and again9 Mar 2015 09:02
It is a game changer that “will make renewables extremely competitive”, he says.
Acera is already seeing a large amount of offers from wind and solar for the current power tender in which a group of distributors across the country are making a combined call for 15-year supply contracts totalling 2,000GWh of new capacity for 2016. The results of that tender (announced in late December 2014, after this issue went to press) will indicate wind’s immediate future. The crunch comes later, as the government is preparing a 20TWh tender – also for 15-year contracts – divided into separate calls, starting in March 2015.
Finat prefers not to hazard a price estimate for wind contracts in the coming calls. He points out, however, that in the last two, conventional power sold at $129/MWh and $112/MWh. Meanwhile, power auctions in Brazil have long seen wind prices fall well below $100/MWh, so far bottoming at $50.2/MWh.
Chile has no turbine manufacturers, which is unlikely to change given the restricted size of its market, says Gaylord. That might make installed wind power costs higher than in Brazil, with its large local wind industry. Yet Finat believes prices will enable wind to stand on its own feet competing with conventional power in the Chilean tenders.
Outstripping obligations
Based on recent experience, distributors will buy wind even in excess of the statutory renewables obligation, says Finat. Chile’s current wind boom comes largely from past development momentum. That, says Finat, continues now, long after surpassing the previous government’s renewable electricity obligation, which had scheduled 5% for 2014 (on its way to 10% to 2024). “We are already at nearly 10%,” he explains.
Chile has vast areas where wind capacity factors top 30%. But, until the new government’s energy policy was implemented, there was little developer security to entice project financers. Developers staying the course over the past decade are mainly those with deep pockets, such as wind market leader Spanish utility Endesa, which is now controlled by Italian counterpart Enel. Another Chilean wind major, Ireland’s Mainstream, sees the market as strategic and uses special financing strategies, such as partnering with Chinese turbine manufacturer Goldwind, which has a dedicated finance affiliate.
Up to now, successful wind operators have mainly sold power directly to the spot market, averaging prices at around $130/MWh. On a smaller scale, the more adventurous of Chile’s mining groups have signed up for wind generation through long-term power purchase agreements (PPA), guided by the spot price. Yet PPAs are limited in number due to the conservative nature of Chile’s power system, with large customers “wanting the usual one-stop shop suppliers, without needing to integrate different solutions”, says Finat. Now, however, with the opening of distributor tenders to renewabl
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