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Chile’s Colbún comments on regulated supply auction, gives project updates
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Prices in Chile’s regulated and nonregulated electricity supply markets have been trending up, a local generator said.
The dynamic is being observed clearly in the former segment, where the average price offered in the supply auction currently underway, and corresponding to 2023, was US$63.45/MWh, compared with the average price awarded in the previous process – corresponding to 2022 – of US$37.4/MWh, which, in turn, was higher than prices seen in the two processes before that.
In the 2022 auction, rising costs of wind and solar capacity and of financing, along with risk stemming from grid congestion – impacting prices offered – were cited among key reasons for the result of auction, where only part of the supply offered was awarded.
These factors, along with risk associated with price stabilization legislation, may also have influenced bid size in the current auction.
“We’re seeing a trend that is reflecting basically the risks of the technologies, the market and particularly the regulated contracts. So it’s an upward trend,” Colbún CEO José Ignacio Escobar told the company’s 1Q24 results call.
Colbún did not participate in the auction, which saw fellow heavyweight Enel submit the bulk of offers. Award decisions are due in the coming days.
Source: BNamericas with CNE data
Escobar, responding to an investor question, also commented on prices in the nonregulated market.
“In the particular case of the private contracts, again, what we have seen in the last tenders, particularly the ones that we participated in and were awarded, I would say they’re reflecting the current situation of the market in terms of the system costs, lateral payments and, of course, the increasing cost of technologies, for example, wind,” he said.
In Chile last quarter, Colbún’s sales volume to regulated and nonregulated clients was 248GWh and 2,330GWh, respectively.
HORIZONTE
The first 70 turbines of Colbún’s 816MW Antofagasta region wind park Horizonte are expected to start injecting power into the grid this month.
A second batch of 70 turbines is due to follow by the end of the year, the call was told.
Horizonte is Chile’s largest wind power complex and one of the biggest in Latin America.
Colbún is seeking the environmental green light to expand capacity by up to 180MW, nudging it near the 1GW mark. The expansion project would add US$200mn to its original price tag, estimated at US$898mn.
Construction launch for the expansion is planned for July 2025.
PROJECT PIPELINE
Colbún also provided an update on its development-phase projects.
Among highlights was exemption from having to submit environmental impact assessments for the installation of battery storage systems at environmentally greenlit projects Inti Pacha phases 1-3 (Antofagasta region, 750MW solar PV and 400MW batteries) and Jardín Solar (Tarapacá region, 537MW solar PV and 200MW batteries).
Colbún was also exempt from having to submit an assessment for the installation of 200MW of batteries at operating 230MW solar PV farm Diego de Almagro. The company has installed 32MWh of battery capacity (8MW, four-hour injection duration) at the Atacama region plant. Global energy market solutions company Wärtsilä was involved in this project.
Colbún also has the environmental green light for 422MW solar PV and 240MW battery storage project Celda Solar, planned for Arica y Parinacota region.
In terms of projects in the review phase, Colbún has a US$540mn, 360MW wind park dubbed Cuatro Vientos planned for Los Lagos region. Another southern wind project, the 360MW Biobío region Junquillos, is also under environmental review.
Colbún is aiming to build 4GW of renewables capacity by 2030 as part of a decarbonization push.
INSTALLED CAPACITY
At the end of 2023, the firm’s installed capacity stood at 4,043MW, led by thermal (2,159MW) and hydro (1,627MW), with the balance being solar (248MW).
In terms of coal-fired capacity, Colbún has a single plant, the 350MW Santa María unit in Biobío region.
PERU
Colbún has a 570MW gas-fired power station in Peru, known as Fénix, where the company has built a green hydrogen facility to provide the fuel for generator cooling. A similar project is planned in Chile at the 887MW Nehuenco gas-fired complex in Valparaíso region and, according to a 2023 statement, it is expected to enter service by end-2024.
Colbún has three development-phase wind projects in Peru: 660MW Bayóvar (Piura region), 238MW Naylamp (Lambayeque region), and 238MW Tres Quebradas (Arequipa region). The company also has 400MW solar PV project Algarrobal in Moquegua region in the development phase.
Submitted for environmental evaluation in March, Bayóvar would be built on private land owned by a mining company, which helps derisk the project, the call was told. Colbún is in talks with potential local offtakers.
On the general outlook on Peru, Escobar said: “We’re permanently scanning the country to find new projects that are in line with our growth strategy, both in solar and wind.”
TRANSMISSION UNIT
During a board meeting last month, Colbún directors agreed to establish a new transmission subsidiary in Chile, Los Andes Transmisión.
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