Chile: Iberdrola-led consortium bids for $2.5 billion power line project

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A consortium led by Spanish multinational Iberdrola, Celeo – a subsidiary of Spanish firm Elecnor, and the Dutch pension fund APG has filed a proposal to build and operate Chile’s first long-distance HVDC power line.

The 600KV power line will be 1,500 km long and will have a capacity of 3,000MW to connect the Antofagasta region, and Lo Aguirre, in the Metropolitan region.

Iberdrola will own a 60% stake in the joint venture whilst Elecnor will provide its expertise gained in building more than 1,000km of power lines and 10 ten years of operations in Chile.

The $2.5 billion project will include the construction of two converter stations and the modernisation of existing ones.

If the bid filed by the consortium is successful, technology developed by Siemens will be used to enable the power lines to transport an increasing amount of renewable energy from regions with high generation to areas with high energy demand, according to a statement.

The results of the tender process are expected to be announced on 13 December 2021 for the project to run through the end of 2028.

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The development of the power line forms efforts by Chile to prepare itself for the energy transition as calls for an increased amount of renewable energy capacity to be deployed as a climate mitigation strategy intensifies. Energy companies in Chile are embarking on several ways to shift their business models from coal to renewable energy. Last year, Enel announced its plan to fast-track the closure of coal plants.

With Chile’s renewable energy market anticipated to expand through 2030, Iberdrola seeks to leverage the country’s market potential to grow its business, according to a statement.

However, increased investments, especially from the private sector and international institutions, are required to improve the energy infrastructure for Chile to achieve its goal of producing 70% of total electricity from renewables, according to the International Energy Agency.

However, there are fears that progress made so far in accelerating the energy transition might be disturbed by the current drought that is causing instability across energy markets in Latin America. Due to the drought, the Chilean government has already announced its plan to resort to coal to secure energy supply as hydropower generation continues to decline.

Projects such as the 1,200km power line that Chile plans to build are stepping stones in helping the country address its energy woes. More investments will be required in sectors such as energy efficiency, demand response, smart grids and in expanding the portfolio of renewable energy generation to ensure stable and resilient energy systems.