After my trip to Uruguay I’ve had the pleasure of visiting Chile, another promising destination in South America. The country enjoys a high GDP growth, with controlled inflation and a stable regulatory framework, and it’s a place where several big players are betting.
We are ending the construction of Talinay, a 90 MW EPC wind farm I’ve worked at together with my team. Initially developed with Vestas money it has recently been acquired by ENEL Green Power, a Utility that is active in the local market with several other projects such as Valle de Los Vientos. The money comes from the Denmark’s Export Credit Agency and (at least as far as I know) no PPA has been signed.
This is a peculiarity of the Chilean energy market: several developers are working on projects without power purchase agreement, selling on a merchant basis at the spot price of energy (right now around 80 $/MWh).
Other financial solutions do exist: Irish developer Mainstream Renewable Power, with many active projects, is using Chinese financing and Chinese turbines (Goldwind, of course). Pattern Energy has signed a long-term power-purchase agreement (PPA) with Antofagasta Minerals (a mining company). They are not alone: copper, the commodity that is moving the whole economy, has energy intensive extraction, and this model will be probably replicated in the future.
The strong economic growth justify this approach, as the energy demand is increasing while several mega-project have been stopped due to environmental problem and lack of popular support, like the HidroAysén dam developed by ENEDSA/ENEL in the Patagonia region.
From a construction point of view, local prices are sky high (concrete and steel sells at around 1.5 to 2 times the European price) and salaries of skilled laborers are growing unstoppably. The good news is that you don’t have to build hundreds of kilometers of high voltage lines, because due to the peculiar geography of the country the main electrical line is always nearby.
You can learn more on http://www.centralenergia.cl/proyectos/mapa-de-centrales-proyectadas/