Chile has so much energy that consumers get it for free
This is very good for consumers, but bad for energy suppliers
The price of electricity in Chile for 113 consecutive days this year fell to zero at some point. The fact is that Chile has powerful solar power plants that supply energy in excess. There are many sunny days in this country, and the stations produce a large amount of energy. It is so big that there is simply nowhere to put it. Therefore, consumers receive electricity for free.
For Chile, this is not a novelty. Last year there was a similar situation, when energy prices kept at the zero mark of 192 days. This year the record is likely to be beaten. Local residents and owners of energy-intensive enterprises, of course, are happy. But everything is not as rosy as it may seem - free energy has a negative side. The fact is that the energy companies in Chile belong to private business, which now does not receive any profit or income. But maintaining the energy infrastructure in working order requires money.
In addition, representatives of the energy sector need somewhere to get money for the construction of new facilities that will replace the old stations. Previously, the production boom in Chile led to a significant increase in the country's energy needs. Private business came to the rescue: various companies built 29 solar farms, and another 15 are planned. The construction of power plants was made with the expectation of continued economic growth. But now the growth of the economy is slowing all over the world, and Chile does not need as much energy as the plants produce. Most of all energy was consumed by the copper industry of the country, and after the demand for copper fell, production facilities are no longer able to consume as much energy as before.
Investors are losing money. For example, Acciona SA invested $ 343 million in the construction of a 247-megawatt station. According to plan, this is the largest such station in the whole of Latin America. The money is invested, but will the profit be received, or at least the funds will be refunded? The head of the company is not too sure.
Problem infrastructure
The biggest problem for the country's energy infrastructure is that the entire power system is divided into two parts: central and northern. Both parts are not connected with each other. The former head of the renewable energy sector Carlos Barria argues that if one part of the energy surplus, and the other requires more energy, nothing can be done. Now the situation is planned to be corrected, but this will take time.
In order to connect both parts of the country's energy system, it is required to build a transmission line of 3000 kilometers in length. Such a line is already beginning to be built, but the project can be completed only by 2017. In addition, another 753 km long line will be built, in order to improve the coherence of the northern energy system.
Solar power stations
The capacity of Chile's solar power stations is constantly growing, and the number of such facilities continues to increase. Since 2013, the power of the entire "solar" energy system of the country has quadrupled, up to 770 MW. The greatest growth is observed in the northern sections of the energy system, Atakama region, which is the center of copper production and processing in the country. Only last year, the total increased capacity increased by 5%. About 50% of energy supplies are provided by solar farms.
This year it is planned to build additional capacity - the implementation of these projects began last year, so construction will not be stopped. Nevertheless, in the same Atacama region, the average price of a megawatt dropped to $ 60. This is less than the $ 70 per megawatt for which they pledged to supply energy to the companies that won long-term auctions in Chile.
This situation negatively affects the development of the country's energy sector in the long term. Yes, now everything is fine, and construction continues. But in the near future, investors will simply stop investing in energy facilities in Chile. Already, some companies refuse to continue financing a number of projects, in the future the situation can only worsen.
According to representatives of the country's energy companies, the situation with prices has become almost uncontrollable due to too rapid development of alternative energy. "The rapid development of alternative energy has become a surprise for us, and we must react quickly," said Salvatore Bernabei, head of Enel Green Power SpA.
While the problem is not solved, low (zero) electricity prices will have a negative impact on the activities of energy companies.
And what about Europe?
For Europe, this situation is also not surprising. In Germany, energy consumers on some days even get paid for using electricity. So, on May 8, on Sunday, Germany broke a new record in generating renewable energy. Thanks to solar and windy weather, the total energy production by solar, wind, hydro and bioenergy plants was about 55 GW. In total, 63 GW of energy was consumed in the country on that day. Thus, the share of renewable sources was about 87%. For several hours, prices have gone into negative, which means paying consumers energy.
True, in Europe, energy companies are a little easier to cope with such prices. The producers of "green" energy are in positive territory even at negative prices - here it is necessary to take into account subsidies for the production of clean energy. The problem is that there is often no surplus of energy left - the "export" lines may be too "narrow", and you need to send energy somewhere. Therefore, energy producers are happy to get rid of the surplus, even taking into account the surcharge.
In general, if we take the average, solar electricity has fallen in price by 50% in the last 16 months. One should think that subsidizing "green" power engineers will soon cease, and then real competition will begin between "alternative" and "classics". This, of course, is about energy companies that produce energy in various ways, rather than musicians.