By Renato Piazzon Falcone. Peru is expected to launch its fifth renewable energy auction before the end of the year, according to industry sources, as reported in Gestión. Although official details have not yet emerged about the technology or capacity requirements, the auction is expected to include new capacity in solar PV and potentially other technologies, such as wind, biomass, and small hydro (no larger than 20 MW).
 
As per Peru’s 2008 renewable energy legislation, renewable energy auctions must be considered every two years to comply with the country’s 5% renewable energy target, which led to the auctions held in 2009, 2011, 2013 and 2015. The 2015 auction achieved worldwide record low prices for solar PV and wind at the time. However, the auction to be held in 2017 was cancelled due in part to generation oversupply.
 
To address these challenges and to improve competitiveness of renewables in Peru’s energy market, the Ministry of Energy and Mines (MINEM) has announced that it is reviewing the country’s renewable energy regulatory framework. Among the measures under consideration are regulatory acknowledgement of firm power in renewable sources (to avoid mandatory backup generation), hourly blocks in auction designs, as well as possible tax benefits. A clear and stable renewable energy policy framework would advance Peru’s energy security and environment goals since, according to new estimates, generation oversupply is expected to end in 2021.
 
In terms of deployment, Peru’s largest to date utility-scale solar projects, which were contracted in prior auctions, have begun operations in 2018: Enel’s 145 MW Rubi Project and Engie’s 40 MW Intipampa Project. Enel has also begun operations of a 132 MW wind farm, Wayra I.

In addition, by the end of 2019, Peru also reportedly plans to install some 140,000 solar panels in various areas of the country that require electricity in accordance with the government's goal of raising rural electrification coverage to 99%. 

By Blanca Lopez Bassa. Chile will award between 7.200 GWh to 7.900 GWh of energy power supply contracts in an energy auction to be held by the end of 2018, according to a presentation by the Chilean Energy National Commission (CNE).

On March 14, 2018, the CNE opened the registration process for institutions and users interested in presenting technical observations on the 2018 energy auction’s preliminary reports. This process officially launches the 2018 energy auction, according to article 131 ter of Law 20.805.

Since the reforms introduced by Law 20.805 of 2015 and Transmission Law 20.936 of 2016, Chilean energy policy has been characterized by unsubsidized and technology neutral energy power supply auctions. The Chilean model has demonstrated that it is possible to attract new renewable energy generators to the market by removing barriers for clean power generators and incentivizing investments in generation.

During prior energy auctions in 2016 and 2017, Chile succeeded in its policy objectives of stimulating competition, decreasing energy prices (Figure 1), and incentivizing entry of new renewable energy generation actors. For example, Auction  2015/01 of 2016 registered the lowest renewable energy price up to that date, US$29.2 MWh (almost half the carbon price in the same auction). The energy supply will come from “new wind capacity (45.5%), new solar capacity (6.8%) and a mix of conventional capacity (47.6%)” (IEA, at 95).

In the energy auction of 2017, the majority of new entry participants were renewable energy generators, the lowest energy price registered was US $21.48 / MWh, and the average price awarded was US $ 32.5 / MWh, as reported by Emol.economia.

Chile’s innovations in energy auction design include the use of hourly and quarterly sub-blocks, which are particularly beneficial for renewable energy generators. In addition, the government established longer contracts and more flexibility, among other regulatory and policy incentives, to attract investment. For example, the government allows up to five years “to postpone the term of beginning of the energy supply or put an early termination to the contract if, for reasons not attributable to the successful bidder, its generation project it is delayed or if it becomes unviable,” according to article 135 ter of Law 20.805.