Chile, one of the countries with the greatest potential for solar energy development!

Given Chile's high levels of solar irradiation, the country has been one of the countries with the greatest potential for solar energy development.

Last year, a solar farm installed in northern Chile would produce "30%-35%" more energy than the same project being built in southern Spain, as climate conditions provided near-ideal conditions for solar power generation.

The Chilean solar industry has been boosted by recent government support for new small-scale projects. Projects with a power generation capacity of no more than 9MW can be automatically connected to the grid without power restrictions, and will also receive reduced transmission charges.

Encouraging new small-scale projects and locating power generation projects in energy consumption areas has helped promote the steady growth of Chile's solar installed capacity in recent years. In July 2021, Chile's cumulative installed capacity reached 3.7GW, almost doubling to 7.3GW in July 2023.

The next step for the Chilean solar industry is therefore to find ways to encourage large-scale increases in installed capacity, which will require significant investments. The International Energy Agency reports that Latin America and the Caribbean as a whole needs $150 billion invested in its renewable energy sector by 2030, and some companies have begun pledging some of the funding.

In October this year, French independent power producer Sonnedix acquired a 416MW project portfolio from Enel and Arcadia Generación Solar for more than $500 million, marking a major investment in Chile's solar industry. However, these operational projects represent the transfer of existing resources rather than the construction of new projects. These projects may serve as a springboard for Sonnedix's long-term plans for the Chilean market.

series of acquisitions

"Chile is an important market for Sonnedix," Daniel Garrido, Sonnedix's head of development for the Americas and general manager for Chile, told PV Tech Premium. "The acquisition of Arcadia Generación is an opportunity to rapidly expand our reach while also complementing our existing portfolio." In fact, this is our largest operating asset acquisition globally to date."

Garrido noted that the deal increases Sonnedix’s operating capacity in Chile to more than 1GW. Acquiring projects in operation rather than those in early stages of development brings immediate returns to the company. Rather than taking a "one size fits all" approach when expanding its Chilean portfolio, Sonnedix is keen to invest in projects with long-term development potential, an approach that has generated immediate returns in jurisdictions with promising solar growth.

Indeed, amid growing interest in Chile's renewable energy sector, Opdenergy and Enel Green Power have made progress on power purchase agreements and greenfield projects in the country in the past six months alone.

"Chile has a very favorable operating environment, with a regulatory framework and a culture that is both business-friendly and highly supportive of the energy transition," Garrido explained, pointing to a range of factors that encouraged Sonnedix to invest in Chile.

"With the acquisition of the Arcadia portfolio, we have established Sonnedix as a significant player. We are working to convert approximately 1.5GW of wind, solar and storage projects to provide cleaner, more reliable and more affordable energy to Chilean households. "

However, the rapid expansion of renewable energy projects poses a problem for Chile’s energy grid and the capacity of the grid infrastructure to meet the needs of a rapidly changing energy mix. Chile currently has more than 2,000 zero-price hours per year, meaning it generates more electricity than is needed to meet the country's energy needs, limiting the effectiveness of new generation facilities, especially in the growing renewable energy sector. .

Energy storage and grid reliability

Given the government's plan to close its coal-fired power stations by 2040, Chile needs to quickly change its grid infrastructure. A research report released by Wärtsilä in July this year pointed out that in order to meet Chile's energy needs without using coal, Chile must achieve 21.8GW of solar capacity by 2040 and install 3.3GW of energy storage equipment.

Some battery developers have become more active in the Chilean market, with 12 projects scheduled to come online this year with a total capacity of 1.3GW. There are a total of 85 projects under development in Chile with a total capacity of 6.4GW. Although all of this capacity will not come online in the short term, the rapid growth of this industry is encouraging. For example, earlier this year, AES Anders commissioned a 180MW solar-storage project in Chile.

“As more and more electricity comes from renewable sources, energy storage can provide flexibility to the grid, which is critical to the reliability and flexibility of the grid,” said Garrido. “Sonnedix has experience operating battery energy storage systems. , we are currently actively evaluating opportunities in this area."

While Sonnedix has done work in the energy storage space, most of that work has been with wind power rather than solar power. Last month, Sonnedix submitted an environmental impact assessment for the Carica Wind Farm, a 92MW wind-storage project with a total investment of $290 million. The move reaffirms the company's commitment to investing in Chile's grid and not just participating in some form of renewable energy generation.

Garrido added: "We support consolidating the transmission system and believe it is the right approach to remove market disruptions. We are keen to work with stakeholders to install energy storage systems at scale to ensure that the grid is ready and stable so that Chile can achieve its goal.”

Mixed Portfolio

This approach of investing in a range of technologies, all aimed at strengthening and reshaping Chile's energy grid, exemplifies what Garrido calls Sonnedix's commitment to building a "hybrid portfolio" in Chile.

"Since 2015, we have been rapidly expanding our presence in Chile and diversifying our portfolio to take advantage of Chile's enormous scale and potential," Garrido explained.

"In October 2022, we acquired Arco Energy, adding wind assets to our solar portfolio and starting our hybrid project journey in Chile," "This diversification is very important and the hybrid portfolio allows us to Better meet customer needs and address today's energy challenges, addressing affordability, reliability, security and flexibility of electricity."

The Arco Energy deal brings 290MW of new renewable energy capacity to Sonnedix’s portfolio, which alongside its other operations in Chile, demonstrates the breadth of projects. The acquisition of Arco Energy is an example of the acquisition of an independent power producer as a whole, while the acquisition of Arcadia Generación Solar and Enel's portfolio is an example of the acquisition of an integral part of a larger corporate structure.

In addition to these acquisitions, greenfield projects such as the Carica wind-storage plant illustrate Sonnedix's range of activities in Chile and show that the company's scope is suitable for a country that is trying to rapidly change its energy mix.

In 2021, Chile's fossil fuel power generation was 45.7TWh, of which coal power generation was 25.7TWh. The Chilean government aims to reduce coal-fired power generation to zero within 20 years. This raises the question of how best to achieve this transformation. Sonnedix will also answer these questions as it attempts to manage multiple decarbonization initiatives simultaneously. These ambitious proposals are admirable.

Garrido concluded: "This is a cornerstone of Sonnedix's strategy to secure, clean energy through corporate offtake agreements, reach an expanding end-customer base, and support companies in decarbonizing companies in high-carbon industries." We are excited about the tremendous momentum Chile has achieved and look forward to continuing to play a key role in Chile’s energy transition.”