Electricity sector in Chile


As of August 2020 Chile had diverse sources of electric power: for the National Electric System, providing over 99% of the county's electric power, hydropower represented around 26.7% of its installed capacity, biomass 1.8%, wind power 8.8%, solar 12.1%, geothermal 0.2%, natural gas 18.9%, coal 20.3%, and petroleum-based capacity 11.3%. Prior to that time, faced with natural gas shortages, Chile began in 2007 to build its first liquefied natural gas terminal and re-gasification plant at Quintero near the capital city of Santiago to secure supply for its existing and upcoming gas-fired thermal plants. In addition, it had engaged in the construction of several new hydropower and coal-fired thermal plants. But by July 2020 91% of the new capacity under construction was of renewable power, 46.8% of the total solar and 25.6% wind, with most of the remainder hydro.
Chile's electricity sector changes were carried out in the first half of the 1980s. Vertical and horizontal unbundling of generation, transmission and distribution and large scale privatization led to soaring private investment. The 1982 Electricity Act was amended three times in 1999, 2004 and 2005 after major electricity shortages. Further amendments are envisaged.

Electricity supply and demand

Installed capacity

There are four separate electricity systems in Chile:
The long distances between the four systems made their integration difficult, but after the 600 km SIC-SING 500 kV AC transmission project costing US$1bn came online in May 2019, Chile's northern grid and central-southern grid are now connected into a single national wide area synchronous grid.
Total installed nominal capacity in April 2010 was 15.94 GW. Of the installed capacity, 64.9% is thermal, 34% hydroelectric and nearly 1% wind power, with nuclear absent. The SING is mostly thermal and suffers from overcapacity, while the hydro-dominated SIC has been subject to rationing in dry years.
Total generation in 2008 was 56.3 TW·h, 42% of which was contributed by hydropower sources. The remaining 58% was produced by thermal sources. This figure varies significantly from one year to another, depending upon the hydrology of the particular period. The electricity production grew rapidly since the start of natural gas imports from Argentina in the late 1990s.
Besides the new hydro projects, there are several large-scale thermal projects in the development pipeline for Chile. Numerous projects are being built, although other similar plants have been delayed due to opposition from locals and uncertainty about gas supply. It is this uncertainty that has directed new attention to coal-fired facilities, of which Chile already has several plants in operation, with a combined capacity of 2,042 MW. In addition, as of April 2010, there are plans to build new plants for a total of 11,852 MW of new generation capacity.

By company

The main companies involved, in terms of installed capacity, are the following:
A number of other companies account for the remaining 14%

Imports and exports

In 2003, Chile imported 2 TW·h of electricity while it did not have any exports.

Demand

In 2007, the country consumed 55.2 TW·h of electricity. This corresponds to 3,326 kWh per capita, which is still low by developed country standards. It grew rapidly until 2006, but since then it has been stagnant.

Demand and supply projections

In 2006 it was expected that electricity demand would increase at 5% per year in the period up to 2030. In that same period, the share of natural gas in the generation mix would increase to 46%. The installed capacity of natural-gas-fired electricity generation was expected to reach 14 GW in 2030, while coal-fired and hydroelectricity generation would each account for about 26% of the total electricity generation mix. As can be seen above, by 2020 trends were quite different.

Access to electricity

Total electricity coverage in Chile was as high as 99.3% in 2006. Most of the progress in rural areas, where 96.4% of the population now has access to electricity, has happened in the last 15 years, following the establishment of a National Program for Rural Electrification administered by the National Fund for Regional Development. Under this Fund, there is tripartite funding of the capital costs of rural connections: users pay 10%, companies 20% and the state provides the remaining 70%, with users expected to pay for running costs.

Service quality

Interruption frequency and duration

In 2002, the average number of interruptions per subscriber was 9.8, while the total duration of interruptions per subscriber was 11.5 hours in 2005. Both numbers are below the weighted averages of 13 interruptions and 14 hours for the LAC region.

Distribution and transmission losses

Distribution losses in 2005 were 6.52%, down from 8% a decade before and well below the 13.5% LAC average.

