Tuesday, August 15, 2017

Chile's Renewable Goals

by Ignacio Alfaro and Jacob Yaniero

The Chilean renewable energy market continues its ascent towards its goal of having 70% of the country’s generation mix coming from renewable energy sources by the year 2050. While this goal is not legally binding, it sends a strong message to the energy industry regarding the importance of renewables. Later this year, Chile will hold presidential elections and all of the candidates appear to support the 70% goal, both from an environmental perspective and an economic one.

Although the 70% target is ambitious, the Chilean market is responding positively. Currently in Chile, 3,695 megawatts are generated by renewables, representing 16.2% of the country’s generation mix. Another 586.8 megawatts are in their final testing stage and will be recognized as part of the mix soon. Once this new generation capacity is connected, 18.75% of the country’s total generation will come from renewables.

In addition to the Chilean government's ambitious 70% goal, certain offtakers must also meet a legally binding withdrawal threshold from renewables every year. The threshold, 9% for 2017, increases each year until the year 2025, when it hits 20% and the Chilean Congress will assess whether to maintain the mandate or call for further increases.


While these targets are good news to developers and lenders, those looking to do business in the country should also be aware of the current challenges that the Chilean government is facing, particular in regards to transmission line capacity connecting the northern part of the country with its central part