Big Investors Bet on Chilean Solar: ESG's Stable Prices

• Chile's energy regulator and grid operator have criticized incentives for small plants, but lenders welcomed BlackRock's April deal for its competitive return on equity and low risk in a ESG-focused market.

The model has come under fire from Chile’s grid operator and the country’s energy regulator, who say the incentives for small plants exacerbate the oversupplies. But lenders cheered BlackRock’s deal in April, saying the return on equity was competitive with most of the projects they finance in the country. The model is seen as a way to give ESG-focused investors access to stable returns in a market with less risk than other renewable projects.

What Makes Chilean Solar Stable?

• The model is seen as a way to give ESG-focused investors access to stable returns while still achieving their sustainability goals.
• BlackRock's April deal showed lenders that the returns on equity were in line with most other renewable energy projects in Chile.
• The model has come under fire from Chile's grid operator and energy regulator, who say the incentives for small plants drive up oversupplies.
• Critics argue that this oversupply could lead to prices plummeting, which could hurt the country's renewable energy sector in the long term.
• Proponents of the model suggest that the oversupply of renewable energy is a net benefit to Chile, providing access to reliable, low-cost electricity for citizens.