Can CSP solar compete in Chile?

The recent approval of the 390MW Likana CSP solar project, planned by SolarReserve, marked the latest milestone for the technology in Chile.

Likana is SolarReserve's third CSP project to get the environmental green light in the country, preceded by the 450MW Tamarugal and 260MW Copiapó projects.

The question is whether the three projects - which will require respective investment of US$5.33mn/MW, US$6mn/MW and US$7.69mn/MW to build, according to their environmental impact studies - can obtain power-purchase agreements in Chile's hyper-competitive wholesale power market.

So far, the only CSP project in Chile to obtain a PPA is Cerro Dominador, a CSP-PV hybrid project that secured a contract to supply about 80% of its forecast output to electric utilities through a public auction that concluded at the end of 2014.

That PPA was awarded at a price of US$114.8/MWh. Power prices have since plummeted, with the most recent auction in 2016 clearing at an average price of US$47.6/MWh.

SolarReserve submitted a bid of US$64/MWh in the 2016 tender, practically halving the price awarded to Cerro Dominador in 2014.

In an interview earlier this year with BNamericas, Cerro Dominador CEO Iván Araneda said he expected CSP solar projects to be competitive in future tenders, citing that they supply base load renewable power with zero exposure to fuel price fluctuations.

SolarReserve CEO Kevin Smith said his company will participate in Chile's next public auction, for which offers are due this October. 

Araneda said that Cerro Dominador is expected to enter full commercial operation in 2019, the same year its PPA takes effect.