Tuesday, July 31, 2018

The Framework of the Chilean Hydropower Industry: Ken Research

There is an urgent need to shift global energy production to renewable forms so as to ensure that the world is caused no more harm by ill effects that arise due to use of non-renewable forms of energy. Chile has a goal of producing majority of its national energy by renewable forms in order to ensure a hospitable and sustainable environment to live in. In 2015, Chile joined the international community and promised to reduce its overall greenhouse gas emissions. Chile is a regional leader when it comes to promoting the use of renewable forms of energy which makes it very popular amongst countries who wish to expand their business into untapped potential.

According to the study, ‘Hydropower in Chile, Market Outlook to 2030, Update 2018 - Capacity, Generation, Investment Trends, Regulations and Company Profiles’, some of the major companies that are currently operational in the Chilean hydropower industry include Pacific Hydro Pty Ltd., Hidroelectrica Guardia Vieja S.A., Enel Generacion Chile SA, Duke Energy International, LLC, Colbun S.A., AES Gener S.A. an HydroChile S.A. All these companies have begun their operation in the Chilean industry and hold a high share in the industry in terms of volume of sales. Chile has witnessed strong economic growth in the recent years which is coupled by an increasing demand for electricity especially in the northern region. Mitigation Plans and Action Scenarios (MAPS) is collaboration between Chilean states which aims to reduce the overall greenhouse gas emissions. This initiative could make Chile a leader in hydro power generation. Chile is investing in huge upgradation of its technology in order to climb the ladder of market dominance in hydropower projects and to deal with the problem of climate change. Some of the technologies in which huge progress is being recorded include baseline analysis, mapping technologies and synergies for rapid technological response to climate change.

The hydropower consumers in Chile can be basically divided into two broad categories. These include the regulated and the unregulated market. Unregulated market includes those consumers which have a high demand and thereby giving them the right to negotiate bilateral transactions with the power suppliers. The regulated markets are the consumers which have low demand and hence cannot negotiate the prices and re compulsorily required to pay distribution costs and sur charge cost as well.

In the regulated market, the prices of electricity are derived from the spot price of energy over the next couple of years. Usually, in hydropower projects there are initial fluctuations in products which are gradually phased out over time and hence this was the reason a long time frame has been prescribed for such projects. The prices are then fixed for a period of two months and are revised twice in a year, once in the month of April and Once in November.

The overall hydropower industry in Chile is expected to grow in the future. This statement is supplemented by various support projects that have been taken up by the government and other organizations in order to promote the electricity generation via hydropower. The companies that are wishing to enter this market needs to understand the huge capital investment that is required in this sector.

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Ankur Gupta, Head Marketing & Communications
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