On March 14, 2018, the CNE opened the registration process for institutions and users interested in presenting technical observations on the 2018 energy auction’s preliminary reports. This process officially launches the 2018 energy auction, according to article 131 ter of Law 20.805.
Since the reforms introduced by Law 20.805 of 2015 and Transmission Law 20.936 of 2016, Chilean energy policy has been characterized by unsubsidized and technology neutral energy power supply auctions. The Chilean model has demonstrated that it is possible to attract new renewable energy generators to the market by removing barriers for clean power generators and incentivizing investments in generation.
During prior energy auctions in 2016 and 2017, Chile succeeded in its policy objectives of stimulating competition, decreasing energy prices (Figure 1), and incentivizing entry of new renewable energy generation actors. For example, Auction 2015/01 of 2016 registered the lowest renewable energy price up to that date, US$29.2 MWh (almost half the carbon price in the same auction). The energy supply will come from “new wind capacity (45.5%), new solar capacity (6.8%) and a mix of conventional capacity (47.6%)” (IEA, at 95).
In the energy auction of 2017, the majority of new entry participants were renewable energy generators, the lowest energy price registered was US $21.48 / MWh, and the average price awarded was US $ 32.5 / MWh, as reported by Emol.economia.
Chile’s innovations in energy auction design include the use of hourly and quarterly sub-blocks, which are particularly beneficial for renewable energy generators. In addition, the government established longer contracts and more flexibility, among other regulatory and policy incentives, to attract investment. For example, the government allows up to five years “to postpone the term of beginning of the energy supply or put an early termination to the contract if, for reasons not attributable to the successful bidder, its generation project it is delayed or if it becomes unviable,” according to article 135 ter of Law 20.805.