Chile Solar Energy Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Chile Solar Energy Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The solar energy market in Chile is expected to grow at a CAGR of more than 2% during the forecast period of 2020-2025. Chile has benefited in recent years from growing exports of copper, pulp, fish, and various other commodities. However, during the last decade, the government has started to lay emphasis on ways to capitalize on other domestic resources such as strong solar irradiation. According to the Project Management Unit (PMU) of the Ministry of Energy, 3,072 MW (35 plants) were under construction as of September 2019, of which 31.8% were solar power plants. A rapid shift away from fossil sources of power generation toward cleaner energy has been aided by the presence of a liberalized power market and strong policy support for non-large hydro renewables. Additionally, the declining cost of the solar module is expected to drive the market. However, the technological limitation such as strong dependence on prevailing weather condition is likely to restrain the growth of the market over the forecast period.

Key Highlights

• The utility-scale solar energy sector dominated the market owing to a large number of power plant projects present and being developed in the country.
• The advancement in technology aiding the decrease in the cost of solar power plant construction is expected to render opportunity for the growth of the market over the forecast period.

Key Market TrendsThe Utility-Scale Solar Energy to Dominate the Chile Solar Energy Market

• The installed capacity of solar energy in total power generation in 2013 stood at 0.06%, increasing to 9.8% in 2018. By 2019, the installed solar power capacity reached 264 GW. Additionally, according to a study by the Chilean Association of Power Generators, by 2030 solar power will reach 30% of total installed capacity, becoming the country's first source of electrical energy.
• In June 2019, the Chilean government and the country's four largest electric utilities company AES Gener, Colbun, Enel and Engie reached a voluntary agreement to phase out their coal units, which will end no later than 2040. The phasing out of coal units will be carried out in the schedule, and it covers phasing out of the first 1,047 MW of the eight oldest plants by 2024. In June 2019, the Tocopilla coal power plant was phased out and 158 MW Tarapacá power plant in Iquique was also phased out in December 2019.
• The removal of coal power plants is expected to create additional demand for the installation of new capacity, which in turn is expected to drive the demand of solar power plants across the country during the forecast period.
• The decreasing cost of solar module clubbed with phase out of coal power plants and supportive government policies are likely to foster the growth of the solar power in the country.

Increasing Demand for Solar Energy Due to the Declining Cost of Solar PV Systems

• Share of the renewables has increased from 8.7% to 19.4% in the country’s electricity generation during 2012-2018. The sector is mainly driven by the growth of the solar energy sector. During the coming years, solar PV technology is expected to account for the largest share in new renewable capacity addition. As of September 2019, there are about over 979 MW of solar PV projects under construction, which is expected to increase the solar PV capacity by 25% compared to 2018.
• The solar industry has cut costs dramatically in the past few years through economies of scale. As the market was flooded with equipment, prices plummeted, and the cost of solar panels has been dropping exponentially.
• As of 2018, solar photovoltaic (PV) modules are over 80% cheaper, than they were in 2009. The cost reductions are driven by continuous technological improvements, including higher solar PV module efficiencies. The overall decline in the solar PV system costs can also be attributed to the effective feed-in tariff programs in countries, such as Germany, etc.
• The declining cost of solar modules is likely to boost the installation of solar energy capacity across the country over the forecast period.

Competitive Landscape

The Chile solar energy market is fragmented. Some of the key players in this market Acciona, S.A, JinkoSolar Holding Co., Ltd., Trina Solar Limited, Enel Green Power S.p.A, and First Solar, Inc.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
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