Why Engie sat out Chile's latest power auction

Tuesday, November 7, 2017

Engie Energía Chile along with fellow company AES Gener did not participate in Chile's latest power auction where 2.2GWh were awarded.

The auction represented a "long shot" as energy will need to be supplied for 20 years starting in 2024, said Engie Energía Chile CFO Eduardo Milligan during the company's third quarter earnings conference call on Tuesday.

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The executive added that his company is fully contracted for the next 10-15 years and that given the size of the auction, "we expected prices would be low."

AES Gener CEO Javier Giorgio said in recent days that Gener did not take part in the power supply call because terms and conditions were not attractive.


With regard to the planned interconnection of the country's central (SIC) and northern (SING) grids, Milligan said the project will come online in the coming weeks and highlighted the recent energization of approximately 400km of 500kV lines.

Engie Energía Chile financial and administration officer Bernardita Infante added "that the interconnection won't be at full speed and capacity until probably 2019 as the southern segment of the Interchile 500kV transmission project has been delayed mostly for permitting reasons."


"We are clearly in a transition to a very different environment," said Infante, commenting on Chile's power sector.

She pointed to the challenge posed by the growing contribution of renewable energy such as higher system costs to cope with intermittent output due to the need of more frequent startup of combined cycle gas turbine plants.

Infante, however, expects that the SIC-SING interconnection will soften these energies' intermittent output by tapping SIC hydropower.



Another Engie Energía Chile project is the 375MW Infraestructura Energética Mejillones (IEM) thermoelectric complex, which is on schedule and budget with a full commercial operation date around July 2018, said Milligan.

IEM advancement reaches close to 90% and commissioning is expected to begin in the coming months, he added.

Engie Energía Chile's latest financials are available here