Fernando Hentzschel - IASS Potsdam

Chile: 

Development & opportunities of 

the Solar Energy Market 

Potsdam, October 2012

Renewable Energy Center 

CER is a CORFO 

Commi,ee, 

created in 

August 2009, 

that works 

under the 

guidelines of the 

Ministry of 

Energy 

Capacity 

building 

Strengthen CER’s 

institution 

Promote the 

development of 

projects 

Promote the 

participation of 

stakeholders to 

encourage 

cooperation 

Knowledge 

Management for 

decision-makers

Agenda 

• About Chile 

• Chilean Electricity Framework 

• Opportunities and Challenges in Chile 

• Strategy for CSP Technology 

• Rational for a Latin American Solar Energy Research Center

About Chile 

Source: Invest Chile, 2012. 

• Chile has a modern, dynamic 

economy, with stable policy and 

regulatory frameworks and a 

market-‐based growth orienta=on. 

• The economy has been growing at 

a fast pace and GDP is expected 

to grow at 4% unEl 2030. Chile’s 

economy is characterized by an 

increasing share of manufactured 

products and by increasing 

exports of minerals and 

foodstuffs. 

• c

About Chile 

• Chile has a modern, dynamic 

economy, with stable policy and 

regulatory frameworks and a 

market-‐based growth orienta=on. 

• The economy has been growing at 

a fast pace and GDP is expected 

to grow at % unEl 2030. Chile’s 

economy is characterized by an 

increasing share of manufactured 

products and by increasing 

exports of minerals and 

foodstuffs. 

• c

Agenda 






Electricity Market 2011- Net power generation 

SING 

Installed Capacity: 4.344 MW 

Max Demand.: 2.162 MW 

Power Generation : 15,9 TWh 

Thermal Generation: 100% 

Population: 6% 

SIC 

Installed Capacity : 12.488 MW 

Max Demand.: 6.881 MW 

Power Generation : 46,1 TWh 

Hydro : 45% - 65% 

Population: 92% 

Aysén 

Installed Capacity : : 49 MW 

Max Demand.: 20 MW 

Power Generation : 134 GWh 

Population : 1% 

Magallanes 

Installed Capacity : 89 MW 

Max Demand.: 40 MW 

Power Generation : 269 GWh 

Population : 1% 

Natural Gas 

22,9% 

Coal 

34,7% 

Large run of river 

hydro 

11,5% 

Total at country level: 62 TWh 

Large Hydro 

(Dams) 

20,8% 

Chart Title 

Deriva=ves 

7,1% 

NCRE 

2,9% 

Wind 

0,5% 

Bioenergy 

1,5% 

Source: CNE, CDEC and CER 

Small 

Hydropower 

0,9%

NCRE- Regulatory framework 

Law 19.940 (2004) 

• Ensures the right to sell energy in the wholesale market (spot) to any 

generator, regardless of size. 

• Establish non-discriminatory terms for small generators (less than 9 MW) 

to participate in the market. 

• Gives legal certainty of access to distribution networks to evacuate the 

power generated for generators of less than 9 MW 

• Full or partial payment exemption of transmission charges stem to nonconventional 

sources, with an installed capacity smaller than 

20 MW (factor of exemption) 

Source: CNE, GTZ.

NCRE- Regulatory framework 

Law 20.257 (2008) 

• Requires power generators in the SIC and SING systems, to demonstrate 

that 10% of its energy injections to the grid come from NCRE. 

• Gradualness of the obligation: 

2010-2014: 5% 

2015-2024: 0.5% annual increases up to 10% in 2024 

• Create the NCRE attribute, which currently has a of market price 14 

USD/ MWh. 

• The law affects those contracts signed after the August 31, 2007. 

• Allows sharing the surplus of NCRE energy between the two systems (SIC 

and SING). 

• Penalty for non –fulfillment of the law: 30 USD/ MWh (first year) and 45 

USD/ MWh (if repeated in the next 3 years). Money collection goes to end 

customers.

National Energy Strategy 2012-2030 

Six fundamental pillars: 

1. Energy Efficiency 

2. Deployment of NCRE 

3. Increase the share of large 

hydropower in the energy matrix 

4. Public Power grid 

5. Improve competitiveness in the 

power market 

6. Regional interconnection 

* ENE 2012-2030 is available on the website of the Ministry of Energy as a pdf file in English and Spanish 

(http://www.minenergia.cl/estrategia-nacional-de-energia-2012.html)

Agenda 






NCRE- Current Situation 

MW 

4,000 

3,500 

3,000 

2,500 

2,000 

1,500 

1,000 

500 

0 

Small Hydro Wind 

Power 

Geothermal Biomass Solar 

Renewable Energy Source 

EIA in process 

EIA approved 

In construc=on 

In opera=on 

Technology In 

Operation 

Under 

Construction 

EIA 

Approved 

SEIA 

EIA in 

process 

Small Hydro 260 64 226 110 

Wind Power 205 100 2501 935 

Biomass 270 170 69 7 

Solar Power 0 1 685 1903 

Geothermal 0 0 0 120 

Total 734 336 3481 3075 

Data at10.04.2012 

Source: CNE, SEA, CER

How much energy do we need… 

and at what cost?

How much energy do we need… 

and at what cost?

SING-SIC Prices 

Source: CNE and CER

CSP in Chile 

• One of the highest solar radiaEon in the world, with clear skies during 

most of the year and raw materials availability. 

• Mining acEviEes located in the same area, with their auxiliary service 

providers, facilitate the installa=on of CSP facili=es, as well as local 

manufacture of plant components. 

• Energy demand of (SING) is essenEally constant, while the power 

genera=on mix is mostly based on coal power plants. 

