construction costs, and there is a 5-year waiting period before they at the latest must deliver electricity. The latter is especially advantageous for CSP projects as they have longer construction times than solar PV due to the power block where solar radiation is concentrated and heat accumulated in molten salt. Power purchase agreements (PPA) are normally won on price alone and having environmental permits in place beforehand is not a prerequisite.

With a high solar power potential in a relatively isolated part of the country, the electricity can also be used directly by the locally widespread mining sector (lithium and copper especially), for producing zero-emission hydrogen (electrolysis of water by means of renewable energy), and for water desalinisation.

Chile has several solar power plants in operation and under construction. One of the more remarkable under construction is the Cerro Dominador in the Atacama desert. It is a combined CSP and solar PV plant with installed capacity of 110MW and 100MW respectively. 10.600 mirrors following the position of the sun, reflect the solar radiation onto a 200m high tower. The combination of CSP and solar PV will allow the plant to dispatch energy at all hours, as the CSP stores the heat in molten salt used for steam generated power at the hours of day (and night) when the solar PV cannot be active. However, initiated in 2014 as Atacama-1, the project has encountered financial difficulties and was taken over by EIG in late 2016 who plans to finalise the project in 2019. One of the problems is that CSP is more expensive than solar PV, and it may be uncertain  whether the advantage of prolonged power generation (up to 17,5 hours) can outweigh this price difference. 62MW of the planned 100MW solar PV capacity of the project is already in operation. Also in the Atacama desert is located the 246MW El Romero solar PV power plant, operational since late 2016.

The Cerro Dominador CSP under construction

Chile is a good example of how a country with a natural endowment of a potential for renewable energy, embraces this in policies and market reforms to exploit the potential. Although many projects are still under development, Chile has in a timespan of around 5 years, managed to build up a significant solar power-based electricity generating sector. With many more projects planned and under construction, Chile has also created one of the worlds’ most important markets for solar energy and has become a Latin American renewable energy frontrunner. For these reasons, the Chilean solar power initiatives and policies are considered to be a sustainable success story. See other stories here.

For more information:

An article arguing for CSP

A recent article on solar power in Chile in general from Energy Institute at Haas

A thorough early 2017 article on renewable energy potential in Chile from Norton Rose Fulbright

A short video on the solar boom in Chile from CGTN America

An early 2018 update on Chile’s installed solar power capacity from PV Magazine

Photos top: Amanecer solar PV plant, middle: cerrodominador.com, bottom: Enel Green power

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