Chile runs technology-neutral auctions, for renewable and non-renewable technologies, for long-term power-purchase agreements (PPAs) organised by distribution companies have emerged as the key driver for large-scale solar and wind projects.
The falling costs of solar- and wind-power generation have increased their price-competitiveness in recent years and have helped to reduce the costs of electricity supply in Chile.
The legislation also allows for specific auctions only for renewable energy, if insufficient progress has been made towards meeting the renewable-energy targets set by law. The Ministry of Energy must monitor the compliance with these targets.
Every three years, the Ministry estimates the likely share of electricity generated from NCRE in the forthcoming years, considering the existing and under-construction projects. So far, such auctions have not been needed, as the yearly NCRE target has always been met.
Large non-regulated customers can either negotiate electricity-supply contracts directly with generators, or organize a public auction (individually or aggregated) and subsequently enter into PPAs with the successful bidders. In addition, several Chilean public institutions have conducted auctions to promote renewable-energy deployment in the forestry, food and agriculture industries, as well as in public buildings.