The price of electricity in Chile has fallen to zero

Published 23.03.2024 | By Йосиф

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The price of electricity in Chile has fallen to zero, and has remained at this level for 113 days in a row.

The price of electricity in Chile has fallen to zero at some point on 113 consecutive days this year. The fact is that Chile has powerful solar power plants that supply energy in abundance. There are many sunny days in this country, and the stations generate large amounts of energy. So big that there is simply nowhere to put it. Therefore, consumers receive electricity for free.

This is nothing new for Chile. Last year there was a similar situation, when energy prices remained at zero for 192 days. This year the record will most likely be broken. Local residents and owners of energy-intensive enterprises are, of course, happy. But everything is not as rosy as it may seem – free energy also has a negative side. The fact is that energy companies in Chile are owned by private businesses that currently receive neither profit nor income. But maintaining energy infrastructure in working order requires money.

In addition, representatives of the energy sector need to get money somewhere to build new facilities that will replace old plants. An earlier manufacturing boom in Chile led to a significant increase in the country’s energy needs. Private industry has come to the rescue: various companies have built 29 solar farms, with 15 more planned. The construction of power plants was carried out with the expectation of continued economic growth. But now economic growth is slowing around the world, and Chile no longer needs as much energy as the plants produce. The country’s copper industry was the largest consumer of energy, and after copper demand fell, production facilities were no longer able to consume as much energy as before.

Investors are losing money. For example, Acciona SA invested $343 million in a project to build a 247-megawatt station. According to the plan, this is the largest such station in all of Latin America. The money is invested, but will there be a profit, or at least a refund? The head of the company is no longer too sure about this.

Problematic infrastructure

The biggest problem for the country’s energy infrastructure is that the entire energy system is divided into two parts: central and northern. Both parts are not connected to each other. Former head of the renewable energy sector Carlos Barria argues that if one part has an excess of energy and another needs more energy, nothing can be done. Now they plan to correct the situation, but it will take time.

In order to connect both parts of the country’s energy system, it is necessary to build a power transmission line 3,000 kilometers long. Construction of such a line is already beginning, but the project can only be completed by 2017. In addition, another 753 kilometer long line will be built in order to improve the connectivity of the northern energy system.

Solar power plants

The capacity of Chile’s solar power plants is constantly growing, and the number of such facilities continues to increase. Since 2013, the capacity of the country’s entire solar energy system has quadrupled, up to 770 MW. The greatest growth is observed in the northern sections of the energy system, the Atacama region, which is the center of copper production and processing in the country. Last year alone, total increased capacity increased by 5%. About 50% of the energy supply comes from solar farms.

This year it is planned to build additional capacities – the implementation of these projects began last year, so construction will not be stopped. However, in the same Atacama region, the average price per megawatt dropped to $60. This is less than the $70 per megawatt for which the companies that won long-term auctions in Chile pledged to supply energy.

This situation negatively affects the development of the country’s energy sector in the long term. Yes, everything is fine now, and construction continues. But in the near future, investors will simply stop investing in Chile’s energy projects. Already, some companies are refusing to continue financing a number of projects, and the situation can only get worse in the future.

According to representatives of the country’s energy companies, the price situation has become almost uncontrollable due to the too rapid development of alternative energy. “The rapid development of alternative energy has come as a surprise to us and we must respond quickly,” said Salvatore Bernabei, head of Enel Green Power SpA.

Until the problem is solved, low (zero) electricity prices will have a negative impact on the activities of energy companies.

What about in Europe?

For Europe, this situation is also not surprising. In Germany, energy consumers are even paid for using electricity on some days. So, on Sunday, May 8, Germany broke a new record in energy generation from renewable sources. Thanks to the sunny and windy weather the total energy production from solar, wind, hydro and bioenergy plants amounted to about 55 GW. In total, the country consumed 63 GW of energy that day. Thus, the share of renewable sources was about 87%. For several hours, prices went into negative territory, which means payments to energy consumers.

https://ecology.md/ru/page/cena-na-elektroenergiju-v-chili-upala-do-nulja-i-vot-uzhe-113-dnej-podrjad-derzhitsja-na-etom-urovne