LAMINA DE HURACAN
Chilean Energy Overview Chile: Leading the Path on Solar Energy Sustainable Energy Division Ministry of Energy - Government of Chile September 9, 2019
Chilean Energy Context • 17.6 MM inhabitants • GDP/capita of USD 22.7 M • High dependency from imported fossil fuels • Low level of electricity and gas interconnection with the region • High renewable potential 3
Primary Energy Offer and Final Consumption Primary Energy Offer Final Energy Consumption 1% 1% 0% 0% 2% 5% 23% 29% 25% 39% 15% 36% 24% Self-consumption Oil Gas Coal Biomass - Firewood Hydro Wind Solar Biogas Geothermal Industrial and Mining Transport Commercial, Public, Sanitary and Residencial 4 Source: National Energy Balance, Ministry of Energy, 2017
Evolution of Electric Generation in Chile USD/MWh GWh 80.000 240 Geothermal 2018 Solar 46% of renewable generation 70.000 210 (18% of NCRE) Wind 60.000 180 Biomass 50.000 150 CHP Hydro 40.000 120 Oil 30.000 90 Gas 20.000 60 Coal Northen Chile Spot Price 10.000 30 (R-axis) Central Chile Spot Price (R-axis) 0 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: National Energy Commission Agreement on international Natural gas Consecutive All new generation 5 natural gas imports cutbacks dry years from renewables
Renewable Future According to different studies, the future development of the energy matrix is forecasted to remain renewable. Chile ranked #1 on the 2018 Climatescope ranking of attractive emerging markets for clean energy investments . 6
High Renewable Energy Potential 7 7
Atacama Desert Highest level of solar radiation in the world >3.500 KWh/m2/Year (DIN) >3.000 Sun hours/Year <2mm rainfall/Year 8
High Renewable Energy Potential Potential estimated by the Ministry of Energy for the last Long Term Energy Planning process. Technology Potential [GW] Wind 37 Hydro 6 Solar-PV 1,194 >72x Chile ’s installed Solar-CSP 510 capacity ~1.7 times the installed Geothermal 2 Over 30 GW undeveloped capacity capacity of USA Total 1,749 with environmental approval 9
Cost Driven Change • The price of PV systems continues to decrease as results of technology innovations, economies of scale and manufacturing experience. • Competitive offers in tender Tender in Chile for Regulated Costumers Global average LCOEs and auction results for utility- scale PV by commissioning date 10 Source: IEA - Analysis from Renewables 2018 Source: National Energy Comision, Chile Felipe Cantillana - MarcaChile
Solid Institucional Framework Chile leads to an attractive country for clean energy investments. • Controlled inflation. Emerging Markets Bond Index Global Spread 700 Chile 600 500 Average bps • Responsible fiscal policy. LatAm 400 300 Global • Controlled fiscal deficit. 200 Europe 100 0 Asia • Good risk rating (Moody’s A1, S&P A+, Fitch A) . 1Q-10 3Q-10 1Q-11 3Q-11 1Q-12 3Q-12 1Q-13 3Q-13 1Q-14 3Q-14 1Q-15 3Q-15 1Q-16 3Q-16 1Q-17 3Q-17 1Q-18 3Q-18 1Q-19 Source: Central Bank of Chile Power Sector • Liberalized, competitive and unsubsidized market. • Generation: Spot market based on audited costs. • Transmission: Centrally planned for national grid. • Distribution: Regulated monopoly. María José Pedraza- MarcaChile
Solar Future There is wide agreement that Solar is important in Chile’s energy future Decarbonization development and operation study, Path to 100% Renewables, Wärtsilä 2019 Coordinador Electrico Nacional (ISO), 2018 Generation Mix Long term analysis for SEN, Moray and PSR, 2018 Propuesta regulatoria sobre flexibilidad, Valgesta, 2019 PELP, Ministry of Energy 2018
Towards a sustainable energy transition • Allow development of flexibles systems that allow integration massive amount of renewables. Communication, Forecast Information Flexibility from the Flexibility from the Monitoring and Systems current facilities demand Systems Control Systems Development of Flexibility from the New alternatives Regional the Transmission future facilities of flexibility Integration System • High quality projects not only from technical point of view, but also solid involvements with comminutes . • Allow development of new solutions (Storage, Electromobility, Demand Side Management, Energy Efficiency, Internet of Things, Smart Grids, etc.) 13
Not only Utility scale… Solar development is growing in all segments Utility Scale Al size of projects. Generators connect to the grid, accessing to the liberalized market (PPAs or Merchant). Dispatched under command of the ISO. # Projects: 33 Solar Installed Capacity: 2,108 MW PMGD/PMG Projects up to 9 MW , connected to distributions or transmission grid under some special conditions. Can access spot market or an stabilized price scheme. # Projects: 131 Solar Installed Capacity: 517 MW Net-billing Regulated clients can connect projects up to 300kW for self-consumption, but surpluses feed to grid and are valued in your electricity bill. # Projects: 5,874 Solar Installed Capacity: 38.5 MW 14
Why are solar and other renewables important for Chile? Solar and renewables have proven to be the most competitive option , lower dependence on imported fuels, opportunity to become energy exporter, and also…. 15
Most CO 2 emissions are from Energy Sector GHG emissions in Chile: Source: Inventario Nacional de GEI 1990-2016, Ministry of Environment Chile
Energy: highest opportunities to lower emissions of GHG in Chile • Chile has committed (in June 2019) to reach carbon neutrality by 2050 • Phase out plan of coal power plants by 2040 (!) (8 will be closed by 2023) • Other actions in transport, heat, cooling, efficiency, etc. 17
Thermal Use (Heating and Cooling) Renewables allow decarbonization in other uses further than electricity. • Represents 36% of total energy consumption in 2017. • Opportunities for solar energy (and other renewables) in industrial and residential sector . • Renewable Thermal National Strategy under development during 2019. 18
Green Hydrogen & Power-to-X Hydrogen costs from hybrid solar PV and onshore wind systems in the long term A need for reaching worldwide carbon-neutrality • Competitiveness of green hydrogen depends on energy cost (+CAPEX and running hours) Source : “ The Future of Hydrogen ” IEA 2019 • Chile’s potential has been highlighted by several international publications. (IEA, IRENA, WEC, BNEF, Asia Pacific Energy Research Center, Jülich Research Institute, among others) • Potential uses go beyond energy sector and is expected to be a 9 trillion USD industry by 2030. 19
Our vision for the future Lead the energy transition , not only to adapt to the technological changes, but to accelerate its development and become a leader of this process in the region. Social and citizen stamp has to be part throughout the process 20
Thank you Gabriel Prudencio Head of Sustainable Energies Division gprudencio@minenergía.cl
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