• Impact on local economy, as well as local manufacture of plant 

components. 

DNI > 3000kWh/m2-year 

Allow smaller solar field 

• GDP 

• Direct and indirect jobs 

• Industrial developing 

• Creation of skilled jobs 

Avoiding transmission lines cost and losses 

• Country goals 

Road infrastructure 

• Competitiveness

Challenges & Opportunities 

• Achieve significant cost reductions of CSP technologies 

under the Chilean enviormental conditions. 

• To ease access to finance 

• PPAs difficulties: Price Volatility and RE Sources 

Intermittency 

• Local banks away to the project finance model 

• Improvement in the assessment of the solar resources 

• Increase the capacity of technology transfer 

• Increase people awareness about the potential 

business of complementary services

Agenda 






Strategy for CSP Technology 

Source: Minenergia y GIZ, CADE 2011

Market Pull 

• Law 20.257 

• Law Arica (Investment Tax Credit) 

• CTF: Investment Plan 

• Open Tender for the First Commercial plant 

• Risk coverage instruments, insurance, soft 

credits, subsidies for pre-investment studies. 

• US$ 14 million subsidy 

• US$ 65 million Loan 

• Energy Storage 


Resources and Capabilities 

Geographic Information 

System for resource 

potential and project 

portfolio. 


Organizational Ecosystem 

Currently, various state agencies are already making efforts, each from its 

field of competence, to strengthen: 

• The scientific and technological bases (CONICYT) 

• Attraction of foreign investment (CORFO-Minenergia - CER) 

• Human Capital Specialist (CONICYT-MINENERGIIA, Universities, CER) 

• Resource Assessment (FONDEF-Minenergia) 

• Mechanisms of investment incentives (Minenergia – CADE, CER) 


Technology Push 

Program to Attract International Centers 

of Excellence (ICE) in Chile 

• To help the local ecosystem develop science-business interaction, tech innovation capacities 

and a tech transfer culture. 

• Establishing and promoting the development of local skills, through the hiring of local 

talent, alliances with Chilean technological and scientific research centers, as well as the 

Chilean industries. 


Agenda 






Context 

Demonstra=on pilot plant 

as embryo of CELES 

Human Resource Capacity 

Building 

• Gathering place for na=onal researchers 

• Na=onal R&D + i. 

• Design and tes=ng of local components. 

• Services for Interna=onal Industry test 

• Pla_orm for interna=onal R&D. 

Technicians and 

professionals, up to the 

level of managers, 

decision makers, and 

researchers. 

Interna=onal Bid for small scale 

commercial plants 

FacilitaEng the deployment of commercial plants 

• Consolida=on of business 

models. 

• Integra=on of local suppliers. 

• Prac=cal experience in 

commercial opera=on. 

Appropriate environment for 

the compe==veness of large-‐ 

scale commercial projects

Research Center 

Generate the neccessary knowledge to achieve large scale penetra0on of 

solar energy conversion technologies in the main produc0ve processes and 

commercial/residen0al sectors in Chile by specifically addressing the 

different scien8fic, technological, economical, and market challenges 

currently ac8ng as barriers. 

• Develop technological systems adapted to the par=cular condi=ons 

present in Chile: we aspire to achieve “from laboratory to market”. 

• Establish the formal basis required to educate and train technicians, 

professionals, researchers, managers and decision makers in the 

design, construc=on, opera=on, maintenance, planning, financing, 

promo=on of solar energy conversion systems. 

• Provide scienEfic knowledge in order to help establish adequate 

and effecEve/efficient state policies aiming to support the large 

scale deployment of solar energy conversion systems in Chile. 

• Serve as a bridge between academy, industry and government 

agencies and transfer knowledge to society in order to foster and 

share the benefits of solar energy u=liza=on while generaEng added 

value to individuals, companies, state, and all sectors of society. 

The Center wants to help transform Chile into a Solar Country.

Basic Configuration 

Net Output 

Power 

Cycle 

Efficiency 

Solar Field 

Opera=on 

Temperature 

Aperture 

Area 

1 MW. 

0.39 

2 loops, 600 

m long each. 

290-‐550 C 

6.540 m 2 

HTF Molten Salts 

TES Molten Salts 

TES Capacity 8 hours 

Cooling Air Cooled

Further Blocks 

It is expected that: 

• The CELES will grow 

from the first block as 

more research projects 

are approved and 

contribute with further 

facilities, equipment, 

funding, and researchers. 

• Each block will be 

deployed according to the 

strategic guidelines 

defined for the center, 

which must be aligned to 

its general and specific 

objectives. 

Local research 

group (La=n 

America) 

Collabora=ve 

effort 

Funding Agency 

(Na=onal, La=n 

America, 

Interna=onal) 

Joint 

research 

proposal 

Interna=onal 

group 

(op=onal) 

CELES 

endorsement 

CELES scien=fic 

commihee 

CELES new 

block 

Proposal 

to CELES

Proposed Location 

Pozo Almonte has been been proposed to be the 

loca=on of the CSP pilot plant and CELES. 

• High solar irradia=on level. 

• Availability of flat land. 

• Proximity to transmission lines. 

• Proximity to ci=es and port facili=es. 

• Region with special tax exemp=ons. 

• Cheaper labor. 

• Availability of hotel and support infrastructure. 

• Environmental analysis: nothing lives in the area.

Solar Resource Available 

Yearly totals of DNI: 

2 864 kWh/m 2 /a 

or 7.84 kWh/m 2 /d. 

3 296 kWh/m 2 /a 

or 9.03 kWh/m 2 /d. 

This is 30-‐50% higher 

than DNI in Spain.

Thank you

Fernando Hentzschel - IASS Potsdam

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