The specialist states that “all upcoming tenders are relevant because of the volumes of energy that the incumbents are willing to offer and the price levels that can be reached”.

Hugh Rudnick: “Chile continues to be a very attractive market for investors”.

(Pulse) The director of Systep, Hugh Rudnick, states that the entry of NCRE in the tenders must be carefully observed, in addition to the backup requirements of these units. He also an academic at the Catholic University argues that supplying energy from NCRE plants could raise costs to higher levels than those currently exhibited in the spot market. However, he adds as a positive aspect that Chile continues to be an attractive market for foreign investors.

How relevant is the bidding process starting in March?

All upcoming tenders are relevant because of the volumes of energy that the incumbents are willing to offer and the price levels that can be reached. There was a big party because we lowered the prices in the previous bidding, but we are still paying very high amounts.

What is the value of it being the first under the new Bidding Bill?

Already with the last bidding that was made in December, a series of elements that are in the new law were used. There are some new elements such as non-contracted energies that go to the spot. One of the advantages of the last bidding process, such as what happened with the EDF company with the El Campesino power plant, is that they are long-term operations with energy delivery over several years, which allows new investors to enter. In addition, in the event of serious problems, the same Central Campesino, which has not even submitted its Environmental Impact Study, already has a signed contract. Despite the problems, Chile continues to be a very attractive market for foreign investors, especially European, Korean, Japanese and North American.

Do you see the possibility of massive participation of conventional generators with grassroots plants?

These generators are generally already heavily contracted. One of the issues being discussed is why these generators are not presented. What happens is that a generator, depending on its technology, cannot be contracted at its full installed capacity. An example is a hydroelectric power plant that in a very dry year cannot produce at full capacity. They have certain restrictions that do not allow them to hire beyond a certain level. As they terminate their contracts there are new slots, but there is not much contractible power at the existing generator level.

How can it be interpreted that the large generators (Colbún, Endesa and Gener) did not participate in the previous bidding process?

They are at high contracting levels, and if they want to offer more energy they see it as risky, because they may eventually not generate and buy that energy at a higher price in the spot market.

Will conventional generators be willing to participate in time blocks, forcing them to shut down plants during very windy hours?

That is another dimension of the discussion. It is with concern that a lot of energy starts to come in during the day and is not backed up at night. There is a whole discussion taking place in the market as to how this problem is going to be solved, because even though renewable energies such as wind power are becoming very cheap to generate during the day, you still have backup energy. Who will provide this support? This is a question that is being discussed by the industry.