Chile has become a leader in Latin America in using renewable energies, especially solar energy. Its privileged natural resources put the country in an enviable position to transform its energy matrix. But the boom in solar projects is outpacing the retirement of coal-fired power plants. Are we replacing fossil fuels or just adding renewable capacity to the energy system?
SANTIAGO – The Atacama Desert in northern Chile receives some of the highest levels of solar radiation in the world. As a result, the solar energy industry is growing exponentially because “there are unique conditions for it,” says Bárbara Yañez, president of the board of the Chilean Solar Energy Association (Acesol).
According to data from Generadoras de Chile, an association of renewable energy companies, renewable energy generation reached a record 63.8% in 2023, the highest on record, with solar accounting for 20% of the total, as more than 1.1 gigawatts (GW) of new solar projects came online.
In particular, wind and solar power have made a massive entry into Chile’s electricity system since 2013, “completely transforming the country’s energy matrix,” says Camilo Charme, general manager of Generadoras de Chile, adding that in 10 years alone, installed solar capacity has grown from eight megawatts (MW) to more than 9,000.
In addition, installed renewable capacity is expected to exceed 29,000 MW by 2024, with more than $30 billion invested over the past decade.
As renewable capacity continues to be added, the share of fossil fuels will decline. But is Chile on the way to 100% renewable energy?
According to Jorge Leal Saldivia, a specialist in renewable energy, “current policies such as the Energy Route and the Energy Agenda are in line with promoting the transition to renewable energy sources”, but he asserts that “the complete elimination of fossil fuel-based energy sources has not been proposed”.
According to a report by Chile Sustentable, of the 28 coal-fired power plants operating in 2019, when the decarbonization timetable begins, eight thermoelectric plants will be closed, 12 have commitments to close by 2025 and eight coal plants have no commitments to close, and could operate until 2040.
In this context, in April 2023, the Department of Energy published an initial agenda for the second phase of the energy transition, which considers the deployment of the first 10 measures in four action areas: promoting storage, mitigating supplier risk, operational flexibility, and policy, regulatory and urgent works actions.
The challenges
Charme explains that the challenges facing generation projects in Chile, including solar projects, “are related to the conditions that will allow further progress in the transformation of the electricity system to continue reducing greenhouse gas emissions in the sector”.
The expert emphasizes that, first and foremost, “there is a need to make better use of the existing networks and to carry out adequate planning of the transmission system”.
For this reason, Generadoras de Chile and Transmisoras carried out a study in 2022-2023 to identify short, medium, and long-term actions, to achieve this objective.
The study found that most of the proposed measures do not require regulatory changes and will allow for more effective management of the transmission networks, maximizing the use of available resources and promoting robust and timely infrastructure development cost-effectively, without the need for extensive slack.
On the other hand, Charme says the generation sector is also facing “unprecedented” operational challenges.
Data provided by Generadoras de Chile shows that in 2023, renewable generation will exceed thermal generation on more than 80% of days. Moreover, there were times, such as midday on 30 October, when instantaneous renewable generation reached 94.6% of the system’s total electrical energy.
In this context, controllable technologies, such as storage systems, are becoming increasingly important as they provide attributes of security, controllable energy and flexibility.
For example, they can adapt to unforeseen changes in wind generation forecasts and compensate for generation differences during midday and dusk, when solar power drops dramatically.
Another challenge is to resolve the issue of the life cycle of solar technologies, i.e. what to do with the large amount of material installed in the Atacama Desert and other areas of the country.
According to Edward Fuentealba, director of the Antofagasta Energy Development Centre (CDEA), this situation is “being evaluated” because the question of what to do with all these installations when they reach the end of their useful life is a daily concern.
Fuentealba, who is currently a member of the advisory committee for Chile’s new energy policy for 2050, highlights a major challenge: Chile’s energy regulations. The expert does not hesitate to say that the current laws “are very old and make it impossible for this type of energy to grow”, and he does not hesitate to say that “this situation must change”.
For energy specialists, this last point is the key to moving towards a clean energy matrix.
Saldivia, who is also head of asset management at Sonnedix Chile, says that the most important thing is to be able to provide “security of supply”, such as firm power, reserves, and fast starts, based solely on renewable sources.
“Power electronics need to develop equipment that makes this possible, and the industry needs to be able to deploy this equipment on a massive scale. For example, grid-forming inverters that can regulate technical characteristics in transmission grids”.
Forecasts
In Chile, there is a commitment to decarbonization, with long-term goals of covering up to 60% of the energy matrix with renewable energy by 2035 and up to 70% by 2050. These targets are fundamental to the energy transition and are supported by initiatives such as the Long-Term Energy Planning (PELP), among others.
Thanks to its geography, the country has a high solar resource potential in the north and wind power distributed throughout the territory. This has encouraged the massive integration of solar and wind renewable energy.
Add to this the fossil fuel price crisis in 2022, which was an eloquent reminder of the strong economic benefits that renewable energy can offer in terms of energy security.
Indeed, according to the International Renewable Energy Agency’s (Irena) report “Renewable power generation costs in 2022”, renewable energy deployed globally since 2000 has saved the electricity sector some $521 billion in fuel costs.
Barbara Yañez confirms that the cost of solar PV projects has fallen by 82% in the last 10 years and continues to fall.
Currently, solar projects are concentrated between the Antofagasta and Atacama regions, she says, noting that one of the “reasons” the industry has grown by leaps and bounds is that it only takes two years to get solar plants up and running.
They were originally installed in the north of Chile because there is more sunshine. However, as the price of photovoltaic modules has fallen, projects have become profitable in places with less radiation, such as the central region.
Regarding the current scenario, Saldivia stresses that it is very favorable for the installation of renewable energy plants, as they generally have a low environmental impact, and points out that in the case of solar projects, the impact is “mainly due to the use of land, which does not really have many alternative uses if there are no protected species and if the land is not suitable for agriculture”.
According to Generadoras de Chile, the share of solar energy is expected to increase in the coming years. By December 2023, more than 4.3 GW of this technology will be under construction, bringing the total installed capacity to 13.3 GW.
“This, positions solar technology as the main source of installed capacity, notwithstanding its non-conventional nature,” says the trade association’s director general.
In summary, the growth of solar energy is much faster than the decommissioning of coal-fired power plants. With this in mind, Saldivia insists that while some coal-fired power stations are being replaced, “there is still much more renewable energy than is being retired”.
According to the Chilean Association for Renewable Energy and Storage (Acera), coal will account for 17% of national electricity generation in 2023.
Faced with this scenario, the National Electricity Coordinator announced the retirement of 20 thermoelectric plants by 2025, which would result in a 69% reduction in installed coal capacity. Generadoras de Chile stressed that this was a “significant milestone” that reaffirmed the country’s commitment to the decarbonization process.
This article was produced with the support of Climate Tracker Latin America.
EQUITY: EG
