Chile will solicit bids next year to build South America’s largest solar farm as the government seeks to kick-start renewable-energy investment in the Atacama desert.
The government will offer a $20 million grant and a $400 million loan to build the solar farm in northern Chile, which will have more than 50 megawatts of capacity, Energy Minister Jorge Bunster said at an event in Santiago today. The European Union will furnish an $18 million grant.
The government’s willingness to back the solar farm may set an example for banks, which have been reluctant to offer loans in the past for similar projects, said Maria Gabriela da Rocha Oliveira, a Sao Paulo-based analyst with Bloomberg New Energy Finance.
“This move may be to get the ball rolling,” Oliveira said today in a telephone interview. “Private banks and development banks are saying they’re willing to finance projects without” long-term contracts to sell electricity.
The solar farm will be the biggest in South America when complete, Bunster said. The bids will be due in the first half of 2013.
T-Solar Global SA, a Madrid-based solar-panel provider, operates two solar farms in Peru with 22 megawatts of capacity each, currently the continent’s largest, according to New Energy Finance. Chile has three solar farms in operation with combined capacity of 9 megawatts.
With little cloud cover and the prospects of high electricity prices through the end of the decade, northern Chile is attracting other solar developers, Oliveira said.
Companies including Spain’s Acciona SA and the local power utility AES Gener SA filed for permits this year to develop solar projects worth more than $9 billion, according to Chile’s environmental regulator Servicio de Evaluacion Ambiental.