Chile – Electric Power & Renewables 2019

Wind Energy is Growing Rapidly in Chile

Published: 15 March 2019


1. Market overview

Wind energy is currently being developed dynamically in Chile. Almost a third of the total electricity generation capacity added in 2018 came from wind turbines. The Global Wind Energy Council (GWEC) expects capacity to grow by around 500 MW annually in the coming years. Business opportunities are expected to increase as a result of the numerous new projects.  Important market drivers and obstacles include:


  • Long-term government targets for the expansion of renewable energies
  • Government plans to tender more than 12.2 terawatt hours of electricity production by 2022
  • Wind sector depends on imports


  • No subsidies or secure feed-in tariffs
  • Highly concentrated energy sector
  • Promising areas are often in nature reserves


Chile: Installed capacity of onshore wind energy (MW)

2012 2013 2014 2015 2016 2017 2018
199 338 831 907 1,040 1,298 1,527

Source: Chilean Ministry of Energy


2. Political objectives

Obligatory quota for renewables is exceeded

Chile will likely exceed its target of generating at least 20% of its electricity from renewable energies by 2025. According to the Chilean Association of Renewable Energies ACERA (Asociación Chilena de Energías Renovables Alternativas), the share already stood at 20.8% in 2018. Between January and October 2018, renewables contributed 10,400 GW hours to electricity generation, although the ERNC law (Ley de Fomento de las Energías Renovables No Convencionales) only requires 4,627 gigawatt-hours. Studies predict that the government’s targets of purchasing around 60% of electricity from renewable sources by 2035 and more than 70% by 2050 will also be met.

Wind energy accounts for 6.8% of total power generation in Chile, according to the Association of Energy Producers (Asociación de Generadoras de Chile), outperformed only by the leading “modern” renewable, solar energy, with 9.8%. In 2017 solar and wind energy each contributed 3.7 terawatt-hours to Chile’s total electricity generation.

The government controls the expansion of renewables through public tenders. Since 2014, four technology-neutral tenders have been carried out, with a total of 31,000 GWh of electricity being allocated per year. In the last two tenders, renewable technologies alone prevailed. An additional 12,200 GWh of electricity per year will be awarded through public tenders through 2022. The projected average annual growth rate of electricity demand through 2022 is 3% to 4%.

The Chilean production promotion association CORFO (Corporación de Fomento de la Producción) presented studies of the regions with the greatest potential for wind energy. According to these studies, the provinces of Aurauco and Biobío in the eighth region and the province of Malleco in the fourth region are particularly outstanding.


3. Market organization

Average market price of 8.9 to 9.6 US cents per kilowatt hour in 2018

The Chilean electricity market is deregulated in all areas (generation, transmission and distribution, sales), as prescribed by the General Law of Electricity Services (Ley General de Servicios Eléctricos).

Electricity consumers are divided into free and “tied” customers on the basis of their installed connected load. Independent (large) customers with an installed connected load of more than 5 MW are obliged to purchase their electricity directly from the generating companies on the basis of individually negotiated electricity supply contracts. Electricity intermediaries do not operate in Chile, so tied (private) consumers with an installed connected load of less than 500 kilowatts do not have a free choice of supplier, but must purchase the electricity from the locally responsible distribution company.

Electricity consumers with an installed connected load of between 500 kilowatts and 5 MW have the choice of purchasing the electricity either through regulated tariffs like a tied customer, or as a free customer through PPAs (Power Purchase Agreements). Users must commit to a model for four years.

The average market price in 2018 fluctuated between 8.9 and 9.6 US cents per kilowatt-hour. Distribution companies sold electricity at a fixed price of 6.4 US cents per kilowatt-hour.


4. Opportunities

Strong expansion in the north and south of the country

Incentives such as tax relief or feed-in tariffs are lacking in Chile. Since 2014, however, taxes for thermoelectric plants have been imposed at a rate of 5 US$ per ton of CO2 emissions.

