The Chilean government is planning to hold a Licitación de Suministro 2019/01 auction for new energy generation capacity in June and the tender is expected to allocate extensive solar and wind facilities.
According to the auction document published by the Chilean National Energy Commission (CNE), bidders will have until June 11 to submit generation project proposals and the results will be announced on June 19.
Selected projects must start delivering power to the Sistema Interconectado Central and Sistema Interconectado del Norte Grande electricity networks on January 1, 2026.
Projects awarded contracts under the tender will supply electricity under 15-year power purchase agreements for 2026-2040 and the procurement exercise is expected to lead to the generation of 5.6 TWh of new electricity per year, more than double the 2.2 TWh the Chilean government allocated in the last auction of the kind, held in early November 2017.
Time-of-day project allocations
As in the previous auction, the tender will include specific time-of-day requirements for power generation. The Bloque de Suministro Nº1-B proportion of the exercise will be eligible for projects which can generate power from 8am-5.59pm daily and will account for the largest proportion of the power to be generated – 2,644 GWh per year. The balance will be generated in two more time-specific blocks covering 6pm-7.59am on a daily basis.
The CNE will set a maximum price it will pay for the electricity generated, with levels set for each of the three time-specific blocks of capacity allocated. Those ceiling prices will be set after project proposals are received and electricity price bids must be denominated in dollars per megawatt-hour transmitted.
In the 2017 ‘Licitación de Suministro 2017/01’ auction, the lowest electricity price bid – $21.48/MWh – was submitted by the Enel Generación Chile subsidiary of the Italian energy giant. The final average electricity price was $32.50/MWh. The second-lowest bid came from GPG Solar Chile, a unit of Spanish power and gas utility Gas Natural Fenosa, which offered $24.80/MWh for the same block of capacity. Around 600 MW of renewable energy capacity was allocated in the auction.
The average price posted in the 2016 new capacity auction was $47.60/MWh, with 12,430 GWh per year of new electricity generation contracted. The 2015 tender, the first of its kind in Chile, attracted an average power price of $79.30/MWh, with 1.2 TWh of electricity contracted.
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This is happening in the middle of a political crisis, with massive street protests against a neoliberal givernment. The same pattern holds in Brazil, where the wind and solar auctions go ahead.
In Latin America, the US alignment of fossil fuel interests and conservative politics does not seem to hold. In Mexico, a left populist givernment is slowing down the shift to renewable energy to protect workers and bureaucrats in the old state monopolies.
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