Chile: new 80 MW merchant solar project announced

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Chile’s ever-shifting merchant solar landscape has added another keynote project to its pipeline this week following the announcement from Greenwood Energy that it is to build a 80 MW project in the Antofagasta region.

U.S. renewable energy company Greenwood Energy will work alongside local EPC Pacific Solar SA to construct the plant, which will usurp the 70 MW Project Salvador PV plant – also located in Chile – as the world’s largest merchant solar project.

This latest addition to Chile’s thriving merchant solar sector will cover 190 hectares of land in the northern region. The merchant solar model – which sells its energy directly on to the spot power markets without the need for power purchase agreements (PPAs) – has proved particularly popular in Chile for a handful of reasons.

Chile’s long, narrow geography makes it difficult to engineer much north-south connectivity, meaning the sunny areas in the north of the country, which is also where the majority of Chile’s mining operations are located, tend to rely on expensive diesel-powered generators for energy. Solar has become a viable alternative in recent months owing to Chile’s stable economy and government-level reluctance to interfere with free-market conditions.

This latest PV project (completion is scheduled for early 2016) will add another 80 MW to the country’s merchant power portfolio, while the overall growth of the solar sector in the country is expected to grow by almost 1 GW this year, according to Bloomberg New Energy Finance (BNEF).

BNEF’s Latin America associate Lilian Alves told pv magazine that Chile’s market and topographical conditions make the country the ideal breeding ground for merchant solar projects.

"The reason that merchant solar is working in Chile and in other countries such as Mexico is because of transmission constraints," she said. High power prices, high insolation and private investors ready and willing to take risks in one of Latin America’s most stable economies are creating a near-perfect storm in which merchant solar projects can grow.

January’s issue of pv magazine – published January 22nd – features an in-depth article on the growth of the merchant power PV model in Latin and South America.