Plans for several LNG-fuelled power plants in Chile have been shelved after none of the projects won contracts at the country’s latest electricity tender. A series of wind and solar power projects secured more than half of the contracts at auction.
The auction, Chile’s largest-ever tender organised by the National Energy Commission, was held to cover 12,450 GWh annually through 2021, with around a third of this demand coming from regulated clients.
Several multi-national firms, including Shell, Mitsui as well as Chile’s state-run ENAP took part in the tender with projects to develop new CCGTs in the country.
Mitsui, in partnership with ENAP, had been seeking to develop the 500 MW Nueva ERA plant as a captured power project next to its Aconcagua refinery in central Chile. Gas supply for the plant would have been sourced via the Quintero regasification terminal in which Mitsui owns a 20% stake.
Shell and Mitsui had made plans for a 540 MW combined-cycle gas power plants in northern Chile that was meant to run on regasified LNG supplied by a new regasification terminal.
Renewables outcompete gas power
Yet, none of these projects was successful – it was renewables, notable wind and solar PV that won contracts to supply more than half of the demand on offer.
"The tender results shows our renewable energy solutions are very competitive, even against conventional technologies," commented Jose Antonio Escobar, CEO of Acciona Energia Chile. The Spanish company committed to building a 183 MW wind farm in southern Chile after winning a contract to supply 506 GWh annually.
GDF Suez announced plans back in 2014 to build a new 375 MW gas plant in Mejillones, Chile along with transmission infrastructure and LNG supply via its subsidiary company E-CL. It is not clear if this project participated in the auction.
Apart from international project developers, the auction results also make for dire reading for most of Chile’s large power producers. AES Corp, AES Gener, Colbun and Energy Chile were all seeking to replace long-term supply contracts that are due to expire in the coming years.
Critical voices were heard prior to the release of the results, claiming that the auction rules had been changed to make it tougher for fossil power projects to compete. Ultimately, the tender outcome will help the Chilean government to meet its 20% renewable energy target by 2020 – but it won’t support its other policy of boosting gas generation as a cleaner alternative to burning fuel oil.