Challenges on integrating renewables into the Chilean grid

The Chilean Electricity Law introduced an obligation to power traders, from 2010 to 2014, to certify that at least 5% of the electricity traded comes from renewable sources. From 2015 onwards, the obligation will increase by 0.5% annually until 10% in 2024. Several challenges need to be addressed to permit efficient access for renewable energies. One of these is the natural barrier to entry for new generators, originated in the radial characteristic of the transmission systems. In the past these systems have essentially developed, and adapted economically, to conventional generation and demand. International experience shows that grid operation and expansion needs to be “smarter” for allowing renewable power connection. In Chile, significant challenges have arisen in grid planning and pricing which this paper attempts to address. While new wind farms can be installed in 1.5 years, transmission infrastructure requires 3 to 6 years to be completed. In this framework, extensive construction times of new grid developments, considering community and environmental approval, require a long-term vision, which, in turn, provides regulatory signals in order to minimize bottlenecks for the integration of new generation, particularly renewable. On the pricing side, wind farms push large transmission expansions, but given regulatory arrangements, participate with a small part on transmission toll payments because of the low plant factors of wind generation. In addition, transmission planning under uncertainty, by taking account of different scenarios, and the concept of anticipatory investment becomes critical.