The Chilean company Windkraft Uno Chile plans to invest more than US$ 17 million in 2019 to construct three wind farms in the province of Biobío, south of the capital Santiago de Chile, completing the construction by June 2021. The farms are expected to operate for at least 30 years. In the north of Chile, a project with an investment of approximately US$ 177 million is taking shape. This is the Parque Cabo Leones III, a wind farm with a capacity of 173 MW. The park, with an operating life of at least 25 years, will be completed within the next three years. The environmental impact assessment authority SEA (Servicio de Evaluación Ambiental) also confirmed plans for the Cerro Tigre wind farm in Antofagasta, with a capacity of 150 MW.

In January 2019 the government announced that it would award a total of 90 square kilometers of land under concession contracts for wind and solar projects in the north and south regions of the country. Bids for a 43.82 square-kilometer tender in Antofagasta and Atacama can be submitted at the respective regional offices starting 19 June 2019.

Green bonds to finance wind energy projects

In April 2018, the Santiago Stock Exchange opened the market for green and social bonds. These bonds help companies finance initiatives with a positive social or environmental impact, including wind farms. The Santiago Stock Exchange recognizes international standards in its selection through The Green Bond Principles, The Social Bond Principles and The Climate Bonds Standards.

Production promotion association CORFO offers credit lines to local and international investors, including seed and venture capital, incubation programs and guarantees. Information is available at

Extension of net billing to systems with up to 300 kilowatts of capacity

At the beginning of 2018, the Congress modified the net billing rules for the payment of electricity from small photovoltaic and wind power plants with regard to the maximum permitted capacities. All plants with a maximum capacity of 300 kilowatts can now sell electricity directly to distribution companies at a regulated price. The increase from 100 to 300 kilowatts of capacity expands the net billing market, which benefits larger companies.

Gabriel Neumeyer, Chairman of the Chilean Association for Solar Energy ACESOL (Asociación Chilena de Energía Solar), points out that many facilities such as hospitals and companies with larger projects have not been able to take advantage of net billing previously because of the 100-kilowatt limit.

Offshore does not play a role yet

So far, only onshore wind turbines have been installed. Offshore wind energy is not competitive due to the high construction costs. Chile has the longest coastline in Latin America after Brazil, but the sea depths make construction difficult. The contour of the seabed in Chile is unfavorable for the most commonly used technologies. Coastlines are very steep, and depths of over 100 meters are measured near the coast. Floating constructions are seen as a better alternative.

Furthermore, Chilean coast is more densely populated than the hinterland, which could lead to more protest from the population. In addition, many favorable areas are designated as nature reserves.

Environmental impact assessment

The environmental impact assessment authority SEA (Servicio de Evaluación Ambiental) analyzes and evaluates all wind energy projects with a capacity of over 3 MW. On average, the evaluation takes 89 days. When presenting a concept, SEA uses two different procedures: Projects based on the environmental impact declaration DIA (Declaración de Impacto Ambiental) usually go through the process more quickly and took 78 days on average in 2017.

For plans requiring an EIA (Estudio de Impacto Ambiental) study, the evaluation took an average of 162 days. The environmental impact studies (EIA’s) require a period of 120 working days with a possible extension of 60 working days. In case of the environmental impact statement DIA, the statutory evaluation period is 60 working days but can be extended once by 30 working days.

The size of the plant is irrelevant when deciding whether a DIA or an EIA is required. Rather, EIA’s are crucial in projects that pose a risk to health, adversely affect natural resources and/or agriculture, affect nature reserves, imply resettlement of population groups or greatly reduce the historical value of an area.

The government still exclusively regulates and monitors the system at the national level, for example by granting areas for electricity distribution. Since 2014, Chilean policymakers have been working to decentralize the sector and to delegate decisions to regional levels. However, this process is slow.


