Subscriber Login


Chile’s Transmission Proposals: RE drives investment in the grid [free access]

March 12, 2018

Chile is emerging as an attractive destination for investment in renewable energy (RE) given its vast untapped potential and clear government support to harness it. The rising demand for energy to support the steadily growing economy and the policy objective of reducing expensive energy imports are driving the development of clean energy projects in the country. Chile is endowed with ample RE resources. The Atacama Desert is a rich source of solar energy, and the country’s mountains and shores possess huge wind, geothermal and hydroelectric power potential.


The government aims to increase the share of RE in electricity supply to 60 per cent by 2035 and to 70 per cent by 2050. However, integrating these variable energy resources into the electricity system is challenging. The government is taking measures to upgrade the electricity system in terms of technical, economic and institutional parameters. Investments in the transmission grid, storage, as well as in system design and planning will be required for the efficient integration of RE into the electric system.


Chile’s electricity market

One of the region’s early adopters of electricity sector reforms, Chile began to privatise its electricity sector in the 1980s and since then has become a model to follow for most other countries in Latin America. The electricity generation, transmission and distribution sectors are now completely owned by private companies. The state has only a surveillance role and regulatory powers, especially over the determination of certain tariffs.


Power demand in the country is increasing rapidly. To meet this demand, Chile depends heavily on coal and oil resources. Earlier, the key sources of energy were natural gas and hydropower, the share of which declined significantly during the 2004–08 period due to the energy crisis in Argentina and the severe drought in the south-central region of Chile during 2007/2008. These acute scarcity episodes shaped the performance of and investments in Chile’s electricity sector in the subsequent years. The share of coal rose considerably from 10 per cent in 2003 to 24 per cent in 2008/2009. In 2017, coal was the largest source of power generation in the country with a 34 per cent share in the total installed capacity of 24,221 MW, followed by hydropower (28 per cent), natural gas (21 per cent) and renewables (17 per cent). However, over the past few years, wind and especially solar have emerged as market-competitive power generation technologies.


Figure 1: Fuel-wise installed capacity (MW), 2017


Source: Comision Nacional de Energia(CNE); Global Transmission Research


Chile’s national grid includes the Sistema Interconectado Central (SIC), Sistema Interconectado del Norte Grande (SING), the Aysen electric system (including Port Aysen and Coyhaique), and the Magallanes electric system (including Punta Arenas, Port Porvenir and Port Natales). SIC is the largest transmission network in Chile with over 11,800 km of lines and 53,957 MVA of capacity. It supplies electricity to over 90 per cent of Chile's population. SING, which covers the area between the cities of Arica and Antofagasta, comprises over 7,110 km of transmission lines and 17,581 MVA of capacity. It serves the power demand of large customers, including the mining and manufacturing industries. The remaining two grids, located in southern Chile, account for less than 1 per cent of the total installed power capacity.


Recently, SIC and SING were interconnected via a 600-km, 500 kV line. The USD776 million project was developed by Transmisora Eléctrica del Norte (TEN).


Government initiatives

In recent years, the Chilean State has assumed a stronger role in energy policymaking, in particular for power generation. Chile’s electricity regulatory framework has been reformed to increase the flexibility and diversity of energy supply, and to encourage investment in the sector. A major achievement has been the development of the long-term National Energy Policy 2050 by the Ministry of Energy. The policy focuses on developing a secure and environmentally sustainable energy supply system, with defined targets for 2035 and 2050.


The government is also encouraging RE generation by boosting competition in the wholesale market through contracts, in which generators sell electricity freely to large (non-regulated) customers and through tenders to distributors that supply small (regulated) customers. Around half of the electricity demand in Chile is supplied under these tenders. With the participation of new companies, these tenders are driving investment in green, affordable electricity and increasing competition. As a result, RE capacity is being built without government incentives or subsidies.


The government has also introduced amendments to the power transmission law. In July 2016, the government approved the Law of Transmission and Interconnection (LTI), introducing several changes in transmission regulations and establishing a new entity for coordinating the operation of the national electricity system, Coordinador Eléctrico Nacional (CEN). The role of the state in planning and expansion of the transmission network has also been enhanced. A key amendment is the categorisation of transmission facilities into the national system (similar to the current trunk system), zonal system (similar to the current sub-transmission system), dedicated system (additional systems), development areas (new category) and international interconnection (new category).


