Engie Chile hikes 2024 capex estimate, rules out coal-fired plant biomass conversion project

Chilean power generator Engie has increased its 2024 capex estimate to US$555mn, up from an earlier forecast of US$530mn.

Forecast outlay for this year corresponding to renewables and battery energy storage, or BESS, systems is now US$235mn and US$170m, respectively.

Earlier in the year, the generator estimated renewables/BESS capex of US$380mn, relating to the under-construction Lomas de Taltal wind park (342MW, US$468mn) and to the BESS Tamaya (68MW, US$128mn) and BESS Capricornio (48MW, US$76mn) storage projects.

The US$25mn upward renewables/BESS revision reflects the recently announced 116MW BESS Tocopilla project, which is due online in 4Q25 and will ramp up the company’s installed energy storage capacity to 371MW.

With a price tag of US$180mn, BESS Tocopilla is being built at Engie’s former Tocopilla thermoelectric complex, taken offline in September 2022. 

“One of the reasons we’re building storage, BESS, at existing sites, is of course, there are synergies,” Engie Chile CFO Eduardo Milligan said. "That's why, today, we’re building BESS first in all our existing sites."

Citing the Tamaya and Capricornio battery systems, installed at company solar PV parks, he underscored the benefits in terms of reducing curtailment, a situation impacting multiple renewables generators. "Adding batteries in this context makes a lot of sense, because we’re able to charge these batteries during the day and to use them during non-solar hours when spot prices are not set by renewables but are set by thermal power plants like natural gas or coal." 

Engie has 574MW of renewables/BESS capacity under construction, which will boost its clean energy park to 1.5GW. The company has 584MW of further capacity – wind, solar and battery storage – in the development phase.

Engie is looking to expand its generation footprint in the center-south part of the country, which tends to have a different wind generation profile compared with the north.

The investment outlook hinges on successful monetization of around US$333mn of receivables owed under an end-user price stabilization mechanism, the call was told. 

In 2026, Engie expects to have, overall, 3.1GW of installed capacity, with renewables/BESS accounting for 66% and natural gas the balance.

COAL RETIREMENT

The company has sought the green light from national energy commission CNE to take the Andina (CTA) and Hornitos (CTH) units at its CTM complex, for a combined 350MW, offline by end-2025. This would result in Engie fully exiting the coal-fired generation segment. Fellow generator Enel has exited coal and AES Andes is working to achieve this by the end of 2027 at the latest.

CNE has authorized Engie to retire two other CTM units, for a combined 334MW, and convert its 377MW IEM plant to natural gas, a project due to be carried out in 2026, the company’s 1Q24 results call heard.

BIOMASS CONVERSION RULED OUT

Engie has also been given the environmental nod to convert units CTA and CTH to biomass. That was an original plan, from 2019. 

Milligan said, however, biomass conversion was not viable.

"The biomass market is not sufficiently developed to reconvert both units to biomass now; this is why what we have today in our pipeline is to disconnect them in coal mode, and to continue evaluating other alternatives for them,” Milligan said. 

"We might keep them mothballed; we will continue keeping them, let's say, under maintenance with limited capex per year until we find other options for them, which could be conversion to other technology, which could be to provide ancillary services to the system, or if we don't find any alternatives for them after some years, we will completely disconnect them."