Chile’s latest power auction decided by razor-thin margins

An analysis by Aurora Energy Research of Chile’s latest electricity auction for regulated customers has found narrow margins between winning and competing bids, suggesting that small changes in economic conditions could have altered the results.

Enel Generación Chile, the Chilean unit of Italy’s Enel SpA, has won the full allocation in the 025/01 auction from Chilean energy regulator CNE, securing 100% of the contracted energy.

The tender covered 3,360 GWh of electricity per year for regulated customers from 2027 through 2030, equivalent to about 11% of projected regulated demand in 2027, according to the CNE.

Six companies participated in the process, submitting 708 bids representing nearly four times the required energy volume. Enel Generación Chile’s offer was selected as the most economically advantageous following the commission’s evaluation.

In the auction, a uniform 0.7% reduction in competing bids would have been enough to change the winning bidder, according to Aurora. The consultancy did not specify that the adjustment referred exclusively to price, with its analysis identifying price, volume flexibility and indexation structure as factors that can affect the relative position of bids.

Aurora said small changes in any of these variables could have altered the ranking of several offers. In one supply zone, available volume was exhausted earlier than in others, becoming the constraint that ultimately determined the outcome.

The analysis was conducted using Regulated PPA Market Insights, a new quantitative analysis and modeling tool developed by Aurora ahead of Chile’s ongoing 2026/01 electricity auction.

Aurora’s analysis is based on the premise that the economics of a regulated power purchase agreement (PPA) depend on more than the expected value of electricity. It considers factors including the value of the base supply profile, capture price risk associated with the generation technology, the cost of purchasing contracted energy that is not generated, price differences between nodes, transmission and system costs, volume risk and modulation factors.

The consultancy also identifies three key locations within the contract structure: the offer node, where a generator submits its bid; the withdrawal node, where the distributor purchases electricity to fulfill the contract; and the injection node, where the generating plant delivers electricity to the grid.

Differences between these locations can create economic exposure for suppliers. Aurora said modulation factors only partially compensate for differences between supply and withdrawal nodes and do not fully reflect intraday price patterns, particularly during periods of high solar generation.

The consultancy therefore said bids should account for projections of nodal prices, congestion and transmission risk throughout the contract period, rather than being assessed solely on average electricity prices.

Aurora also highlighted utilization risk. Its data show that the utilization rate of regulated contracts declined from 92% in 2015 to 58% in 2022, with significant differences between geographic zones and time blocks.

For one contract used as a benchmark in the analysis, Aurora estimated that lower utilization accounted for nearly 20% of the PPA’s value. Its model therefore incorporates projections of regulated demand by node and time block to estimate utilization risk for individual bids.

Chile’s National Energy Commission (CNE) organizes electricity auctions for regulated customers. The 2026/01 tender covers 2,835 GWh of annual supply across four geographic zones, divided into two contract blocks and three time bands.

The first block comprises 1,575 GWh per year under 15-year contracts beginning in 2029. The second covers 1,260 GWh annually under 15-year contracts starting in 2030.

Aurora said Regulated PPA Market Insights combines historical demand and utilization data with contract economics, demand and price scenarios, competitor analysis and portfolio simulations. The tool is designed to estimate the probability of winning under different bidding strategies and quantify key sensitivities before participation in a tender.

Raúl Urtubia, research product manager at Aurora Energy Research, said the same bidder winning the most recent tenders could give the impression that the outcomes are predetermined, but the underlying data indicate close competition.

“The difference between winning and losing can hinge on a fraction of the price, how volume is allocated across zones, or the indexation structure,” Urtubia said.