Chile Energy Transition Challenges: Insights from wpd Chile

What is the main challenge Chile faces today in terms of energy development?

Chile faces multiple challenges in achieving sustainable energy development. While there are positive measures such as the Decarbonisation Plan and the acceleration of the closure of polluting power plants, these do not align with what is happening in the electricity system.

In generation, there is a clear challenge between the different scales: Utility Scale, PMGD, and NetBilling, as they do not coexist. For example, PMGDs receive subsidies at the expense of the other generation scales, which must be corrected so the electricity system can truly drive the energy transition by promoting competition and democratic access to energy.

On the other hand, a reform to the wholesale market is urgently needed. The current regulations are outdated because they are not prepared for the reality of the country, which has a high penetration of renewables. Half of the renewable energy produced is valued at $0 due to the marginal pricing system.

Transmission also faces challenges. The reason for the curtailment of clean energy is largely because the grid lacks sufficient infrastructure to inject this energy into the National Electric System (SEN). In this regard, the Energy Transition Law should address the issue, as much of Chile’s energy development depends on its proper implementation.

Lastly, it is important to understand that the country’s economic growth and productivity largely depend on the energy transition. Therefore, not only is the transition not being favoured, but so is the Chilean economy.

As a leader in renewable energy development, how do you assess Chile's current readiness—regulatory, technical, and financial—to host large-scale wind and solar projects in the coming decade?

Chile has demonstrated great potential for the penetration of renewable energy, as evidenced by the increase in wind and solar projects recently. However, the operation of the electricity system is outdated, as it still follows the logic of thermal plants. Without a reform of the electricity market, Chile will not be a leader in renewable energy.

Additionally, environmental legislation lacks robustness, meaning there is no clear standard for evaluating Environmental Impact Assessments (EIAs). Currently, many assessments are done based on guidelines, which is inefficient and slows the progress of the renewable industry and, consequently, the energy transition.

In technical areas, it is urgent to improve the quality of wind developments in terms of impact measurement, project distance from receptors, early engagement with the community, and the feasibility of connecting to substations, among other aspects. It is also necessary to improve the quality of wind turbines. The wind turbine manufacturing market is highly concentrated, leading to less innovation. It is crucial to increase competition among manufacturers, with more competitive prices and newer, better technologies.

From a financial perspective, we are clear in stating that if Chile continues with the logic of a contract market, i.e., a financial market, we are delaying the energy transition. The system should promote the generation of renewable energy, not just its commercialisation.

Based on WPD’s international experience, what lessons or best practices would you like to see adopted more strongly in Chile to strengthen project profitability and long-term investment confidence?

Everything mentioned above is directly related to the profitability and confidence of renewable projects. If the regulation of the electricity market, environmental legislation, and public policies are not coherent with each other, and authorities continue with short-term discussions, the energy transition will not meet the established deadlines.

Currently, the Chilean government has announced that they will accelerate the decarbonisation of the energy matrix by 2035; we see it as very difficult to reach that target in the current scenario. Therefore, a comprehensive and coherent reform of the regulations is urgently needed to enable the proper development of renewables.

POSTAGENS RELACIONADAS

June 25, 2025

•

Interview

Strengthening the Regulatory Framework: Key to Attracting Investment and Advancing Chile’s Energy Transition

José Adolfo Moreno, partner at Moreno Sáez Avilés, examines the main challenges facing Chile’s energy development, highlighting the need to improve environmental regulation and the permitting system. He points out the risks of overregulation, long legal appeal processes, and issues with public and indigenous consultations. He also emphasizes the essential role of legal professionals in supporting a just and investment-friendly energy transition.

June 21, 2025

•

Interview

Challenges and Opportunities for Chile’s Energy Transition: Insights from wpd Chile

Lutz Kindermann, General Manager of wpd Chile, highlights the key challenges the country faces in its journey towards a sustainable energy transition. He notes that despite positive initiatives like the Decarbonisation Plan, Chile’s electricity system is not yet equipped to handle the high penetration of renewable energy. In particular, he criticises the lack of integration between different generation scales, the outdated wholesale market, and the limitations in transmission infrastructure. Additionally, he underscores the need for a comprehensive reform of both environmental and electrical regulations to ensure the competitiveness and efficiency of the renewable sector. According to Kindermann, Chile’s economic growth largely depends on a structural shift in its energy approach, stressing the urgency of implementing coherent policies to attract investment and meet decarbonisation goals.

May 29, 2025

•

Interview

The Future of Critical Minerals in Brazil – AN EXCLUSIVE INTERVIEW WITH: João Paulo Braga, CEO of Invest Minas

29 May 2025, London (The Net-Zero Circle) - In this exclusive interview, Dr. João Paulo Braga, CEO of Invest Minas, shares insights into the state’s priorities, how lithium and other critical minerals fit into Brazil's green industrial future, and what lies ahead for the region known as Lithium Valley.