Contents

Introduction

The Chilean electricity sector is experiencing a profound process of transformation that, in large part, is in line with the process of energy transition that the planet is experiencing, although it also has its own characteristics. The process in Chile began with the reforms promoted by the team of Máximo Pacheco, Minister of Energy in the previous government of Michelle Bachelet, which coincided in time with the fall in prices of renewable technologies, especially wind and solar.

The genesis of Chile's energy revolution is clearly illustrated by the evolution of electricity prices. The marginal price in the then Central Interconnected System (SIC), which began an abrupt increase in 2007 when Argentina cut off the supply of natural gas to Chile, went from a maximum of US$338MW/h in March 2008 to US$70.7/MWh in June 2018. Supply bids for regulated customers, on the other hand, went from tariffs of US$129/MWh in the 2013 process to US$79.3/MWh in October 2015, US$47.6/MWh in 2016 and US$32.5/MWh in 2017.

"It was a dizzying process," says Andrés Rebolledo, former energy minister who took the post of Pacheco in the development of the energy agenda. "The magnitude and speed of the change in those four years (2014-2018) was impressive, it is a case of public policies with incredible innovation," he says.

This also occurred in a context of economic slowdown in Chile that resulted in successive downward adjustments in the electricity demand projections. In 2013, shortly before the end of the copper price supercycle, the National Energy Commission predicted that by 2023 the demand for electricity would reach 110,000GWh. In 2016, the CNE forecast for 2023 was adjusted to 89,000GWh, 20% less than the previous estimate. In the last projection, the demand is estimated at 82,000 GWh.

This marked adjustment of the sector, which also coincided with the decline in the prices of coal and natural gas and the explosion in the supply of wind and solar generation equipment, is the tip of the iceberg of a process that is shaking the traditional model of business of the electric sector in Chile.

Figure: Energy Matrix
[GRAFICO:FIGURA:ID_132]

Figure: Cost of Power

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