Chile generators to sell US$1.4bn in receivables

Chile’s biggest power generators are due to sell a total of US$1.4bn in payment certificates to IDB Invest, the private sector arm of the IDB group.

Revenue from the sale of the receivables is expected through 2024 and should ease some pressure on working capital needs, rating agency Fitch said.

Receivables, issued by the Chilean treasury, are held by Engie Chile, which will sell more than US$400mn, AES Andes (more than US$227mn), Colbún (about US$164mn) and Enel Generación Chile (around US$606mn).

“Collectively, on average, the asset sale will boost liquidity by 50% across these rated names when assuming the 2Q23 reported cash position,” Fitch said.

Chile’s biggest power generators are executing investment plans to expand their renewable energy footprints. 

The receivables correspond to the second tranche under Chile’s price stabilization fund for regulated clients, PEC II, part of a mechanism, stemming from the 2019 social crisis, to shield households from increases in electricity prices. 

The fund is intended to pay the differences that may arise between end-user stabilized prices and power-purchase agreement prices.

Generators receive credit documents denominated in US dollars. A state guarantee of US$1.8bn is established.  

As lower priced power-purchase agreements enter force, the average system contract price is expected to drop. When this price is below the stabilized consumer price, receivables should start to be repaid.  

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A public consultation period on Uruguay’s green hydrogen roadmap ended this week.

Uruguay wants to leverage its clean power potential to create a green hydrogen and derivatives industry targeting both the export and domestic markets.

For projects over 500MW, the country could, depending on plant location, reach hydrogen production costs of between US$1.2/kg and US$1.5/kg by 2030, the draft roadmap states.

“These production costs would allow Uruguay to position itself competitively among net exporters such as Chile, Saudi Arabia, Oman, Namibia or Australia,” it adds.

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Chile’s council of ministers for sustainability and climate change voted to submit to President Gabriel Boric, for strategic environmental review, regional energy strategy plans, local media outlet Electricidad reported.

Officials are due to start devising the strategy plans, known as PEER, in Magallanes and Antofagasta regions, where major green hydrogen projects are planned. The documents are used as inputs in long-term energy planning. 

The strategic environmental review, or EAE, is meant to ensure than the creation of territorial planning policies and instruments is carried out transparently and democratically, Electricidad adds.

The Magallanes PEER and EAE process is due to start this month and finish in December 2024, while work is expected to start in Antofagasta in January 2025 and end in June 2026.

The remit of Chile’s council of ministers for sustainability and climate change includes policy advising and planning.

The council recently approved modifications to rules governing the environmental review system as well as a bill to overhaul environment watchdog SMA. The draft legislation, which would need the approval of congress, covers areas such as oversight and sanctioning powers.