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Chile To Give Spare Energy Supply For Free

First Posted: Jun 10, 2016 05:50 AM EDT
Solar panels
Chile is dealing with a quite unique problem--it has to give away energy for free because of having too much and lagging infrastructure projects.
(Photo : Ethan Miller / Getty Images)

Chile has invested on solar power energy generation, and is now able to gather more than enough supply so consumers are now getting it for free.

It sounds great for consumers, but most energy-generating companies and investors are alarmed.  

Bloomberg has reported that this abundance in solar energy has led to the dropping of the spot price, which even reached zero through April. In 2015 alone, there were around 190 price drops recorded.

Chile now has two power grids---one in the northern part and other one in the central part. Since year 2013, the country was able to produce more solar energy. The central grid alone was recorded to produce about 770 megawatts, which is one of the main reasons of the energy surplus.

In a report published by The Christian Science Monitor, Chile has been working on expanding its solar power generation. The government, however, now faces the challenge of delayed infrastructure construction, which means there are areas that cannot be covered by the national grid. This has resulted in having some areas left out, even if the supply in some areas is more than enough.

The government is currently trying to address the infrastructure issue. It has a pending project of building an additional transmission line that spans 3,000 kilometers. The government also plans to develop another line in the northern part of the central grid that might solve the congestion problem and can help distribute the energy surplus in other parts of the country.

In an interview with Bloomberg, Chile Energy Minister Maximo Pacheco said: "Chile has at least seven or eight points in the transmission lines that are collapsed and blocked, and we have an enormous challenge to bypass the choke points."

Meanwhile, investors have expressed alarm as they are losing money because of the situation. Rafael Mateo of Acciona SA's energy unit in Chile said: "Growth was disordered." 

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