5. Market barriers

No tailwinds for renewables in the population

The promotion of renewable energies is somewhat unpopular with the Chilean population. The decisive factors are a lack of information from the government about concrete plans, as well as concern that electricity costs could rise as a result of the expansion of renewables. The highly unequal level of education and the unequal distribution of wealth also fuel a general rejection against the government and large companies.

There is still a shortage of skilled workers in the Chilean wind energy sector. Particularly in the regions in the south and north, where the natural potential is greatest, only a few workers are well trained. Companies often use expertise from the mining sector for the construction, maintenance and operation of plants. Investment in research and development is also meager. Other challenges are primarily financial in nature. There are hardly any institutional investors with long-term plans, and national banks seldom grant loans for wind energy projects.


6. Local industry structure

Major international conglomerates dominate the market

In the Chilean energy market, there are about 40 generation, 40 distribution and 10 transmission companies. Many companies belong to large international enterprises. The companies with the largest capacities are AES Gener, AME, Cerro Dominador, Colbun, EDF, Enel, Engie, GPG, Orazul Energy, Pacific Hydro, Prime Energía and Statkraft.

The biggest electricity producers (including conventional energies) are Endesa, AES Gener, Colbún and Engie, with a combined market share of around 78%. In 2016 wind power generation was dominated by Enel Green Power, with a market share of 48.9%, followed by Latin America Power (17.1%), Pattern Energy (8.5%) and Vestas (8.1%).


Chile: Largest single producers of wind energy

Company Net capacity (in MW)
Energy Focus S.A (Parque Eólico San Juan) 184.4
Parque Eólico Cabo Leones I S.A 118.4
Parque Eólico El Arrayán 115.0
EGP SUR 110.6
Parque Eólico Los Cururos 109.6
Parque Eólico Taltal 98.1
Parque Eólico Talinay 89.6
Valle de los Vientos 88.9
Parque Eólico Renaico S.p.A 87.5
Río Alto Generación 65.0

Source: Chilean Ministry of Energy


Currently there are virtually no wind turbine manufacturers in Chile; this technology is almost entirely imported. On the one hand, this is due to the small market, which restricts economies of scale. On the other hand, its peripheral geographical location makes it difficult for Chile to export turbines to neighboring countries at competitive prices. Standard products are used, with turbines varying between 1.5 and 3 MW depending on the location. Financing by local banks is more difficult when it comes to acquiring the latest technology, which has not yet been tried and tested in the country.

Two exceptions are the SAME Group, which manufactures rotor blades, and Thorus, which specializes in the production of wind turbines.

The most important international companies in the wind-power sector are now present in the Chilean market. Wind farm operators include Norvind and Endesa. Manufacturers such as Nordex, Senvion, Siemens and Enercon are also represented in Chile. Among the project developers are Spanish company Acciona Energia, German companies such as wdp, Sowitec and Notus and Chilean companies such as Mainstream Renewable Power Chile, Lader Energy and Latin America Power.

The Chilean company Colbún plans to build Latin America’s largest wind farm in Antofagasta in 2022, with an expected capacity of 607 MW. Colbún signed an agreement with the Chilean Luksic Group, which will come into force in 2020 and last ten years. According to the agreement, the Zaldívar mine operated by Luksic will be fed by 100% green electricity sources. The cost of the project is estimated at US$ 1 billion.


7. Contacts
Name Website Comment
Ministerio de Bienes Nacionales Ministry of Public Real Estate
Comisión Nacional de Energía (CNE) Regulatory authority for the energy market
ACERA Association of renewable energies
Secretaría Regional Ministerial (SEREMI) Representatives of the Ministry of Energy in the regions, has own funding programs
Sofofa Industry federation
Corporación de Fomento de la Producción (Corfo) Governmental agency for economic development
Pro Chile Export Promotion Agency
ChileInvest Investment Promotion Agency
Online-Businessplattform Multilingual electronic marketplace, also provides information about the wind market in Chile