Chile trims electricity volume sought in 2023 regulated supply auction

Chile’s national energy commission CNE has amended the rules governing its 2023 regulated power supply auction.

Among the changes, officials are now seeking 5,000GWh/y, distributed across two supply blocks: one of 2,600GWh/y (due to come online in 2027) and one of 2,400GWh/y (2028).

CNE originally planned to auction 5,400GWh/y, split into two supply blocks of 1,800GWh/y (due to come online in 2027) and 3,600GWh/y (2028).

The auction is one of the most eagerly anticipated by the industry in recent years, given the process of change the electricity sector is undergoing and the fact that only a portion of supply offered was awarded in 2022 auction.

Last year CNE, awarded 777GWh/y of new supply from 2027 via 15-year contracts at an average price of US$37.4MWh/y. Officials had sought to secure 5,250GWh/y. Rising costs of wind and solar capacity and of financing, along with risk stemming from grid congestion – impacting the prices offered – were cited among the key reasons for the result. 

Officials introduced innovations for the 2023 process, including incentives for energy storage and non-variable renewables, splitting the auction into three geographic zones (north, central and south) and the possibility of transferring the systemic costs of the short-term market. 

One of the objectives is to help build a portfolio of renewables projects that can inject power during non-solar hours.

Bids are due to be presented on December 13. Economic offers are due to be opened on January 8 and contracts awarded, in a first phase, on January 12.

DEMAND

Electricity demand in Chile is forecast to drop this year, in line with an expected economic contraction of around 0.3%, Fitch said recently. However, nonregulated demand from the mining sector is expected to remain resilient amid dampened demand from regulated clients.

Fitch expects economic growth of 2.2% for 2024. The IMF, in its World Economic Outlook, expects a contraction of 0.5% this year and growth of 1.6% for 2024.

Power demand and economic growth should remain largely in lockstep in 2024 and 2025.

Click here to see the updated bidding rules