Renewable energy in Chile

The energy challenge in Chile has reached a crucial point in its transition to more sustainable energy sources.   Initially, Chile sought to incorporate new renewable sources, mainly solar and wind energy, into the power grid as complementary technologies to conventional power plants, such as thermal and hydroelectric power plants.  This first stage is now completed and these renewable sources have now become the main electricity generation technologies in the country.  In 2022, generation from solar and wind power surpassed generation from coal for the first time ever, just as generation from renewable sources will surpass generation from thermal sources. 

The Chilean power grid has undergone a remarkable and radical evolution.  During the last decade, the installed capacity of renewable energies increased to more than 27% of the total generation in 2022.  In previous years, the most optimistic experts predicted that renewable energies would account for 90% of total generation by 2050, experts now indicate that the country will reach this goal by 2030. 

In 2022, once again, Chile ranks first in the Bloomberg Climatescope ranking, demonstrating its regional leadership in the field of energy. The Bloomberg New Energy Finance Climatescope 2022 Bloomberg New Energy Finance  report ranked Chile as the best country to invest in renewable energy among emerging markets, followed by India, China, Colombia and Croatia.  

A notable milestone on the path to sustainability was the enactment of the Framework Law on Climate Change in 2022.  This law established the legal goal of making Chile carbon neutral and climate resilient by 2050, reflecting the national consensus on climate and environmental matters. 

Based on this principle, the Government of Chile has promoted various decarbonization initiatives, placing special emphasis on the following: 

• Energy Storage and Electromobility Law: This law promotes the development of energy storage systems, allowing the participation of players that operate independent storage in the market in the short term.  It also promotes electromobility and the integration of points of generation and consumption in the power grid. Regarding the promotion of storage, that would be achieved by allowing transmission companies to participate in the generation market, eliminating the prohibition established in Article 7 of the Electricity Law, including transmission companies. 
• Bill that Promotes Renewable Energies in the Power Grid: The main objective of this initiative is to increase the participation of renewable sources in the power grid, even during hours of less generation, such as at night. 
• Energy Transition Bill: This proposal is based on three fundamental pillars: the efficient development  and expansion of transmission infrastructure, the planning and operation of a low-carbon power grid, and the promotion of competition and the promotion of storage in the market. 

Within the framework of the "Decarbonization Plan" for 2023, the following priorities and measures have been established in the short and medium term to promote structural reforms and modernize the energy sector: 

• The development of a detailed decarbonization plan. 
• Invitation to bid for urgent transmission works through a process called “open season”. The National Energy Commission (CNE, Comisión Nacional de Energía) has invited companies to submit proposals for new works and expansion of transmission systems.  The CNE will publish an invitation in July 2023 for companies to submit their binding bids for works.  
• Adjustment of the carbon emission tax. 
• Assignment of land near substations for storage projects. 
• Review and adjustment of the minimum technical requirements for thermal projects. 

In addition to the aforementioned initiatives, it is important to highlight the significant progress in the development of electromobility in Chile.  Recently, the Regulation establishing the interoperability of electric vehicle charging systems was published in the Official Gazette.  This regulation is of great relevance, since it seeks to facilitate user access to public charging stations, which must comply with standards and have their information publicly available. 

In order to offer charging services to third parties, public charging stations must register with the Interoperability Platform, which will be presided over by the Superintendence of Electricity and Fuels (SEC, Superintendencia de Electricidad y Combustibles).  Through this platform, operators or service providers must send information in real time about the availability of chargers, the types of connectors they offer, the location of the charger, the price of the service, the available payment methods and charger activation methods (whether through an operator, QR code, or other means), among other details. 

This measure seeks to promote accessibility and efficiency of charging infrastructure for electric vehicles, thus facilitating the transition towards more sustainable mobility in the country.  By standardizing and making the information about charging stations transparent, users are given greater confidence and ease of use, thus promoting the adoption of electric vehicles in Chile.  

In November 2022, an energy storage and electromobility law was passed in Chile (the “Law”). This is an effort to overcome two of the biggest obstacles in the energy matrix towards the goal of reaching carbon neutrality by 2050. Today the energy matrix faces a problem of intermittency and the dumping(when power plants produce an amount of electricity that is lost because the transmission system does not have enough infrastructure to support it).  

One of the main pillars of this new Law is to allow pure storage systems to receive income from power and capacity transfers in the national grid, or National Electric System (“SEN”), (i.e., those that are not part of a generation plant can participate in the balance of energy injections and withdrawals in the SEN, through the participation of the systems in the electricity market.  As renewable energies are, in principle, intermittent or variable, and are not constantly injected 24 hours a day, 7 days a week, since they depend on various climatic factors, energy storage is a solution to this problem and an adequate regulation will allow them to be able to generate a constant injection to the system. 

The Law also allows the connection of Electricity Generation-Consumption Systems, (i.e. "productive infrastructure for purposes such as hydrogen production or water desalination, with its own generation capacity, through renewable generation means, which is connected to the electricity system through a single connection point and can withdraw energy from the electricity system through a supplier or inject its surplus into it.”) The Law allows them to withdraw energy from the SEN or inject their surplus into it, promoting an efficient connection of this type of facility to the SEN. 

The Government is now tasked with issuing a secondary set of associated rules to guide the interpretation and specific implementation of the Principles of the Law, which is due by November 2023. Without the regulations, it will not be applicable or operational. This set of new rules will allow the development and operation of this type of project, permits and environmental evaluation, remuneration procedures and rates, as well as strengthen cooperation with other players in the electricity market and with the community in general.