42 percent of the electricity supply contracts awarded in the last tender in Chile are pending approval by the National Energy Commission (CNE). At the beginning of April, the agency would only have authorized 333 of the 775 agreements awarded in the tender of August 2016, according to Diario Financiero.
The last tender of supply in August 2016 marked a turning point in the Chilean electricity market. At an average price of 47.59 cents per megawatt hour, renewables rose with more than 50 percent of contracts for the supply of almost 13 terawatt hours of energy tendered, overriding conventional technology generators. The solar, with a minimum price of 29.10 euros per megawatt hour, was the technology responsible for such a historic low price, which reduced to less than half that obtained in previous tenders.
The low price obtained by plants that will have to start the supply in 2021 does not seem to be the reason for the delay in the formalization of the contracts. Industry sources indicate the high number of contracts to be formalized by the 22 companies awarded as the main cause. The first contracts were approved by the CNE in December 2016 and the regulator indicates that the deadline for the formalization of contracts with the 25 electricity distribution companies “is not yet concluded.”
The non-formalization of contracts also has consequences for the public purse. The total amount of energy awarded as a “guarantee of seriousness” exceeds 176 million dollars. Guarantees that, for the moment, have not been fully satisfied. The contracting generating companies have a period of 60 days from the approval of the supply contract by the CNE to pay this guarantee to supply the energy awarded after 2021.
Chile has called a new energy tender for October. On this occasion, the volume of energy to be tendered is much lower than previous calls and the guarantees have also doubled. “The changes aim to have an even more competitive market than we have achieved and to ensure that the offers presented are serious, responsible and non-speculative offers,” said the executive secretary of the National Energy Commission (CNE) Andrés Romero in a release.
