What investments do Chilean power companies have lined up for 2020?

Chilean electric power companies are expected to maintain their investments this year as they look for long-term growth opportunities and develop their existing pipeline of projects.

Their portfolios are mostly comprised of renewable projects, both solar and wind, as Chile moves to retire all its coal-fired plants before 2040 and aims to become carbon-neutral by 2050.

However, a looming economic recession in Latin America, a consequence of measures aimed at containing the coronavirus pandemic, could affect investment outlook in the sector and restrict the creation of new projects.

For the power sector, the biggest impact of the lockdown measures being deployed in most of Latin America will be lower demand. In Chile, power demand is already falling, which will bring power prices down and impact returns for companies in the sector, including distributors and generators.

According to Víctor Opazo Carvallo, CEO at renewable developer Solek, this expected drop in demand will put investors on guard until the medium-term picture becomes clearer. “I think we will see a market making more conservative decisions until we see much more stability,” he told BNamericas.

Other developments in 2020, such as the government’s legislative agenda, which includes an overhauled distribution bill and a flexibility bill, are likely to be delayed if the coronavirus crisis extends further in time.

However, companies are unlikely to make big adjustments to their projected expenses for the year, as they involve long-term projects that need to come online before specific dates, generally set by a supply contract in the regulated or unregulated segments.

Below, we shed light on the planned investments of the biggest companies in Chile’s power sector, explaining their main areas of focus and listing some of their biggest projects.

AES Gener

AES Gener plans to spend US$350mn this year as it ramps up its US$1.8bn renewable growth plan that will see it investing US$630mn in 2022 in both Chile and Colombia. Parent company AES issued US$335mn in equity to help fund this growth earlier this year.

The most important projects for the company this year include its flagship US$3bn Alto Maipo hydroelectric plant, US$255mn Mesamávida wind farm, US$298mn Los Olmos wind farm and 80MW Andes Solar II. The company has not been forced to interrupt construction at any of these projects due to the unfolding coronavirus pandemic, AES Gener told BNamericas.

Engie Energía Chile

The company has a US$1bn investment plan that will see it add 1GW of renewable capacity over the next few years. In 2020 Engie Energía Chile plans to invest US$296mn, with most of that going to renewable projects and lesser amounts for small transmission projects and recurring expenses. In 2019, the company invested US$190mn.

Significant projects for the company this year include the US$159mn Calama solar park, the US$64mn Capricornio solar park and the US$68mn Tamaya solar park, which is expected to see construction begin during Q1. Together, these projects will add 362MW of new capacity.

Colbún

While Colbún has not provided a firm figure for its 2020 investments, the company is moving ahead with significant renewable expansion in Chile with the aim of adding 4GW of new capacity by 2030. It has also said it will invest US$50mn in transmission assets this year and is looking for acquisition opportunities for other existing renewable projects.

Its project pipeline includes several large-scale projects, although construction is not expected to begin in 2020. This pipeline includes the US$700mn Horizonte wind farm and the following solar parks: US$788mn Inti Pacha, US$86mn and U$83.2mn Diego de Almagro Sur I and II  and US$430mn Jardín Solar. 

Enel Chile

Enel Chile is preparing to add 2GW of new renewable capacity through generation arms Enel Generación Chile and Enel Green Power Chile. Its portfolio comprises solar, hydroelectric, wind and geothermal projects.

Enel Chile (which includes both companies, plus distribution and electric vehicle arms) is deploying a US$2.2bn investment plan between 2019 and 2021. Annual investments in asset development are expected to rise from US$430mn in 2019 to US$510mn in 2021, a 20% increase, with most investments going into Enel Green Power and Enel Generación.

The company invested US$481mn in 2019, with 56% going into renewables and 11% into thermal generation.

Acciona

Acciona's international investment plan involves 4bn euros (US$4.4bn) in investments over five years, starting in 2020, mostly focused on renewable growth. The company expects to add 1GW of new capacity each year the plan is in effect. In 2020, the company expects to invest 1bn euros.

In 2019, the Madrid-based company invested 1.24bn euros, mainly in new renewable parks in Chile, the US and Mexico. In Chile, the company had 142MW under construction in December 2019 and expects to begin construction of another 226MW in 2020. In Mexico, the company had 337MW under construction at end-2019 and has no new plans in 2020 so far.

Of its 13GW project portfolio, 50% is split between Chile, Mexico and the US, 25% is in Spain and the remaining 25% in the rest of the world.

Mainstream 

Mainstream Renewable Power is moving ahead with its Andes Renovables platform in Chile, which involves US$1.7bn investments in projects due from 2022 onwards. The company has not disclosed a firm investment figure for 2020.

Last year, Mainstream closed financing for its first project package, a US$580mn portfolio nicknamed Cóndor. The company expects to secure financing for its second set of projects, worth US$600mn and nicknamed Huemul, in 2020. All projects encompassed under Huemul are expected to begin construction in 2020. Meanwhile, projects encompassed under Cóndor began construction in 2019.

Interchile

The ISA group, owner of Chilean transmission arm Interchile, will invest US$3.65bn in 2020, with 22% of that total, or US$818mn, allocated to the Southern Cone nation.

The investment will be split between telecommunications, energy and road infrastructure investments. In energy, Interchile will develop projects ancillary to its recently completed US$1bn Cardones-Polpaico line, such as expansion works at the Nuevo Maitencillo and Pan de Azúcar substations.