In recent years, Chile has invested so much in its solar power industry that the country is now generating more electricity from the sun than it knows what to do with. A new report reveals that spot prices on solar electricity dropped to zero for 113 days of the year through April, and many more days of free solar power are expected to come. Taking advantage of free solar power is a huge benefit for residents, but analysts are concerned about how this will impact the market, since investors and owners of solar power plants may lose money.
Solar power fed to Chile’s central grid has quadrupled in capacity since 2013. The grid is now fed by 29 solar farms, and another 15 are planned for construction in the future. But Chile has two power networks in play: a central grid and a northern grid, which are not connected. Infrastructure in some areas of each grid is poor, so there are places where the grids simply cannot transmit as much electricity. Due to the age-old principle of supply and demand, some areas have more electricity than they need, driving prices down, while other areas are under-served. In areas served by the northern part of the central grid, power surpluses have driven the price to zero, and this year’s figures are on target to meet or exceed last year’s number of free solar power days, which was 192. Simultaneously, areas under-served by the grid are experiencing higher than normal prices.
Critics are concerned about the long-term effects of the massive solar industry growth, without the necessary infrastructure updates to handle the increased capacity. As Carlos Barria, former chief of the government’s renewable energy division and a professor at Pontifical Catholic University of Chile, in Santiago, told Bloomberg: “[President] Michelle Bachelet’s government has set the energy sector as a priority,” said Carlos Finat, president of the country’s renewable association, known as Acera. “But planning has been focused in the short term when it is necessary to have long term plans to solve these type of issues.”
Chile is responding to the need for better energy infrastructure, though. Construction is underway on a 3,000 kilometer (1,865 mile) transmission line to link the two grids by 2017. A separate 753km (468 mile) line is also in development, designed to alleviate congestion in the northern parts of the central grid, where excess electricity is driving prices down to zero.