Why this is important to Wisconsin businesses: Chile's power purchase agreements are an important way to gain access into the Chilean energy sector.
The Chilean National Energy Commission (CNE) has extended the deadline for its regulated market power supply tender from through July 27, 2016. Under the tender, companies can submit bids for a 20-year power purchase agreement to provide 13,750 GWh annually. This amount of energy represents one-third of current regulated consumer consumption and 29 percent of Chile’s supply for the next decade, making the offer the largest power supply provision in Chile’s history. More information can be found on CNE’s website.
The deadline extension is due to pending legislation that would create an independent institution tasked with outlining a long-term plan for electrical transmission compatible with renewable energy generation hubs. In 2015, CNE offered three similar contracts for a combined 1,200 GWh annually. The decision to divide the wattage was made to accommodate new renewable energy projects that generate power intermittently with definite peak hours. Between the three tenders, a total of 38 unique offers were presented, a number that CNE described as “exceed[ing] our best expectations.”
Chile’s energy recently became the third-most-expensive in South America. President Michelle Bachelet has made a concentrated effort to tackle rising prices by cutting costs 25 percent through 2021. The trend in money allocated for previous tenders reflects this goal. Bids awarded in 2013 averaged $128.20/MWh, while the 2015 bids were capped at a price of $108.13/MWh. Renewable energy will also play a key role in this objective. Analysts forecast that half of new energy capacity added between 2016 and 2019 will come from wind and solar projects.
Wisconsin companies have an opportunity to bid for the current and future agreements through partnering with local firms with experience in bidding for these types of contracts, or through forming a consortium with other local or foreign players. Wisconsin’s trade representative in the market is available to assist in making these connections.