FIT SANTIAGO June 2017 1
RENEWABLE ENERGY IN CHILE TABLE OF CONTENTS
1 REGULATIONS TO STIMULATE THE USAGE OF RENEWABLE ENERGY ... 12 MANDATORY TARGET FOR A PERCENTAGE OF ENERGY PRODUCTION AND/OR CONSUMPTION TO STEM FROM RENEWABLES ... 2
3 LIST OF GOVERNMENT INCENTIVES TO STIMULATE INVESTMENTS IN NCRE ... 2
4 CONSULTING IN SUSTAINABILITY PROJECTS (INVESTING IN WIND OR SOLAR ENERGY)? WHAT IS THE WILLINGNESS TO PAY? ... 3
5 INSTITUTIONAL PLAYERS ... 3
6 GOVERNMENT SUPPORT FOR SETTING UP A BUSINESS ... 3
7 COMPETITION IN THE ENERGY-EFFICIENCY & SUSTAINABILITY SECTOR ... 4
8 MORE BACKGROUND INFO ... 4
9 MORE INFORMATION AND SOURCES ... 4
1 REGULATIONS TO STIMULATE THE USAGE OF RENEWABLE ENERGY
There are two regulatory frameworks: Decree Law no. 20.257, 2008 and no. 20.698, 2013. Relevant links can be found at the bottom of this document.
These regulations aim to fullfil future energy requirements by developing non-conventional renewable energy (NCRE) resources, such as geothermal, wind, solar, tidal, biomass and small hydroelectric plants.
The law requires electricity providing companies to supply electricity to the grid according to their contract commitments. Also, they need to demonstrate that a certain percentage of their total energy committed was injected in the system by non–conventional energy sources. The energy can be produced by their own plants or by contracting through third parties.
The fine for non-compliance is 0.4 monthly tax units (UTM) per MW. In June 2017 this was equivalent to CLP 18,696 or about 25 EUR per MW.
This regulation came into force in 2010. Up until 2014 the minimum required percentage of NCRE was 5%.
Starting from 2015 the requirement increased by 0.5 % annually. Actually, today (2017) the total amount of NCRE provided has reached 14% of the total energy supply, which is more than the legal requirement. For your information, there is almost 4,000 MW of NCRE installed and commercially operative in Chile. (See below graph)
FIT SANTIAGO June 2017 2 Source: http://www.latercera.com/
2 MANDATORY TARGET FOR A PERCENTAGE OF ENERGY PRODUCTION AND/OR CONSUMPTION TO STEM FROM RENEWABLES
The mandatory target in Chile is 20% by 2020. See Decree Law 20.257 and 20.698 (Disposiciones Transitorias, Artículo 1° Transitorio). Relevant links can be found at the bottom of this document.
3 LIST OF GOVERNMENT INCENTIVES TO STIMULATE INVESTMENTS IN NCRE
Investment incentives in Chile are in the form of tax credits, tax exemptions, and co-financing of research and developments projects, and early-stage entrepeneurship. However, these do not include direct fiscal incentives for renewable electricity as such.
A carbon tax was enacted in September 2014 (Law 20780 of Tax Reform). A yearly tax of USD 35/ton of CO2 applies to emissions from power plants of 50MW or more (except biomass) starting in 2017 (to be paid in 2018).
CORFO, the Chilean Economic Development Agency offers various incentives for investments in NCRE projects (outside of Santiago) and is indeed the agency for any type of grant in Chile. They do a lot of innovation and research grants, but also for specific topics.
The START-UP CHILE programme is another type of incentive whereby a selected number of entrepreneurs receive a USD 40,000 grant, and for foreigners a Chilean work visa, to develop a “start-up” business in Chile. Upon admittance into the program, an entrepreneur is given six months to develop a project (any kind) and then promote it through a series of pitches and seminars at local universities, corporate meetings and other channels of community outreach. In January 2017, the program launched the call for its 18th Generation with 100 new vacancies. For more info go to http://www.startupchile.org/.
Interestingly, two Belgian start-ups in the NCRE sector have benefitted from Start-Up Chile in recent years.
FIT SANTIAGO June 2017 3 Another incentive that is stated in Decree Law no. 20257 is the so-called “net billing (net-metering)”
incentive, which was designed to enable grid connection for DG systems and to foster auto-consumption.
The scheme applies to renewable energy and co-generation systems of up to 100kW. The compensation price for produced electricity, equal to the regulated price per kWh plus avoided transmission losses, will be deducted from the monthly bill, and be carried over in case of a net balance in favour of the producer.
