Solar power reaching grid parity in Chile

Spanish energy consulting company Creara has released the first PV Grid Parity Monitor to assess solar PV competitiveness in Chile and has found that grid parity in being achieved in key areas.

The new report, released with the support of the European Copper Institute, is based on data from 2012-2014 and Creara assessed competitiveness of solar energy at the residential, commercial and utility-scale in terms of parity.

Chile is one of the world's fastest growing energy markets, partly due to policy reforms that centre on improving energy security, boosting economic efficiency and assuring environmental sustainability.

Following “moderate” annual growth over the previous five years, clean energy generation in Chile – from wind, solar, biomass, and other renewable energy resources outside of large-scale hydro power – erupted in 2014, according to Chile's renewable energy agency Cifra.

A total 982 MW of new unconventional renewable power capacity came online across the country in 2014 - over 300 per cent more than the 244 MW installed in 2013.

That kind of growth, and Chile's supportive energy policy framework, has attracted attention and is driving investment from firms across the renewable energy value chain.

Overall, Chile's unconventional renewable power generation capacity increased by 2,097 MW in 2014.

Wind energy accounted for the greatest share (836 MW) and growth in Chile's solar solar sector was especially strong.

402 MW of solar power capacity came online in Chile in 2014 – a year-on-year growth rate of more than 10,000 per cent.

ERDC reported that another 833 MW more was under construction across the country and a huge 8,149 MW was approved for construction.

Creara said: “Once PV grid parity is reached, electricity consumers would be better off by self-consuming PV-generated electricity instead of purchasing electricity from the grid. They also review and provide a general description of the current state of renewable energy regulation in Chile.”

Turning to the competitiveness of commercial PV generation in Chile, Creara concluded that high installation costs in this sector, along with high discount rates used to calculate return on investment (ROI) and internal rates of return and (IRR) low reference electricity prices leave commercial PV costs on an LCOE basis short of grid parity.

Moving on to utility-scale PV, Creara concludes that grid parity has been reached in certain locations within Chile. “Current high prices in the spot market allow enough room to protect the investor from potential falls of electricity prices, securing their profitability,” according to the report authors.