Research reveals that Chile could obtain annual benefits greater than US$5.2mn from cross-border solar energy trade

PRESS RELEASE from SERC Chile
April 2024

(Machine translation of original release, issued in Spanish)

The growing global demand for energy, particularly for clean and diversified generation sources, as well as the instability in hydroelectric production, as a result of climate change, is forcing the countries of the region to explore new strategies to meet new challenges. of consumption. At the regional level, international electricity trade consists of only 2% of its total production. Which has resulted in investment in renewable energy being on the rise with solar and wind energy leading the charge in countries such as Brazil, Uruguay and Chile. OECD projections indicate that if current trends, such as dependence on fossil fuels, continue, a 60% increase in greenhouse gas emissions is anticipated by 2050.

An investigation, led by the economist Claudio Agostini, together with Shahriyar Nasirov and Carlos Silva, all researchers from the Solar Energy Research Center (SERC Chile) and academics from the Adolfo Ibáñez University , together with specialists from the National Electric Coordinator , analyzed the different scenarios that They would allow Chile and neighboring nations to benefit from a cross-border commercial exchange of electricity, highlighting the potential not only to satisfy growing regional demand, but also to turn South America into a benchmark in clean energy exports.

For Claudio Agostini, principal investigator of SERC Chile, the technical analysis highlights the importance of generating a solid and efficient cross-border collaboration framework. “ Solar energy offers the opportunity to unite us in the pursuit of a sustainable future. Chile, with its vast solar potential, has the possibility of leading electricity trade in South America, minimizing marginal costs and generating benefits estimated at 5.2 million dollars annually. This requires cross-border cooperation and investment in renewable energy," he says.

A transnational energy agreement. How would it work?

In the report, academics simulated multiple scenarios to evaluate the effects of the export and import of solar energy between Chile, Argentina and Peru, based on real operation data and considering an “energy surplus” for export, that is, the capacity of unused or excess generation in each country.

SERC Chile researcher Carlos Silva specifies that the methodology consists of a detailed analysis of energy demand and supply patterns in South America, as well as simulations of energy exchange scenarios. “ With this research, we wanted to recreate real exchange scenarios, taking into account factors such as existing generation capacity, transmission infrastructure and seasonal variations. This helped us assess both the opportunities and challenges of energy trading, providing detailed insight into how to optimize the use of renewable energy resources in the region ,” explains Silva.

Furthermore, he emphasizes that the results are conclusive regarding the potential of solar energy. “The export and import of solar energy are viable, and widely advantageous for Chile and our neighbors. This opens up exchange opportunities that do not compromise the security or efficiency of the local electrical system ,” clarifies SERC Chile researcher Carlos Silva.

The main scenarios that would give life to this proposal consist of three situations. On the one hand, the import of 150 MW from Peru when the neighboring country experiences a generation surplus, especially at times of low demand in Chile. This is simulated in time slots from 0:00 to 7:59 hours, and from 17:00 to 23:59 hours. This would allow Chile to replace expensive and polluting energy sources, such as diesel plants, with cleaner and cheaper alternatives from Peru. Both countries obtaining a total benefit of 10.37 million dollars annually, of which 5.2 would be for our country.

“ This transition could translate into a 43.8% reduction in marginal costs. While daily operating costs in Chile decrease from 1.8 to 1.64 million dollars, generating a cheaper operation ,” Claudio Agostini points out.

Secondly, the scenario of exporting 150 MW of solar energy to Argentina is evaluated, during the hours of greatest demand in the trans-Andean nation (between 8:00 a.m. and 5:00 p.m.), where Chile has a surplus of generation. solar. Action that not only improves the efficiency of the Chilean energy matrix, but would also provide economic benefits with an estimated gain of 8.4 million dollars annually. This scenario highlights the viability of selling energy at competitive prices, benefiting both nations.

Finally, the integration of both dynamics would allow energy to be imported from Peru and exported to Argentina, maximizing the economic and operational benefits for Chile, while promoting deeper regional energy integration.

Although there is evidence from countries such as North America, Canada and Mexico about the benefits of interconnections between large electrical systems, research also indicates that there are multiple challenges that must be overcome, such as the investment and financing of transmission lines and the management of systems on both sides of the interconnection.

“ These simulations show that not only is the export and import of solar energy between these countries technically viable, but it also results in significant economic advantages for the parties involved. The findings emphasize the need to develop regulatory frameworks and public policies focused on fostering cross-border energy cooperation. By taking advantage of the abundant potential of renewable energies in the region ,” concludes Agostini, SERC Chile researcher.