Acciona Chile CEO: Govt must address congestion, curtailment

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Friday, October 21, 2016

Chile's government must play a more active role in efficiently incorporating renewable energy into the national power mix.

Otherwise, past mistakes are bound to repeat themselves at the expense of consumers, Acciona Energía Chile CEO José Ignacio Escobar told BNamericas.

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First, the state must fine-tune its model for national power auctions, namely with regard to the geographic distribution of projects, Escobar said on the sidelines of the Cirec Week renewable energy conference in Santiago.

"We had a solar boom that generated serious congestion problems," Escobar said, referring to an overabundance of utility-scale PV plants on the northern section of the central SIC power grid.  "We're only now taking measures to resolve them."

With transmission capacity limited and demand concentrated farther south in Santiago, solar curtailment rates are climbing as spot prices plunge to zero at certain points of the day on the grid's northern section, Escobar said.

Escobar cited the disparity in power prices between the points of injection and consumption as "by far" the biggest risk that renewable generators – and the banks that finance them – are forced to assume in Chile.

With nearly 4GW of wind farms planned for the country's southern zone and three more tenders planned for the 2016-18 period, congestion and curtailment could continue to cause problems, Escobar said.

In addition to boosting transmission capacity, which Chile is doing through projects such as the Cardones-Polpaico expansion and the interconnection of the SIC with the northern SING grid, authorities must also adjust the tender rules accordingly, Escobar said.

As an example to follow, he cited Argentina's recently concluded RenovAr Ronda 1 renewable energy tender, which limited the amount of capacity that could be awarded in specific regions.

LARGE CONSUMERS

The public sector must also set an example for the rest of the country as a large-scale offtaker of renewable energy, Escobar said, citing state copper miner Codelco and national oil company Enap as prime candidates.

This would send a strong signal to large-scale consumers in the private sector about the viability of PPAs with wind and solar producers, he said, and give generators opportunities to secure financing other than through the ultra-competitive, regulated market tenders.

Chile's state-owned metro company signed a deal in May to obtain 60% of its power from wind and solar farms, starting from 2018.

Acciona won contracts to supply wind energy to Chile's power distributors through tenders conducted in 2014 and 2016.