LAMINA DE HURACAN

Chilean Energy Overview

Chile: Leading the Path on Solar Energy

Sustainable Energy DivisionMinistry of Energy - Government of Chile

September 9, 2019

Chilean Energy Context

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• 17.6 MM inhabitants

• GDP/capita of USD 22.7 M

• High dependency from imported fossil fuels

• Low level of electricity and gasinterconnection with the region

• High renewable potential

4Source: National Energy Balance, Ministry of Energy, 2017

Primary Energy Offer and Final Consumption

29%

15%

24%

25%

5%

1% 1% 0% 0%

Oil Gas Coal Biomass - Firewood Hydro Wind Solar Biogas Geothermal

2%

39%

36%

23%

Self-consumptionIndustrial and MiningTransportCommercial, Public, Sanitary and Residencial

Primary Energy Offer Final Energy Consumption

0

30

60

90

120

150

180

210

240

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

USD/MWhGWh

Geothermal

Solar

Wind

Biomass

CHP

Hydro

Oil

Gas

Coal

Northen Chile Spot Price(R-axis)

Central Chile Spot Price(R-axis)

Evolution of Electric Generation in Chile

5Agreement on international

natural gas imports Consecutive

dry yearsNatural gas

cutbacks

Source: National Energy Commission

201846% of renewable generation

(18% of NCRE)

All new generation from renewables

According to different studies, the futuredevelopment of the energy matrix isforecasted to remain renewable.

Chile ranked #1 on the 2018 Climatescope ranking of attractive emerging markets for clean energy investments.

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Renewable Future

7 7

High Renewable Energy Potential

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Atacama DesertHighest level of solar radiation in the world

>3.500 KWh/m2/Year (DIN)

>3.000 Sun hours/Year

<2mm rainfall/Year

Potential estimated by the Ministry of Energy for the last Long Term Energy Planning process.

High Renewable Energy Potential

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>72x Chile’s installed capacity

~1.7 times the installed capacity of USA

Over 30 GW undeveloped capacity with environmental approval

Technology Potential [GW]

Wind 37

Hydro 6

Solar-PV 1,194

Solar-CSP 510

Geothermal 2

Total 1,749

10Felipe Cantillana - MarcaChile

Cost Driven Change

• The price of PV systems continues to decrease as results of technology innovations, economies of scale and manufacturing experience.

• Competitive offers in tender

Global average LCOEs and auction results for utility-scale PV by commissioning date

Source: IEA - Analysis from Renewables 2018 Source: National Energy Comision, Chile

Tender in Chile for Regulated Costumers

María José Pedraza- MarcaChile

Solid Institucional FrameworkChile leads to an attractive country for clean energy investments.

• Controlled inflation.

• Responsible fiscal policy.

• Controlled fiscal deficit.

• Good risk rating (Moody’s A1, S&P A+, Fitch A).

Power Sector

• Liberalized, competitive and unsubsidized market.

• Generation: Spot market based on audited costs.

• Transmission: Centrally planned for national grid.

• Distribution: Regulated monopoly.

0

100

200

300

400

500

600

700

1Q-1

0

3Q-1

0

1Q-1

1

3Q-1

1

1Q-1

2

3Q-1

2

1Q-1

3

3Q-1

3

1Q-1

4

3Q-1

4

1Q-1

5

3Q-1

5

1Q-1

6

3Q-1

6

1Q-1

7

3Q-1

7

1Q-1

8

3Q-1

8

1Q-1

9

Ave

rage

bp

s

Emerging Markets Bond Index Global Spread

Chile

LatAm

Global

Europe

Asia

Source: Central Bank of Chile

There is wide agreement that Solar is important in Chile’s energy future

Path to 100% Renewables, Wärtsilä 2019

Solar Future

Decarbonization development and operation study,

Coordinador Electrico Nacional (ISO), 2018

PELP, Ministry of Energy 2018 Propuesta regulatoria sobre flexibilidad, Valgesta, 2019

Long term analysis for SEN,

Moray and PSR, 2018

Generation Mix

Towards a sustainable energy transition

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• Allow development of flexibles systems that allow integration massive amount of renewables.

• High quality projects not only from technical point of view, but also solid involvements with comminutes.

• Allow development of new solutions (Storage, Electromobility, Demand Side Management, Energy Efficiency, Internet of Things, Smart Grids, etc.)

Information Systems

Forecast

Systems

Communication, Monitoring and Control Systems

Flexibility from the current facilities

Flexibility from the demand

Development of the Transmission

System

Flexibility from the future facilities

New alternatives of flexibility

Regional Integration

Solar development is growing in all segmentsNot only Utility scale…

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Utility Scale

Al size of projects. Generators connect to the grid, accessing to the liberalizedmarket (PPAs or Merchant). Dispatched under command of the ISO.

# Projects: 33

Solar Installed Capacity: 2,108 MW

PMGD/PMG

Projects up to 9 MW, connected to distributions or transmission grid undersome special conditions. Can access spot market or an stabilized price scheme.

# Projects: 131

Solar Installed Capacity: 517 MW

Net-billing

Regulated clients can connect projects up to 300kW for self-consumption, butsurpluses feed to grid and are valued in your electricity bill.

# Projects: 5,874

Solar Installed Capacity: 38.5 MW

Why are solar and other renewables important for Chile?

Solar and renewables have proven to be the most competitive option,

lower dependence on imported fuels,

opportunity to become energy exporter,

and also….

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Most CO2 emissions are from Energy Sector

Source: Inventario Nacional de GEI 1990-2016, Ministry of Environment Chile

GHG emissions in Chile:

• Chile has committed (in June 2019) to reach carbon neutrality by 2050

• Phase out plan of coal power plants by 2040 (!)

(8 will be closed by 2023)

• Other actions in transport, heat, cooling, efficiency, etc.17

Energy: highest opportunities to lower emissions of GHG in Chile

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Thermal Use (Heating and Cooling)Renewables allow decarbonization in other uses further than electricity.

• Represents 36% of total energy consumption in 2017.

• Opportunities for solar energy (and other renewables)

in industrial and residential sector.

• Renewable Thermal National Strategy under development during 2019.

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Green Hydrogen & Power-to-X

• Competitiveness of green hydrogendepends on energy cost (+CAPEX and running

hours)

• Chile’s potential has been highlighted by several international publications.(IEA, IRENA, WEC, BNEF, Asia Pacific Energy Research Center, JülichResearch Institute, among others)

• Potential uses go beyond energy sector and is expected to be a 9 trillion USD industry by 2030.

A need for reaching worldwide carbon-neutralityHydrogen costs from hybrid solar PV and onshore wind systems in the long term

Source: “The Future of Hydrogen” IEA 2019

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Our vision for the future

Lead the energy transition, not only to adapt to the technological changes, but to accelerate its

development and become a leader of this process in the region.

Social and citizen stamp has to be part throughout the process

Gabriel PrudencioHead of Sustainable Energies Divisiongprudencio@minenergía.cl

Thank you