Enel Chile outlines 2024 capex schedule, reiterates distribution reform call

Electric power company Enel Chile expects to deploy about US$380mn in renewables and battery storage development capex this year.

Associated outlay in Q1 was US$96mn, or 25% of the planned 2024 total for the technologies, according to a company presentation. 

Solar projects accounted for 38% of investment in the quarter, hydropower 35%, battery storage 19%, wind 5% and geothermal and others 3%.

Enel Chile – whose net installed capacity stood at 8.5GW in March, with 77% renewables and batteries – has four projects under construction: a 67MW storage system at solar park El Manzano, 150MW hydropower plant Los Cóndores, the 80MW solar-67MW battery hybrid park Don Humberto, and a second 34MW battery system at wind park La Cabaña.

Investment in energy storage is growing in Chile, chiefly in the northern regions, against a backdrop of climbing curtailment, which has also started to be seen south of Santiago, where there are multiple wind projects.   

Overall Enel Chile’s capex in Q1 was US$179mn, up 65% year-on-year. Of the total, around US$103mn was allocated to development capex, CEO and acting CFO Giuseppe Turchiarelli told the company’s latest results call.

In November Enel said generation capex under a 2024-26 plan was US$1.9bn, with associated capacity growth of 1.3GW, of which batteries account for 0.7GW.

SUPPLY AUCTION

One of Chile’s biggest electricity players, Italian-owned Enel is participating in energy commission CNE’s regulated supply auction, bids for which were opened on Thursday. Enel presented offers.

The official results are due to be published Friday.

DIVESTMENT 

Enel has plans underway to offload minority stakes in renewables assets, the call was told. 

“As of today we don’t have any kind of update,” Turchiarelli said, adding that more details should be available in the coming months.

DISTRIBUTION REFORM

Turchiarelli reiterated a company – and power industry call – for distribution reform.

While deemed politically challenging, an overhaul is seen as vital to support the country’s energy transition and the incorporation of distributed generation and storage assets into the grid.

A lack of distribution infrastructure “cannot jeopardize” electrification and decarbonization, Turchiarelli said.

PRICE STABILIZATION

Chile recently published its third price stabilization law, legislation designed to mitigate the impact of electricity rate hikes on some regulated consumers.

The legislation, which introduces a third stabilization mechanism known as PEC 3, extends a rate freeze originally implemented to ease tensions amid social protests that erupted in 2019.

Under the legislation, a multibillion-dollar debt pile owed to generators has built up. Generators are issued payment certificates, which can be used for factoring operations, to reimburse them for the difference between amounts charged by distributors to end customers and the amount payable to generators for electricity supply under existing regulated power purchase agreements, rating agency Fitch said in a recent release. 

As of March, Enel had receivables net of factoring of US$349mn, the call was told. 

Enel is awaiting publication of a decree, due this quarter, that will permit factoring operations associated with PEC 3.

If factoring operations proceed next half, the company expects to close the year with outstanding accounts receivable of up to US$500mn. 

Overall, sector balances are due to be settled by 2035. 

As lower priced PPAs take effect, the average system contract price is expected to drop. When this price is below the stabilized consumer price, receivables should start to be repaid.  

GAS PIPELINE

Enel has been carrying out repairs on cross-border 5.4Mm3/d (million cubic meters a day) gas pipeline Gasoducto Atacama, with a view to bringing the 941km asset back into service this quarter.

The pipeline runs between a 780MW combined-cycle plant in Chile’s Antofagasta region and Jujuy province in northern Argentina. On the Chilean side, it also links to a 224km duct supplying industrial and mining clients.

Enel is an importer of Argentine gas. The company has reached agreements with Argentine producers for the supply of 4.1Mm3/d in October 2023-April 2024, 2.6Mm3/d in May-September 2024 and 3.5Mm3/d in October-December 2024, a previous call was told.

The bulk of Argentine gas is exported to Chile through infrastructure further south, linking producers in the Neuquén basin, home to the Vaca Muerta unconventionals formation, to Santiago’s metropolitan region.

Argentina is carrying out pipeline flow-reversal work, due to wrap up next half, to support the transport of Neuquén basin gas to the north to replace gas imported from Bolivia, which is expected to stop flowing this year. 

This year the Chilean subsidiary of Glencore signed a contract with Enel to obtain piped natural gas for three years at the Altonorte copper smelter in the La Negra industrial district in Antofagasta region. Gas will be supplied via the Atacama duct.