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ENERGY TRANSITION AND RENEWABLES IN CHILE

Jaime Peralta

Vice President, Coordinador Eléctrico Nacional – CEN

February 2019, Quebec

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Agenda

❑ About Chile

❑ National Electric System

❑ Energy Market Framework

❑ National Electric Coordinator (Chilean ISO)

❑ Renewable Energy (RE) in Chile

❑ Transmission Sector

❑ Challenges and Opportunities

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ABOUT CHILE…

Chile is long and

narrow country

(4,270 km)

✓ Population: 17.6 millions

✓ Surface (continental): 755,915 km2

✓ GDP per capita: USD$ 15,900 (4,0% growth)

✓ Energy investment: USD$ 3.120 million (50%

RE)

✓ Highest solar radiation in the world

✓ Law 20698-2013 ➔ RE Target: 20% by 2025

✓ 2050 Energy Policy (2016) ➔ 70% RE by 2050

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ELECTRIC SYSTEM – 2018

• Installed Capacity: 24,487 MW

• Energy Generated: 76,526

GWh

• Peak Demand: 10,570 MW

• Energy growth: 3.1 %

• Transmission Lines: 33,000 km

National Grid

3,100 km

Hydro

Solar

Wind

Thermal

Thermal

0%

20%

40%

60%

80%

100%

Thermal Hydro Solar Wind Geothermal

Installed capacity MW Energy generated GWh

Energy & Capacity by Fuel Type

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• RE Generation = 13,342 GWh (17,4%) Total = 76,526 GWh

• RE Capacity = 4,829 MW (19,7%) Total = 24,487 MW

RENEWABLE ENERGY – 2018

Law 20,698 from 2013 ➔ Target: 20% RE by 2025

RE

20%

Coal

23%

Diesel

12%

LNG

19%

Hydro

27%

Installed Capacity

RE

17%

Coal

38%

Diesel

1%

LNG

15%

Hydro

28%

Energy

0%

10%

20%

30%

40%

50%

60%

Solar Wind Small Hydro Biomass Geothermal

Energy Capacity

Renewable Resources Energy Installed Capacity

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ENERGY INSTITUTIONAL FRAMEWORK

National Electric

Coordinator – NEC

(Chilean ISO)

National Energy

Commission

(CNE)

Fuels & Electricity

Superintendency

(SEC)

• Regulatory body

• Set regulated rates

• Energy Tenders

Generation

Companies Transmission

Companies

Distribution &

Large

Customers

• Sanctioning body

• Interprets regulations

• Oversights norms compliance

Ministry of

Energy

Other organizations:

• Panel of Experts

• National Economic

Prosecution Office

(FNE)

• Transparency Counsel

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Independent technical organization in charge of the operation of

the national grid and the energy market

✓ Responsible for ensuring a secure, reliable and economic energy supply,

and guaranteeing open access to the transmission systems

✓ Annual budget around US$ 50 Million (US$/MWh 0.65) and 300

employees

✓ Main functions:

✓ Secure, reliable and economic system operation

✓ Wholesale energy, capacity & ancillary service markets

✓ Long-term planning for transmission expansions & International

bidding process for transmission projects

✓ Open access (project interconnection process)

NATIONAL ELECTRIC COORDINATOR (Chilean ISO)

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WHOLESALE ENERGY, CAPACITY

& AS MARKETS

• Competitive bids

• Fix charge to the

demand

National Electric

Coordinator

Generator

B

Distribution

(Regulated)

Long-term

Forward

Contracts

Generator A

Large

Customers

>500kW

Bilateral

Contracts

Transmission

(Open

Access)

LMP

Pricing

LMP

Pricing

• Day-ahead economic dispatch (based on declared variable cost ➔ LMP)

• NEC manages energy and capacity balances and settlements

• Competitive long-term energy tenders for regulated customers led by CNE

• Ancillary services will transition from cost-based to auction-based market

• 410 market participants (G, T, D & Large Customers)