Connection costs must be paid by the producer and cannot affect other consumers. The producer owns the renewable energy credit associated with generation and can sell it to any company in order to fulfil the renewable energy mandate. The net metering law entered into force in September 2014 with the publication of Decree 71 that regulates it. For more information go to: https://www.cne.cl;
http://www.energia.gob.cl/.
Currently there are no other national incentives related to NCRE and sustainability. For more information about bidding processes and how to apply, please go to the relevant government website:
http://www.cnr.gob.cl/Ley18450/Paginas/Calendario2016.aspx.
Remark: certain regions have set up their own incentive schemes and programmes. For example, the region of Biobio: http://www.fomentobiobio.cl/programas-financiamiento/.
4 CONSULTING IN SUSTAINABILITY PROJECTS (INVESTING IN WIND OR SOLAR ENERGY)? WHAT IS THE WILLINGNESS TO PAY?
In general companies have access to two types of advice:
1) They can contact a number of governmental institutions for free, such as the Chilean Agency for Energy Efficiency - Agencia Chilena de Eficiencia Energética (ACEE), or the National Centre for Innovation and Development of Energies - Centro Nacional para la Innovación y Fomento de las Energías (CIFES), as well as the National Association of Energy-Efficiency Companies - Asociación Nacional de Empresas de Eficiencia Enérgetica (ANESCO);
2) They can go to a specialised consulting company and pay for the services.
In general, most companies are willing to pay for quality advice and guidance.
5 INSTITUTIONAL PLAYERS
Chile has quite a lot of institutional players, such as banks or equity funds.
However, most of them are not very keen to invest in energy at the moment, because there is a degree of uncertainty regarding the energy prices in the future.
During the last years the market energy price has dropped a lot, mainly due to the fact that NCRE players have been able to bid lower prices than the traditional players, and produce energy rather cheaply (cf. solar power plants).
Also, there has been a reduced activity in the mining sector because of the continued low price of copper and similar materials. This has made many of the institutional players weary of the future, as they do not know if or when the mining sector will take off again.
6 GOVERNMENT SUPPORT FOR SETTING UP A BUSINESS
Most of the times government institutions give all the information regarding projects, companies in the market, and the energy market in Chile. They could also help you in networking, and so on.
FIT Santiago will also be able to introduce you to relevant governmental organisations, with whom you can discuss things in more detail.
For setting up a business in Chile please see: https://investchile.gob.cl/guia-del-inversionista-interior/.
FIT SANTIAGO June 2017 4
7 COMPETITION IN THE ENERGY-EFFICIENCY & SUSTAINABILITY SECTOR
Quite a few players, both local and foreign companies, are already on the market. However, all of them have plenty of chances in this strongly growing market.
Large companies such as Chilectra, Enel or Engie are starting up small companies in their own incubator space to develop this market.
These projects mostly involve energy efficiency and sustainability, but more often than not they deal with other specialities than consulting. Still, any company can use the information that is publicly available at these large energy firms.
8 MORE BACKGROUND INFO
In Chile there are five electricity systems, the two principal systems being the Large Interconnected Northern System (SING) and the Interconnected Central System (SIC). Both systems have distinct usage profiles and make use of different energy generation technologies. The amount of electricity generation depends on private companies that sell the energy generated according to mechanisms provided for in the law, which vary depending on the installed load of clients.
In the SIC, three companies represent 90% of the market (Endesa, AES Gener and Colbún), while in the SING, three firms represent almost 100% of the installed capacity (E-CL, AES Gener and Endesa).
9 MORE INFORMATION AND SOURCES
https://www.leychile.cl/Navegar?idNorma=1055402&idParte=0 https://www.leychile.cl/Navegar?idNorma=270212&idParte=0 https://investchile.gob.cl/
http://www.acee.cl/
http://www.acera.cl/
http://www.anescochile.cl/
http://global-climatescope.org/en/country/chile/#/details
http://www.energia2050.cl/en/energy-2050/energy-2050-chiles-energy-policy/
http://exportwise.ca/wp-content/uploads/2017/02/CHILE_infographic-EN.pdf
http://www.fne.gob.cl/wp-content/uploads/2014/01/informe_final_FNE_Enero13_2014.pdf https://www.corfo.cl/sites/cpp/programas-y-
convocatorias?p=&r=null&at=&e=&o=&buscar_resultado=1&bus=energia http://www.english.corfo.cl/
