REFERENCE CODE GDPE0680ICR PUBLICATION DATE AUGUST 2013 CHILE POWER MARKET OUTLOOK TO 2030 MARKET TRENDS, REGULATIONS AND COMPETITIVE LANDSCAPE

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1 REFERENCE CODE GDPE0680ICR PUBLICATION DATE AUGUST 2013 CHILE POWER MARKET OUTLOOK TO 2030

2 Executive Summary Large Hydropower Is the Single Largest Source of Electricity in Chile s Power Mix Though thermal power contributed XX% to Chile s total installed capacity in 2012, it was large hydropower that, in terms of a single technology, contributed the largest share, with XX%. Of the thermal power technologies, gas contributed XX%, coal contributed XX%, and oil contributed XX%. Other renewable technologies, including onshore wind, biomass, and solar technologies, combined with small hydropower to contribute the remaining XX% of the total installed capacity in Power Market, Chile, Cumulative Installed Capacity Breakup by Type of Power Plant (%), 2012 Continued Growth in Electricity Consumption and Generation Annual electricity consumption in Chile increased from XX Terawatt hours (TWh), in 2000, to XX TWh in 2012, at a Compound Annual Growth Rate (CAGR) of XX%. This increase in consumption was mostly due to the industrial and residential sectors. Electricity generation also increased over the period Annual power generation was XX TWh in It had increased to XXTWh by 2012, at a CAGR of XX%. Power Market, Chile, Annual Power Consumption and Generation (TWh), Renewables (onshore wind, solar technologies, biomass) and small hydropower Oil (thermal) Large hydropower including pumped storage Annual consumption and generation Coal (thermal) Annual consumption (TWh) Annual power generation (TWh) Gas (thermal) Source: GlobalData, Power etrack, Capacity and Generation Database [Accessed on July 22, 2013] Source: GlobalData, Power etrack, Capacity and Generation Database [Accessed on July 22, 2013] 2

3 Table of Contents 1 Table of Contents 1 Table of Contents List of Tables List of Figures Introduction GlobalData Report Guidance Chile, Power Market, Key Performance Areas, Key Performance Indicators, Key Indicators Chile, Power Market, Macro-economic Factors Chile, Power Market, Supply Security Chile, Power Market, Generation Infrastructure Chile, Power Market, Transmission Infrastructure Chile, Power Market, Opportunities Chile, Power Market, Challenges Chile, Power Market, Market Analysis Chile, Power Market, Supply Structure Chile, Power Market, Key Market Players Financial Performance Key Financial Ratios and Inference Chile, Power Market, Financial Deals Deal Volume and Value Analysis, 2004 to Q Deals, Split by Type, Chile, Power Market, Demand Structure Breakup of Consumption by Sector, Chile, Power Market, Regulatory Scenario Chile, Power Market, Key Electricity Policies Chile, Power Market, Liberalization Chile, Power Market, Energy Efficiency

4 Table of Contents Renewable Energy National Energy Strategy ( ) Chile, Power Market, Foreign Investment Scenario Chile, Power Market, Capacity and Generation Overview Chile, Power Market, Cumulative Installed Capacity, Breakup by Type of Power Plant, Chile, Power Market, Cumulative Installed Capacity and Annual Power Generation, Cumulative Installed Thermal Capacity and Annual Thermal Power Generation, Cumulative Installed Hydropower Capacity and Annual Hydropower Generation, Cumulative Installed Renewable Capacity and Annual Renewable Power Generation, Chile, Power Market, Transmission and Distribution Overview Chile, Power Market, Transmission Overview Northern Interconnected System Central Interconnected System Sistema de Aysén Sistema de Magallanes Chile, Power Market, Distribution Overview Chile, Power Market, Grid Interconnection Electricity Import and Export Trends, Chile, Power Market, Electricity Trading Chile, Power Market, Competitive Landscape: Snapshot of Top Power Generating Companies Key Company in the Chile Power Market Empresa Nacional de Electricidad S.A Company Overview Business Description

5 Table of Contents SWOT Overview Key Company in the Chile Power Market Colbun S.A Company Overview Business Description SWOT Overview Key Company in the Chile Power Market AES Gener S.A Company Overview Business Description SWOT Overview Key Company in the Chile Power Market E.CL S.A Company Overview Business Description SWOT Analysis Appendix Market Definitions Power Installed Capacity Active Installed Capacity Electricity Generation Electricity Consumption Thermal Power Plant Hydropower Plant Nuclear Power Renewable Energy Resources Abbreviations Bibliography GlobalData s Methodology