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MARGINAL COST (LMP) – Monthly Average

0

50

100

150

200

250

300en

e

mar

may ju

l

sep

t

no

v

ene

mar

may ju

l

sep

t

no

v

ene

mar

may ju

l

sep

t

no

v

ene

mar

may ju

l

sep

t

no

v

ene

mar

may ju

l

sep

t

no

v

ene

mar

may ju

l

sep

t

no

v

2013 2014 2015 2016 2017 2018

USD/MWh

Crucero 220 kV Quillota 220 kV

ENERGY TENDERS - Regulated Customers

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RE Awarded:2015/16 ➔ 52%2017 ➔ 100%

52.9 54.559.8

65.8

104.3

90.0

99.5

90.3

129.5

138.9

128.9

112.0108.2

79.3

47.6 32.5

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

N°1 N°2 N°3 N°4 N°1 N°2 N°3 N°4 N°1 N°1 N°2 N°1 N°2 N°1 N°2 N°1

2006/2007 2008 2010 2012 2013 2015/2016 2017

Average Bid Awarded Price

Awarded Energy GWh/Año Awarded Price USD/MWh

[GWh/Año] [USD/MWh]

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PROJECTS UNDER CONSTRUCTION TO 2020

Project: Cerro Dominador CSP

Technology: (First) Concentrated Solar

Region: Antofagasta

Capacity: 110 MW

ISD: 2020

SMALL HYDRO 3.6%

78 MW

WIND 24.7%

539 MW

SOLAR 16.5%

361 MW

TOTAL 2,183 MW

RENEWABLES 44.8%

978 MW

OTHERS 55.2%

1,205 MW

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RENEWABLE ENERGY POTENTIAL

Chile has significant RE resources:

• 2,000 GW of wind, solar and hydro

capacity.

• 4,000 MW of geothermal and

biomass capacity.

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MAIN ACTORS IN THE RE MARKET

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

Others

Etrion Corp

Pacific Hydro S.A.

SOWITEC Energías Renovables

EDF Energies

D'E Capital

SunPower Corporation SpA

EPM

Ibereólica Chile

Fisrt Solar

Ingenostrum Chile SpA

SunEdison

Energy Focus S.A.

Pattern Energy

Acciona Energía Chile

Enel Green Power Chile

Solar Wind Small Hydro Thermal Geothermal[MW]

Installed Capacity

4,829 MW

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TRANSMISSION SECTOR

• Three segments: National, Zonal and Dedicated

• Centralized planning for National/Zonal (by CNE)

• System expansions based on a competitive

bidding process (by NEC)

• 2018 expansion plan ➔ USD 1,400 million (First

HVDC project)

Dedicated

National System

(500kV & 220kV Bulk Transmission)

Zonal

(Sub-transmission)

Dedicated

Zonal

(Sub-transmission)

Dedicated

Dedicated

Distributors

Generators

DistributorsConsumers

Consumers

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✓ Integration of high levels of variable renewable energy (flexibility)

✓ New auction-based markets for ancillary services

✓ Develop RE workforce (4,000 jobs by 2030)

✓ Permitting, environmental, and social issues (PMO, ROW Studies, state land bids)

✓ Dry hydrology scenarios and voluntary decarbonization commitments

✓ Transmission congestion (First HVDC project)

✓ Natural disasters (earthquakes, tsunamis, volcanos, wildfires, flooding)

SOME CHALLENGES…

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INVESTMENT OPPORTUNITIES

✓ Renewable Energy Generation

✓ CSP Technology (Base capacity)

✓ Energy Storage Systems (BESS, Pump storage)

✓ Ancillary Services (New auction-based market)

✓ Transmission Expansions (Developers and EPC contractors)

✓ Regional Interconnections (Peru, Argentina)

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ENERGY TRANSITION AND RENEWABLES IN CHILE

Jaime Peralta

Vice President, Coordinador Eléctrico Nacional – CEN

February 2019, Quebec

THANKS FOR

YOUR ATTENTION