Chile's Renewable Investments Hit Record $5.7 Billion

• Chile’s renewable energy investment soared 231% in 2024, fueling growth in solar and wind as challenges loom, but the future shines bright with ambitious green projects ahead.

Investment in Chile's renewable energy sector skyrocketed by 231% year-on-year, reaching a record USD 5.7 billion in 2024, according to the Chilean Renewable Energy and Storage Association (ACERA). Renewable sources, including hydroelectric and non-conventional renewables, represented 68% of the nation's total electricity generation, with solar photovoltaic leading at 11,746 MW and wind at 6,470 MW. Energy storage systems also expanded significantly, boasting over 3 GW of projects in operation and 19 GW under evaluation.

However, ACERA highlighted challenges, including increased curtailment of solar and wind energy, which offset some of the new generation. Some solar power generators faced curtailment rates exceeding 50% due to low demand and insufficient transmission infrastructure. Additionally, regulatory uncertainties surrounding a proposed law for electricity subsidies are impacting investor confidence. Looking to 2025 and beyond, ACERA anticipates the retirement of nearly 1 GW of coal-fired generation, alongside the introduction of 6.7 GW of new non-conventional renewables and storage projects over the next three years.

What challenges are impacting Chile's booming renewable energy sector despite record investments?

Despite the remarkable growth and investment in Chile's renewable energy sector, several challenges are impacting its continued expansion and effectiveness. Here are some key obstacles:

• Curtailment of Renewable Energy: There has been an increase in the curtailment of both solar and wind energy, which reduces the overall effectiveness of new generation capacities. Certain regions have reported curtailment rates exceeding 50%, primarily due to periods of low demand and insufficient grid infrastructure to handle peak generation times.
• Insufficient Transmission Infrastructure: The existing transmission lines and systems are not fully equipped to manage the growing amounts of renewable energy now being generated. Upgrades and expansions of this infrastructure are critical to prevent bottlenecks and enhance the delivery of renewable electricity to consumers.
• Regulatory Uncertainty: Uncertainties around new legislation, particularly concerning proposed electricity subsidies, can lead to hesitation from investors. This lack of clarity can stall financial commitments and strategic planning necessary to develop projects.
• Intermittency and Reliability Issues: The inherent intermittency of solar and wind energy poses challenges for grid stability and reliability. Energies generated during peak production times need effective management and storage solutions, which are still in development phases.
• Competitive Energy Prices: As investments in renewables increase, the scenario presents competitive pricing against traditional energy sources like coal and natural gas. However, sudden changes in energy prices can impact profitability and investment decisions in renewable projects.
• Environmental and Land Use Conflicts: The expansion of large-scale renewable projects often leads to conflicts over land use, especially in ecologically sensitive areas or regions with existing land claims. Engaging local communities and balancing ecological concerns is crucial for sustainable development.
• Technological and Operational Hurdles: The renewable energy technology landscape is rapidly evolving; however, not all projects may leverage the most advanced technologies for efficiency and output. Operational challenges may include maintenance, integration of energy storage systems, and adopting new grid management technologies.
• Investment Diversification Needs: While funding has surged in the renewable sector, there remains a need for diversification of investments into different technologies beyond just solar and wind. Exploring opportunities in bioenergy, hydrogen, and geothermal can bolster a more resilient energy portfolio.
• Workforce and Skill Gaps: The burgeoning renewable industry requires a skilled workforce adept in new technologies and practices. Educational institutions and training programs may need to evolve and expand to meet labor market demands.
• Supply Chain Vulnerabilities: Renewable energy projects rely heavily on global supply chains for components like solar panels and wind turbines. Disruptions in these supply chains—due to geopolitical tensions, trade restrictions, or global crises—can delay projects and inflate costs.

Addressing these challenges will be essential for Chile to sustain its renewable energy momentum and achieve its long-term energy transition goals. Collaboration between government, industry, and local communities will play a vital role in overcoming these obstacles.