Offshore wind SPV sets sail in Chilean waters

Chile has an extensive coastline along with demand for clean solutions that can inject power after the sun sets, that is, complement output from solar PV parks and, in turn, contribute to cleaning up the grid.

Putting turbines in the sea constitutes unchartered waters in Chile – which is building an offshore sector roadmap – and presents potential benefits in other spheres including land-use avoidance, diversification of renewables technology, scale and supply chain investment.  

Launched this week, Chile-UK energy special purpose vehicle (SPV) Viento Azul Biobío is in the vanguard, with waters off Concepción city, in Biobío region, fixed squarely in its sights.

BNamericas conducted an email interview with Viento Azul Biobío project director Daniel Perdomo to find out more.

BNamericas: Can you tell us why Viento Azul Biobío was established?

Perdomo: Viento Azul Biobío (VAB) is a partnership between SC Power, a Chilean-based company and a UK entity, 17 Energy. 

Our partnership came together in the past nine months through a joint passion to unlock offshore wind in Chile. Outside of our vision to bring offshore wind to Chile, we both aligned in our commitment to bring stakeholders deeper into the heart of how we develop the projects. Truly listen and engage with local communities, industry, fisheries and government to enable the building of the social license to develop alongside driving more equity in how we share benefits across its lifecycle.

BNamericas: What can you tell us at this stage about the project you are planning for Concepción? For example, what capacity is planned and are you mulling fixed or floating turbines?

Perdomo: VAB is focused on early development and announcing our consortium is just our first step into the public view on a long journey to reaching our vision for offshore wind in Chile.

We are targeting commercial-scale developments in Chile with an interest in the Biobío region. At these initial stages, we are very much recognizing that this is a time to listen and work with communities and key stakeholders to support our technical, environmental, coexistence and commercial assessments.

For development, we have a significant number of studies to undertake and mature a project, which will enable us to build the business case to support decisions on final capacity, coexistence, technology, supply strategy and offtake.

Pictured, from left, during a Viento Azul Biobió launch event, Rodrigo Corvalán of Viento Azul Biobío, Andrea Moraga Paredes of Universidad de Concepcion, Nathalie Almonacid of Chile’s marine energy research council (MERIC), and Viento Azul Biobío project director Daniel Perdomo.

BNamericas: We understand that the wind profile in that part of Chile is favorable, in that output in the evening/night, when solar production drops off, is good. Is that more or less correct?

Perdomo: Chile boasts significant wind resources with high-capacity potential, particularly along its extensive coastline. The consistent and strong wind speeds make the country an ideal location for offshore wind farms. 

Chile is renowned for its abundant solar resources, which primarily peak during the day. 

Where the opportunity presents for offshore wind generation lies in that winds tend to be higher during evening and nighttime hours, providing a natural complement to solar power. This combination coupled with synergies with the retirement of coal power plants can create an opportunity for a more stable, decarbonized and reliable energy supply.

BNamericas: What can you tell us about potential offtakers? For example, are you considering bidding to supply the regulated market or seeking a private power purchase agreement?

Perdomo: VAB will be considering multiple avenues alongside how best we support communities and industry, while of course balancing the business case for the development. 

Biobío region in Chile, historically a hub for industrial activity, has faced significant environmental challenges. Offshore wind development can play a pivotal role in the regeneration (socially, environmentally and economically) and transformation of this region through job creation, investment attraction and clean energy transition.

BNamericas: For a final investment decision, what conditions would need to be in place?

Perdomo: Financial investment decision (FID) is a key milestone for an offshore wind project to enable a project to go into construction, so naturally like all major infrastructure projects, it will need a number of key aspects fully understood and derisked before a developer will take an FID such as: 

- Technical feasibility: a full understanding of the wind resource assessment, foundation and substructure conditions and key recommendations available on optimal technology for the projects. 

- Financial viability: understanding the capital expenditure and operational cost alongside the revenues, market conditions and risk management that will underpin an investment. 

- Supply chain strategy: a robust position on how to build and deliver this project within a fixed timeframe and budget.

BNamericas: What about regulations? Would new regulations specifically for offshore be needed?

Perdomo: Chile does not have a specific policy and regulatory framework in place for offshore wind to date; however, this will play significantly into our activities to support the building of an industry for which the policy and regulatory framework will be key. We aim to support the development of this framework through our experience in mature markets and leaning on international standards and best practices and sharing the key lessons learned in Europe.

BNamericas: In an ideal world, when would you want permitting and construction to start?

Perdomo: Development of offshore wind farms take significantly longer in comparison to onshore wind or solar projects due to the complexity of the project and the nature of working in a challenging offshore environment. 

Ideally, we would like to move into consenting activities as soon as possible due to the period of data collection and monitoring required to support the environmental permitting process. 

We do need to be mindful that a key priority in our project development ambition includes building an industry to support offshore wind alongside development. 

The UK and Europe are now familiar with the technology; however, we recognize that it is not as familiar in LatAm as yet. Our team have leading experience from the early development of offshore wind in the UK and Europe where we can draw upon where the opportunities lie for Chile and how best to support the development of the supply chain in an emerging market.

BNamericas: For Chile and indeed Latin America in general, this would be a trailblazing project, given all wind capacity, today at least, is onshore as we understand. Is a potential incursion into other markets in the region a possible future step? 

Perdomo: We have seen significant interest and ambition in LatAm for offshore wind and Chile certainly has an opportunity to be one of the leaders in LatAm. Our global market is changing at a pace and with 2030, 2040 and 2050 targets being targeted, embracing renewable energy at scale is heavily sitting within the crosshairs. 

A recent emerging market example which may be interesting for Chile is Australia. A vast country with a strong backbone of onshore wind and solar projects. However, with market changes and the pace to decarbonize, it quickly recognized the benefits to support incorporating offshore wind into its energy mix.

Pictured, from left, Viento Azul Biobío project director Daniel Perdomo, project engineer Peter Mazurenko and director and advisor Dan Kyle Spearman.