Javier Arellano of Solarpack Chile
Opportunities for new PV projects are still viable in Chile despite word of consolidation in the inhospitable, yet hot spot, terrain in the north of the country. Arellano discusses why and how Latin America’s hottest solar market keeps churning.
If you are selling solar PV in Latin America then there is no doubt that Chile is the place to be. It may not have subsidies, but nevertheless it is a market where PV can hold its own cost-wise, and help feed a massive demand for power.
With even major utilities calling for greater development of solar power, an important grid modernisation programme underway and tax reforms aimed at penalising traditional generation, it is little wonder the market is on fire.
That does not mean the Chilean market is not without its challenges. Just ask Solarpack, the company behind Chile’s trailblazing Pozo Almonte and Calama Solar 3 plants.
To find out what has been achieved so far in the market, and what more needs to be done, PV Insider caught up with Javier Arellano, general manager of Solarpack’s Chilean operations.
Q. What is the current state of the solar market in Chile?
Arellano: The solar market in Chile is consolidating. Today, there are already 185MW of solar PV in operation and soon another 200MW are due to be added.
There is still an enormous amount of potential, even though there is a high level of saturation of projects under development in the country.
The development of transmission grids is not keeping up with the level of investment in generation, which means many projected solar installations will not be able to go ahead in the short or medium term.
Q. What are the main challenges in developing projects?
Arellano:The main challenge is grid interconnection. Today that is the scarcest resource and the point where projects are finding the biggest holdups. It is also a challenge to sign long-term power purchase agreements that allow stable revenues to secure competitive financing.
Q. How are these challenges being overcome?
Arellano:The government is pushing regulation to apportion rules around the process of grid interconnection.
This will no doubt improve the outlook a bit, even if it will also be necessary to push regulation for the sub-transmission and backbone networks, to ensure open access to the grid under reasonable conditions and timeframes.
Elsewhere, there are projects that are aimed at reinforcing and uniting the grids. Meanwhile, nevertheless, there are going to be many problems to do with the saturation and disconnection of power lines.
On the other hand, the establishment of scheduled blocks for distribution tenders is a step in the right direction, although we think more is needed; to really open up the distribution networks with bids for even more granular blocks.
Q. What are the sectors and applications that are generating most demand for solar power in the country?
Arellano:At the moment it is mining and spot-market sales that are walking off with most of the solar PV production. There are also many self-consumption initiatives and lots of small mining operations looking for hybrid solutions for off-grid work.
Q. Do you think the government is doing enough to promote solar power? What else could it be doing?
Arellano:We think it is on the right track and is implementing important changes.
It needs to keep moving forward in overcoming barriers to interconnection, in establishing mechanisms to allow solar PV to compete on a level playing field with traditional generation and in allowing access to stable pricing that will allow long-term financing.
In our opinion, as well, there needs to be more progress in giving solar PV better entry into distribution tenders.
Q. What benefits can an experienced company, such as Solarpack, offer in this market?
Arellano:Chile is a very unusual market. Most of the installations are in the north of the country and up there the construction and operation of plants face important challenges.
The north has a dire lack of labour, the working conditions are extreme and the subcontractors do not always have the right experience.
A company such as Solarpack, which has already built plants, understands the risks, costs and challenges involved in financing, building and operating a solar plant in Chile.
Our presence in the country, which started in 2008, has also given us a deep understanding of the market, which is key in putting together competitive, realistic projects.