Responsibilities in the electricity sector

Policy and regulation

The National Energy Commission, created in 1978 to advise on long-term strategies, is responsible for advising the Minister of Economy on electricity policy and for setting of regulated distribution charges. The Energy Superintendence is responsible for supervising compliance with laws, regulations and technical standards for generation, production, storage, transportation and distribution of liquid fuels, gas and electricity. In turn, the Minister of Energy formally imposes the regulated tariffs and retains control over the issuing of rationing decrees during periods of drought when there is a shortage of hydro-electric generation capacity. Further responsibilities in the electricity sector are also held by the Superintendence of Secure Values , which is in charge of taxation, as well as directly by the regions and municipalities.

Generation, transmission and distribution

Since the privatization of the Chilean electricity sector in 1980, all generation, transmission and distribution activities have been in private hands. There are 26 companies that participate in generation, although three main economic clusters control the sector: Enel group, AES Andes and Tractebel. The situation is similar in the distribution sector, with approximately 25 companies, in which the major companies include CGE Distribución S.A., Chilectra S.A., Chilquinta Energía S.A., and Inversiones Eléctricas del Sur S.A.. In transmission, there are 5 players. In the Central Interconnected System, the most important player is Transelec, a pure transmission company which controls almost the entire transmission grid that serves the SIC. In the other interconnected systems, the large companies generation or the large clients are the owners of the transmission systems.
The Central Interconnected System serves principally household consumers, while the "Large North" Interconnected System mostly serves large industrial customers, primarily mining interests in Chile's northern regions. The largest generating company in the SING is Electroandina, owned by Tractebel and Codelco.

Renewable energy resources

In January 2006, new legislation was passed to apply the benefits included in Short Laws I & II to renewable energy production. The new regulation provided for exemptions in transmission charges for new renewable energy sources below 20 MW of capacity. It also simplified the legal procedures for projects below 9 MW. Previously, besides hydro, no other renewable source had a significant contribution to the Chilean energy mix, but this has changed.

Hydro

At the end of 2021 Chile was the 28th country in the world in terms of installed hydroelectric power.
Historically, hydroelectric plants have been the largest power source in Chile. Periodical droughts have, however, caused supply shortfalls and blackouts, which led the government to increase diversification in the country's energy mix in the 1990s, mainly through the addition of natural-gas-fired power plants. Nevertheless, hydropower projects continued to be carried out, with the 570 MW Endesa's Ralco plant, on the Biobio River, being the best example as the largest power plant in Chile. The construction of this plant was long delayed by opposition from local residents and environmental activists, but it finally began operations in 2004, the year when it also got the approval from Chile's environmental authority to be expanded to a capacity of 690 MW.
Furthermore, Argentina's gas crisis has revitalized other hydropower projects in Chile. In 2007–8, Chilean power generator Colbun completed three hydroelectric projects, the 70 MW Quilleco plant on the Laja River and the Chiburgo and Homito plants, with 19 MW and 65 MW generation capacity respectively. In addition, in 2007 Endesa started operating the 32 MW Palmucho plant, which is to work in conjunction with Ralco's facility. Finally, Australia's Pacific Hydro and Norway's SN Power Invest are developing the 155 MW La Higuera and the 156 MW La Confluencia hydroelectric plants on the Tinguiririca River. The controversial 2,750 MW HidroAysén project was cancelled in 2014.

Solar power

At the end of 2021 Chile was the 22nd country in the world in terms of installed solar energy.
As noted above, solar power has surged, with 3.104 GW installed capacity and 2.801 GW under construction in July 2020. At a power auction in October 2015, three solar generators offered power at $65 to $68 per MWh and two wind farms offered power at $79 per MWh, vs. coal power offered at $85 per MWh, and an average price of $104.3 per MWh at an auction in 2008 with no wind or solar power offered. In the August 2016 auction, the Spanish company Solarpack was one of the winners with a proposal to sell power beginning in 2021 from a new 120 MW solar facility, Granja Solar, at $29.1 per MWh, an international record low price at the time. On March 2, 2020, Solarpack began supplying power from Granja Solar, 10 months early; rated at 123MW, this raised Solarpack's current Chilean capacity to 181MW.