Chile was one of the first nations in Latin America to set long-range targets for clean generating capacity. Today, the mandate stands at 20% of renewable energy generation by 2025. However, given the rapid development of wind and solar projects in the country, Chile is likely to achieve its target earlier than 2025.
The Chilean electricity market is divided into four segments: Central Interconnected System (SIC), Norte Grande Interconnected System (SING), Aysén and Magallanes. Chile is the world’s largest copper exporter, and the energy-intensive nature of that industry creates substantial challenges in meeting power demand. In 2013, the copper industry consumed 22TWh, which represents 32% of the total generated in the country that year. Mining operations are geographically located in the northern part of the country, mostly serviced by the SING system. Although most of the mining’s electricity demand occurs in the SING area, two thirds of the country’s generating capacity (19GW) is located in the SIC system.
In 2014, Chile generated 12% of a total of 69TWh from biomass and waste, solar, wind and small hydro. Large hydro accounted for 28% and natural gas, coal, oil and diesel accounted for the rest.
The country is the leader in Latin America in solar installations – as of the first half of 2015, 0.5GW was already installed in the country. Most of this development has been merchant projects – PV plants developed to sell electricity in the spot market or to single offtakers.
Chile’s renewables policies support the use of auctions as a tool to help achieve its renewables objectives.
In order to improve the competitiveness of renewable projects in auctions, in September 2014 the government approved a resolution that created three supply time blocks: 11pm-8am; 8am-6pm; 6pm-11pm. Generators bid to supply electricity during a certain time block.
Chile also encourages clean energy through total exemption from transmission taxes for renewable projects up to 9MW and partial exemption for projects of 9MW to 20MW.
In 2014, a net metering regulation was published. Under the regulation, retail electricity consumers who have renewable energy or cogeneration installations smaller than 100kW will be able to connect to the grid, deliver surplus generation and obtain credit for electricity delivered. The credit is equivalent to the price per kWh charged by the utilities to their consumers.
Score Summary
Chile’s 1.97 overall score in Climatescope 2015 placed it third among all countries, up from fifth position in 2014, when it scored 1.79. The country’s ascent was powered by significant gains on both Enabling Framework Parameter I and Clean Energy Investment and Climate Financing Parameter II. Chile’s strength in the heavily weighted clean energy policies and power sector structures indicators of Parameter I were instrumental, as was its performance on the Parameter II categories of cost of debt and amount invested.
On Parameter I, Chile finished fourth, up nine levels from 2014, with a score of 1.81. Its 2014 score was 1.38.
On Parameter II, Chile scored 0.93, up from 0.79 in 2014. Its Parameter II ranking was eighth in 2015 versus 17th in 2014.
On Low-Carbon Business & Clean Energy Value Chains Parameter III, Chile’s 11th-place finish in 2015 equaled its 2014 position. The country’s 2015 and 2014 Parameter III scores were 3.38 and 3.18, respectively.
On Greenhouse Gas Management Activities Parameter IV, Chile relinquished its first-place finish of 2014, falling to third position. Its 2015 and 2014 Parameter IV scores were 3.05 and 3.48, respectively.