SANTIAGO (Reuters) - Mining in Chile, which consumes over 30 percent of the nation’s power, much of it via dirty sources like coal, could become a lot greener as the industry turns to wind and solar energy to cut costs, the local chief of Mainstream Renewable Power told Reuters.
Mainstream, a Dublin-based renewables provider with operations on five continents, won 27 percent of a massive government auction in August to supply Chile with power for two decades from the 2020s.
The auction was considered an environmental victory as wind and solar companies, offering record-low bids, won the majority of the tendered power.
But copper mining, by far Chile’s most important industry, used such sources for well less than 8 percent of its energy in 2015, according to government copper body Cochilco.
That will likely change in upcoming private auctions, as miners and other industrial users begin to shift focus away from financing and reliability issues associated with renewables, Bart Doyle, Mainstream’s Chile general manager, said in an interview on Tuesday.
“It’s all about the price. The arguments about banking and reliability, all that crap finished seven to eight years ago in the U.S. and 10 in Europe,” he said.
“When solar was offering you daytime power at $90 (per megawatt hour) and the incumbents were offering you 24-hour power at $90, that was a no-brainer. You take the incumbents. But when solar is offering you $30, all of the sudden things look a lot more interesting.”
Doyle said Mainstream’s Sarco and Aurora wind projects, set to be among Chile’s biggest renewable energy projects at 299 megawatts total, will close financing with four international banks this month. The projects, a joint venture with English private equity firm Actis, will help show industrial companies that major banks are willing to back energy deals in Chile, he said.
The vast majority of renewable awards in the August auction went to wind projects, which he called “disappointing” for solar, blaming in part the design of Chile’s power auctions.
Chile awards most of its power in 24-hour blocs, in which solar companies cannot effectively compete because they would be required to provide power during the night. Of the 12.3 terawatt-hours awarded in August, one terawatt was offered to companies only providing power during the day.
He said Mainstream had been lobbying hard to change the bidding system, and that the government might rejig it in coming auctions.
“The regulatory set-up does not support solar,” Doyle said. “Unless you drastically expand the daytime bloc, solar is the big loser here.”
Reporting by Gram Slattery; Editing by Richard Chang