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Chile

With a power score of 2.58, Chile ranks number 1 among emerging markets and number 9 in the global ranking.

  • Emerging markets
  • Americas

2.58 / 5

Power score


 

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Low-carbon strategy

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.

Power

Power policy

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 policies

Renewable energy auction
Feed-in Tariff
Import tax incentives
Net Metering
Renewable energy target
VAT incentives

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.

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Power market

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)

20122014201620182020010K20K30K MW

Electricity Generation (in GWh)

20122014201620182020020K40K60K80K GWh
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Utility privatisation

Which segments of the power sector are open to private participation?


Generation
Transmission
Retail

Wholesale power market

Does the country have a wholesale power market?


Available
Not available

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?


Available
Not available

Bilateral power contracts

Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?


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Not available

Fossil fuel price distortions - Subsidies

Does the government influence the wholesale price of fossil fuel (used by thermal power plants) down through subsidies?


Available
Not available

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?


Available
Not available

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Climatescope 2022

Power Transition Factbook

This marks the 11th anniversary of Climatescope, BNEF’s annual assessment of energy transition opportunities. The project has been expanded to include activity not just in clean power but in the decarbonization of the transportation and buildings sectors. The Power Transition Factbook is the first of three reports that composes BNEF's Energy Transition Factbook. The transport and buildings sectors reports are coming soon.

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