Renewable energy in Chile gets more attractive with its major capacity build-up during 2019-2030, says GlobalData

GlobalData Energy 24 September 2020 (Last Updated September 24th, 2020 10:26)

Renewable energy in Chile gets more attractive with its major capacity build-up during 2019-2030, says GlobalData

The renewables market in Chile stands to reap the benefits of its renewables’ potential and its intent to lower the price of electricity for the customers. Chile has put in gigantic efforts to promote renewables expansion to contribute to its decarbonisation plan and achieving the target of attaining carbon neutrality by 2050. The Chilean renewable capacity, including hydropower, currently contributes to approximately 47% to the capacity mix, while fossil fuel rules the remaining 53%. Chile’s capacity mix is estimated to witness a major upside by 2030 with renewables, including hydropower, accounting for more than 70% of the power capacity mix.

The country is firmly planning to retire its coal power generation fleet and to prioritise renewable energy sources that would not require damming or diverting water resources impacting the environment. Due to Chile’s vulnerability to future changes in climatic conditions, during 2019-2030, almost 30GW of new power generation capacity will be built. Out of this, 90% of the new capacity will be renewable in nature. Solar PV and wind will lead the renewable capacity built, together contributing more than 70% of the capacity.

The market is robust and attractive with more than 8.9GW of wind projects and 21.9GW of solar PV projects under various stages of development.

Chile has a plan to phase out coal-fired power plants by 2040 and achieve carbon neutrality by 2050. To provide an unwrinkled road to a smooth transition and risk-free environment to the investors would need an established supply chain, policy support and continuous visibility of the market. During the H1 2020, the country’s renewable sector has already witnessed a high number of M&A and Asset Transaction financial deals compared to the same period last year. Solar PV technology saw three times more financial deals, amounting to $4bn, followed by wind at $1.2bn and hydropower at $0.3bn.

Chile has been particular about the environment and its resources. In the generation front, it is trying to reduce coal-based power generation, which formed as high as 45.6% in 2013 to 5%-15% of the generation blend in 2030. The current Chilean energy transition vision and trajectory towards an increasingly clean and efficient matrix has provided the investors with the confidence of a stable and lasting market with good returns.