Chile to Delay Power Auction by as Long as 90 Days

  • Energy Minister Maximo Pacheco speaks in Santiago interview
  • Auction to cover more than a quarter of generating capacity

Chile will delay an auction of contracts representing more than a quarter of its electricity-generating capacity as it awaits approval of a new transmission law, Energy Minister Maximo Pacheco said.

The auction, which was due to be completed on May 10, will be postponed for no more than 90 days, Pacheco said in an interview at his office in Santiago Thursday. Companies originally had until April 20 to present their bids.

“We will announce the new date in the next few days,” Pacheco said. “In two months, we will have this new law approved and that will help us to solve the transmission planning issues. We want to bring certainty for bidders in the auction.”

Chile is trying to increase its power capacity through a series of auctions after prices rose to some of the highest in South America. The next tender -- that will auction more than 13 terawatt-hours -- is designed to allocate 29 percent of Chile’s regulated energy supply for the next decade.

The new transmission law will create a independent institution to manage the national electricity system, establish long-term conditions for transmission planning and allows the government to define hubs for renewable energy generation, according to Carlos Finat, president of the country’s renewable association, known as Acera.

Most expensive

Chile has the third most expensive power in South America, behind Guyana and Uruguay, according to Bloomberg New Energy Finance. President Michelle Bachelet has targeted a 25 percent reduction in prices, cutting electricity bill for Chileans from 2021 onward.

In the last auction in October, energy companies got contracts to supply power at an average price of $79.3 a megawatt-hour, 40 percent less than in a previous event in December 2013, according to a government report.

Between 2016 and 2019, 4.7 gigawatts of power capacity will be added in Chile, almost half coming from wind and solar projects, according to forecasts of Bloomberg New Energy Finance.

(Corrects number in fourth paragraph of story published March 17.)
Before it's here, it's on the Bloomberg Terminal.