Systep calls to review composition of new generation capacity after latest tenders

Business and Economics Online
Future Value

The Chilean consulting firm Systep called for a review of the composition of the new generation capacity installed in the country, as it pointed out that in the face of a significant growth in generation, it is also necessary to adapt the complementary services and the recognition in sufficiency power.

“While a scenario of growth in generation greater than growth in demand is not necessarily negative (in fact it reduces the risk of rationing), it is important to review its composition. The increase in installed capacity in recent years is largely variable renewable (solar and wind). This requires adjusting the levels of complementary services and the recognition of sufficiency power, among others”, concluded the entity in its monthly report on the electricity sector.

In this context, Systep pointed out that “it is the duty of the authority to ensure that the projects put out to tender are complied with, as well as to ensure that the price signals given by the market reflect their real conditions, understanding that it is these signals that guide investments in the market”.

“On the other hand, the last tenders saw a strong entry of new agents into the market, mainly with variable generation projects, with almost 3,000 MW of wind generation and more than 1,300 MW of solar generation. These new agents, with their lower bid costs, came to challenge the existing ones, gaining ground in the market, without necessarily growing it”, he pointed out.

“Thus, an increase in installed capacity that responds to future contracts rather than to an intrinsic demand need of the system is natural,” he analyzed.