A slump in copper mining means there is more power than is required in some parts of the country
Chile’s solar industry has expanded so quickly that it’s giving electricity away for free.
Spot prices reached zero in parts of the country on 113 days up until April this year, a number that’s on track to beat last year’s total of 192 days, according to Chile’s central grid operator.
While that may be good for consumers, it’s bad news for companies that own power plants struggling to generate revenue and developers seeking financing for new facilities.
Chile’s increasing energy demand, pushed by booming mining production and economic growth, has helped spur development of 29 solar farms supplying the central grid, with another 15 planned.
A key issue is that Chile has two main power networks, the central grid and the northern grid, which aren’t connected to each other. There are also areas within the grids that lack adequate transmission capacity.
That means one region can have too much power, driving down prices because the surplus can’t be delivered to other parts of the country.
The government is working to address this issue, with plans to build a 3,000-kilometer (1,865-mile) transmission line to link the the two grids by 2017. It’s also developing a 753-kilometer line to address congestion on the northern parts of the central grid, the region where power surpluses are driving prices to zero.
The country is expected to install almost 1.4 gigawatts of solar power this year, up from 371 megawatts in 2015, according to Bloomberg New Energy Finance.
As long as this complex infrastructure problem is not solved in Chile, electricity prices will continue to fall, and due to excess solar energy power plant will lose customers.