Developers eye major Chile tenders24 Apr 2015 19:38
Wind Power Monthly article 20 Apr - http://www.windpowermonthly.com/article/1343447/developers-eye-major-chile-tenders
CHILE: Wind developers are eyeing opportunities in two large-scale tenders the Chilean government is set to launch.
The tenders — for long-term contracts (up to 20 years) with privately-owned distribution companies — aim to cover around 15TWh of annual consumption not covered by existing contracts.
In line with the government's Energy Agenda launched last year to tackle the country's rising energy costs, the tenders aim to bring down Chile's soaring electricity prices by encouraging as many new participants as possible.
The first tender is due to be launched in May and will offer generators an estimated 14TWh of annual demand.
Once the tender conditions have been released, companies will have almost a year to present offers to give as much time as possible for new participants and projects to prepare bids.
These have until until January 2021 to inject electricity into the grid. This provides ample time for companies to design, permit and build new projects from scratch, as part of the government's efforts to break the hold of a handful of major generators over the country's power markets.
If a project is delayed for reasons outside the developer's responsibility, the start date for the contract can be delayed, significantly reducing the contract risk.
"This is a very good opportunity to enter the generation market in Chile," said Martin Osorio, head of regulation at the National Energy Commission, which is running the process.
A second short-term tender will offer around 1TWh to cover annual demand from 2017 onwards. The deadline for offers is expected to be in the second half of this year, Osorio said.
Following last December's tender, the government is expecting a strong participation in both processes from renewable sources, including wind and solar power, to help Chile meet its legally-mandated target of sourcing 20% of electricity from renewables by 2025.
It saw almost 20% of the demand on offer go to renewables as developers took advantage of blocks defined by time of day, giving a key advantage to solar and wind projects.
Additionally, it covered close to 100% of demand on offer, compared to just 20% in the previous major tender held in 2013. It also achieved an average long term price of $108/MWh, against $136/MWh, and reversing the upward trend seen since the tender system was launched in 2006.
Still such prices are many times those paid in other countries in the region, such as Colombia and Peru, a factor which, together with considerable natural resources and a stable investment climate has transformed Chile into one of the world's hottest markets for renewable investments in recent years.
The start of the contracts under the short-term tender will also coincide with another major development in Chile's electricity industry: the linking of the country's two
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