Other key features of the 2016 law include adoption of the under capital asset pricing model (CAPM2) for valuation of legacy assets of all transmission systems; single tariff process and pricing for national and zonal systems; direct payment of transmission charges by end users (stamp tariffs), both regulated and unregulated; unified planning for the entire system; and a mandate for the Ministry of Energy to prepare Strategic Environmental Evaluations (EAE) for projects to be tendered, considering land, environmental, social, technical and economic aspects of the projects.


Future grid plans  

Chile has already formulated extensive plans for expanding its electricity transmission grid. According to Global Transmission Research estimates, the country plans to add more than 6,200 km of transmission lines and 24,700 MVA of transformer capacity over the next decade, requiring an investment of more than USD7.5 billion. This includes the recently proposed Propuesta de Expansión del Sistema de Transmisión 2018 of Comisión Nacional de Energía (CNE), which incorporates the grid requirements for integrating large-scale solar, wind and hydropower capacity. The CNE 2018 expansion plan includes 10 national-level projects with a total investment requirement of USD1,465 million and 38 zonal projects with a total investment requirement of USD213 million.


As per the latest assessment of CNE under its 2018 report, electricity demand in Chile is likely to increase at a compound annual growth rate (CAGR) of 2.85 per cent from 73 TWh in 2018 to 125 TWh in 2037. In response, about 17,529 MW of RE will be added during 2018–37. Majority of this will come from solar energy projects to be developed in the northern region (Atacama Desert) of the country. Thus, large-scale grid projects have been proposed in this area to support solar development. Under CNE’s 2018 report, a ±600 kV high voltage direct current (HVDC) transmission project between Kimal and the Lo Aguirre substation has been proposed parallel to the ±500 kV Huelquén–Kimal HVDC transmission line included in CNE's Preliminar Plan de Expansión Anual de Transmisión Año 2017. The development of the HVDC system is recommended in phases, with a first phase of immediate construction, corresponding to the transmission line, and a second deferred phase, corresponding to the converter stations, so that the specifications of this equipment can be elaborated later. Following the publication of the proposed expansion plan for 2018, CNE is now seeking proposals from companies for projects. Based on the inputs, it will subsequently issue its Preliminary Technical Report during the second semester of 2018.


Other proposed projects under the plan include reinforcement of stretches of the national transmission system, such as Lagunas–Pozo Almonte in the province of Tamarugal; Maitencillo–Nueva Maitencillo in the province of Vallenar; Ciruelos–Cautín in the regions of Araucanía and Los Ríos; and a new substation in the Angostura area, in the province of Biobío.


In addition, in October and November 2017 CNE launched tenders for 98 zonal system projects.


Figure 2: Expected demand in Chile during 2018–36 (TWh)


Note: SIC–Sistema Interconectado Central; SING–Sistema Interconectadodel Norte Grande

Source: Comision Nacional de Energia(CNE); Global Transmission Research



Chile is among the stable economies of the Latin American region. The economy is likely to maintain a steady growth rate owing to the country’s sound economic policy and institutional framework. Under this scenario, electricity demand in Chile is expected to continue to grow and RE is expected to play an increasing role in meeting this demand. To integrate a large share of RE, the electricity supply infrastructure has to be strengthened. More transmission lines and capacity, storage and demand-side response systems need to be developed. The ongoing efforts of the energy regulators and policymakers will play an important role in developing a robust electricity supply infrastructure for sustaining Chile’s economic growth.


Table 1: Key planned/upcoming transmission projects in Chile 



Voltage (kV)

Line length (km)

Estimated cost (USD million)

Year of commissioning

Kimal–Lo Aguirre line project1





Huelquén–Kimal project





Cardones–Polpaico project





Charrúa–Ancoa line project





500 kV Pichirropulli–Puerto Montt line (energised at 220 kV) project





Los Changos–Kimal Project





New 2x220 kV Mataquito–Nueva Nirivilo–Nueva Cauquenes–Dichato–Hualqui line project





2x220 kV New Maitencillo–Punta Colorada–New Pan de Azúcar line project





Rapel–Portezuelo line project1





Candelaria–Punta de Cortés line project1





Note: 1-Newly proposed under Propuesta de Expansión del Sistema de Transmisión 2018, CNE 

Source: Global Transmission Research