Renewables awarded over 50% of the energy bid in the latest auction to take place in Chile

On 28 July 2016, a total of 84 national and foreign generation companies submitted their economic and administrative proposals to take part in the 2015 Supply Tender process launched by the Chilean Government. This process offered 12,430 GWh/year of energy with the aim of covering the electricity needs of the regulated clients of the SIC and SING Interconnected Systems for 20 years as from 2021. The proposals from these 84 companies amounted to almost seven times the energy under tender, with a total of almost 85,000 GWh/year.

On 17 August, at the Estación Mapocho Cultural Centre, crowded with public and private sector representatives from the country’s energy and electricity industry, the public event took place to award the offers for the first stage of this tender. More than half the energy auctioned was awarded directly to renewable energy projects, mainly wind and solar, amounting to some 2,000 MW of power that will generate clean energy for Chile as from 2021.

The average bid price was 47.6 $/MWh, 40% less than the value obtained at the last auction in October 2015, 79.3 $/MWh, and 66% lower than the average price of 130 $/MWh achieved in 2013. Clearly this is a price that was unthinkable in Chile a few years ago, exceeding even the most optimistic expectations.

This result is a huge step for Chile on the road to meeting its renewables objectives, a fact recognised after the auction by Carlos Finat, Executive Director of ACERA, who commented that: “on this basis we are confident that we will be able to comply with Law 20/25 by 2020, at least five years earlier than the target year, as predicted by ACERA”. As a result of this Law, Chile aims to achieve and exceed its target of covering 70% of the national grid’s power generation from renewables by 2050, as established by the Government’s long-term energy policies.

The successful bidders

• Endesa Chile was awarded a total of 6.3 GW of hydroelectric, thermal and wind power.
• Mainstream Renewable Power will supply a total of 3,366 GWh/year through the construction of seven wind farms that will add 986 MW to Chile’s electrical with an investment of $16.5bn.
• Germany’s WPD was also successful and will operate the Malleco, Negrete and Santa Fe wind farms.
• Acciona Energía Chile is to construct the 183 MW San Gabriel wind farm in the region of Araucanía Sur (IX), representing a supply of 506 GWh/year. Specifically, the supply awarded to Acciona forms part of Block 3 out of those included in the tender and covers the regulated consumption generated 24 hours a day, between 1 January 2022 and 31 December 2041.
• Ibereólica will develop the Cabo Leones project in the northern region of Atacama (III).
• Chile’s Aela is one of the successful bidders together with its partner Mainstream.
• GPC, a division of Gas Natural Fenosa, will supply 850 GWh/year thanks to the construction of 320 MW in solar and wind projects.
• Chile’s Besalco Energías Renovables was also awarded a contract in the auction.
• Solarpack was awarded the supply of 280 GWh/year, a capacity that it will achieve via its subsidiary Maria Elena Solar S.A., thanks to the construction of the 120 MWp solar PV farm, Granja Solar, which is scheduled to enter into commercial operation in 2019. The company has been awarded 28 2-B type sub-blocks to sell 280 GWh per year during the period from 08:00 to 17:59. This schedule will allow the company to achieve the best match between its daily production curve and the demand to be covered, as well as being the only daytime sub-block awarded under the entire tender. The price awarded of 29.1 $/MWh represents a new record, as the lowest price awarded in the history of a solar plant at global level. The previous record achieved 29.9 $/MWh, awarded to a solar plant in Dubai.
• Spain’s COX Energy achieved 250 MW of power for itself, representing a generation capacity of 264 GWh per year. The company presented an offer for PV and wind power for the 24-hour generation block, for which it was the successful bidder. The estimated investment for all the projects that formed part of the bid won and that will enter into operation in 2022, is in excess of $300m. The price offered by COX Energy, 52.72 $/MWh exceeded the average tender price.

Bid schedule

The programme for this “National and International Tender for the Supply of Power and Electrical Energy to cover the consumption of clients that are subject to price regulation (Supply Tender 2015/01)”, started in May 2015 with the call for tender. Subsequently, the National Energy Commission (CNE) together with the electricity utilities embarked on an international roadshow in the USA, Brazil and Asia with the aim of promoting this tender for which, within the framework of the new Law on Tenders (No. 20,805), the CNE is responsible for its design, coordination and direction.

This process covers the tender for five Supply Blocks, equivalent to approximately one third of the current consumption of the clients regulated by the SIC and SING systems:

• Supply Block No. 1, effective from 1 January 2021 to 31 December 2040, for 3,080 GWh of energy for tender.
• Supply Block No. 2-A, effective from 1 January of 2021 to 31 December 2040, for 680 GWh of energy for tender, destined to only cover the consumption that takes place during the periods from 00:00 to 07:59 and from 23:00 to 23:59.
• Supply Block No. 2-B, effective from 1 January of 2021 to 31 December 2040, for 1,000 GWh of energy for tender, destined to only cover the consumption that takes place during the period from 08:00 to 17:59.
• Supply Block No. 2-C, effective from 1 January of 2021 to 31 December 2040, for 520 GWh of energy for tender, destined to only cover the consumption that takes place during the period from 18:00 to 22:59.
• Supply Block No. 3, effective from 1 January 2022 to 31 December 2041, for 7,150 GWh of energy for tender.

Upcoming tenders

At the end of this year, the CNE will announce another tender for 3,800 GWh, to start supply in 2023. Another call is expected in 2017 for 7,200 GWh, to supply as from 2024, and in 2018, an auction will be take place for 8,900 GWh, to start supply in 2025.

View the official results of the tender by clicking here.