With a power score of 2.58, Chile ranks number 1 among emerging markets and number 9 in the global ranking.
- Emerging markets
2.58 / 5
Net-zero goal and strategy
Chile pledged to achieve carbon neutrality by 2050 in its updated ‘nationally determined contribution’ (NDC), which is its plan to help achieve the goals of the Paris Agreement.
Nationally Determined Contributions (NDC)
Chile submitted its updated NDC to the United Nations Framework Convention on Climate Change (UNFCCC) in April 2020. It is aiming for its greenhouse gas (GHG) budget to not exceed 1,100 million metric tons of CO2 equivalent (MtCO2e) between 2020 and 2030, with emissions peaking in 2025. It has a goal for emissions to be 95MtCO2e by 2030.
Fossil fuel phase-out policy
Chile aims to phase out its coal power fleet by 2040 and has established a schedule to retire 50% of its coal power plants by 2025.
Chile has a target for 20% of its electricity generation to come from renewables by 2025. It achieved this goal ahead of schedule, with 25% of generation coming from clean energy sources in 2020. Wind and solar made up 18% of the total generation in 2021.
Power prices and costs
Chile holds power auctions with standardized power purchase agreements (PPAs) denominated in US dollars. Developers can also sign bilateral contracts outside the regulated market with large consumers. Miners are a large portion of Chile’s corporate clean energy PPA market, and they usually sign long-term contracts.
In November 2019, Chile created a temporary mechanism to stabilize retail power prices. This was in response to civil unrest that rocked the country in mid-October 2019. However, the government is not subsidizing the stable prices. Instead, generators such as AES, Enel, Colbun and Engie will incur a loss as a result of the law. They will be compensated from the savings the government accrues from 2021 onward when renewable PPAs kick in, lowering generation costs. The government must pay generators back by 2027.
Installed Capacity (in MW)
Electricity Generation (in GWh)
Which segments of the power sector are open to private participation?
Wholesale power market
Does the country have a wholesale power market?
Doing business and barriers
Despite recent improvements, Chile face limitations on its transmission infrastructure. Clean energy generators faced high levels of curtailment in the past before the country added two important new transmission lines. Curtailment rates averaged 2% in 2020. However, a large pipeline of wind and solar assets is set to be commissioned in upcoming years and the country may face significant bottlenecks again.
Currency of PPAs
Are PPAs (eg. corporate PPAs and all other types) signed in or indexed to U.S. Dollars or Euro?
Bilateral power contracts
Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?
Fossil fuel price distortions - Subsidies
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) down through subsidies?
Fossil fuel price distortions - Taxes
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) up through taxes or carbon prices?
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