Chile’s Largest Power Auction Gets 84 Bids; Seen Slashing Prices

  • Chile to auction contracts for a third of regulated consumers
  • List of winners to be announced by the government on Aug. 17

The largest auction of electricity supply contracts in Chile’s history attracted 84 bids on Wednesday, a spokeswoman for the National Electricity Commission said, raising optimism that it will lead to lower electricity prices in the Latin American nation.

The commission is auctioning contracts to supply 12,430 gigawatt-hours a year, a third of supply to regulated consumers, according to its executive secretary Andres Romero. The winners of today’s auction will be announced on Aug. 17.

"This is historic. It is the largest auction in our country and the one that has generated most interest from bidders," Romero told reporters. "Competition is good news because it means we can reach our objective of lowering electricity costs for Chilean families and businesses by 20 to 25 percent by 2020."

Chile has the third most expensive power in South America, behind Guyana and Uruguay, according to Bloomberg New Energy Finance. To reduce prices, the country is trying to increase its generating capacity through a series of auctions. President Michelle Bachelet has targeted a 25 percent reduction in prices, intended to cut electricity bills for Chileans from 2021 onward.

Today’s auction attracted a large number of renewable energy bids, according to Romero.

"Chile’s auctions have been attracting a lot of interest from renewable energy companies, and new players have entered the country’s market," said Carlos Finat, president of Chile’s renewable association, known as Acera.

In the last auction in October, energy companies got contracts to supply power at an average price of $79.30 a megawatt-hour, 40 percent less than in a previous event in December 2013, according to a government report.

For the first time, a participating project will be able to sell energy on both Chile’s central-south and northern systems as a new power line is built connecting the two grids.