6 Table of Contents Coverage Primary Research and Analysis Secondary Research and Analysis Disclaimer

7 Table of Contents 1.1 List of Tables Table 1: Power Market, Chile, GDP ($bn), Population (million), and Annual Power Consumption (TWh), Table 2: Power Market, Chile, Market Share of Key Power Generation Companies (%), Table 3: Power Market, Chile, Deal Value ($m) and Deal Volume (Unit), 2004 to Q Table 4: Power Market, Chile, Deals by Type (%), Table 5: Power Market, Chile, Annual Power Consumption (TWh), Table 6: Power Market, Chile, Electricity Consumption by Sector (%), Table 7: Power Market, Chile, Foreign Direct Investment ($bn), Table 8: Power Market, Chile, Cumulative Installed Capacity Breakup by Type of Power Plant (%), Table 9: Power Market, Chile, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Table 10: Power Market, Chile, Leading Active Thermal Power Plants (MW), Table 11: Power Market, Chile, Leading Upcoming Thermal Power Plants (MW), Table 12: Power Market, Chile, Cumulative Installed Thermal Capacity (GW) and Annual Thermal Power Generation (TWh), Table 13: Power Market, Chile, Leading Active Hydropower Plants (MW), Table 14: Power Market, Chile, Leading Upcoming Hydropower Plants (MW), Table 15: Power Market, Chile, Cumulative Installed Hydropower Capacity (GW) and Annual Hydropower Generation (TWh), Table 16: Power Market, Chile, Leading Active Renewable Power Plants (MW), Table 17: Power Market, Chile, Leading Upcoming Renewable Power Plants (MW), Table 18: Power Market, Chile, Cumulative Installed Renewable Capacity (MW) and Annual Renewable Power Generation (GWh), Table 19: Power Market, Chile, Transmission Line Length (Ckm), Table 20: Power Market, Chile, Distribution Line Length (Ckm), Table 21: Power Market, Chile, Annual Imports (TWh), Table 22: Power Market, Chile, Empresa Nacional de Electricidad S.A., SWOT Analysis Table 23: Power Market, Chile, Colbun S.A., SWOT Analysis Table 24: Power Market, Chile, AES Gener S.A., SWOT Analysis Table 25: Power Market, Chile, E.CL S.A., SWOT Analysis

8 Table of Contents Table 26: Abbreviations List of Figures Figure 1: Power Market, Chile, GDP ($bn), Population (million), and Annual Power Consumption (TWh), Figure 2: Power Market, Chile, Market Share of Key Power Generation Companies (%), Figure 3: Power Market, Chile, Deal Value ($m) and Deal Volume (Unit), 2004 to Q Figure 4: Power Market, Chile, Deals by Type (%), Figure 5: Power Market, Chile, Annual Power Consumption (TWh), Figure 6: Power Market, Chile, Electricity Consumption by Sector (%), Figure 7: Power Market, Chile, Cumulative Installed Capacity Breakup by Type of Power Plant (%), Figure 8: Figure 9: Power Market, Chile, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Power Market, Chile, Cumulative Installed Thermal Capacity (GW) and Annual Thermal Power Generation (TWh), Figure 10: Power Market, Chile, Cumulative Installed Hydropower Capacity (GW) and Annual Hydropower Generation (TWh), Figure 11: Power Market, Chile, Cumulative Installed Renewable Capacity (MW) and Annual Renewable Power Generation (GWh), Figure 12: Power Market, Chile, Annual Imports (TWh),

9 Introduction 2 Introduction Chile has one of the most robust and open economies in South America. It is an associate member of the Common Market of Southern Cone and a member of the Asia-Pacific Economic Corporation. It became a member of the Organization for Economic Co-operation and Development in May Chile s economy is market-oriented and characterized by good foreign trade and established financial institutions. Chile s Gross Domestic Product GDP amounted to $XXm (at constant prices) in 2012, increasing at a rate of XX% from 2011 (IMF, 2013). It is one of the most competitive markets in the world and ranks well in terms of ease of doing business, because of its simple business regulations and strong protection of property rights. Between 1972 and 1975, Chile went into economic recession. Private investment and bank deposit withdrawals fell rapidly, and substantial capital was lost. Following the recession, many sectors were nationalized in order to stabilize the economy. The nationalized system was entirely changed when the government decided to adopt an open market system in the 1990s. This led to an increased average annual growth rate of XX%, between 2004 and Exports, in general, account for a quarter of Chile s GDP, and commodities make up XX% of its export revenues. Its export commodities include copper, fish, fruits, paper and pulp, and chemicals. Chile s export partners include China, the US, Japan, the Netherlands, South Korea, Italy and Brazil. Currently, thermal power generation dominates the electricity sector, followed by hydroelectric generation. Chile is increasing its total installed capacity and generation in response to increasing consumption. Chile has a strong regulatory structure in place for the power sector, making it attractive for investors. Since 2005, the government has been promoting energy efficiency in energy, transportation, building and other departments. Chile imports XX% of the fuel required for power generation, including oil, gas and coal. Chile has experienced a number of major droughts and a major earthquake in It also suffered a gas supply cut in 2004, which has continued to affect the power system and has been the cause of a number of black-outs. Increasing emphasis is being placed on renewable energy generation to reduce the high dependence on fossil fuel imports, which has adversely affected the electricity supply security in Chile. 10

10 Introduction Chile is prone to earthquakes and the government is therefore hesitant to build nuclear plants. The government has plans to drastically increase the use of renewable energy for power generation, which would require heavy subsidies and investment in power infrastructure. The overall regulatory responsibility for Chile s power sector belongs to the Ministry of Energy. Within the Ministry of Energy, a lot of responsibility, including the responsibility for monitoring the power sector, is vested in the Comisión Nacional de Energía (CNE). The Chilean power sector was deregulated in the 1980s, and power generation, transmission, and distribution have been completely privatized. 2.1 GlobalData Report Guidance The report comprises an executive summary that captures the key growth trends in the Chilean power market. Chapter three provides a snapshot of the key parameters in Chile that affect its power sector, as well as key points about the Chilean power market. Chapter four provides a power market analysis of Chile. Chapter five details the regulatory scenario of the power market and the inward foreign investment scenario in Chile. Chapter six provides information on Chile s cumulative installed capacity and annual generation trends, both as a whole and by individual generation source. Chapter seven describes the power transmission and distribution infrastructure of Chile and includes information on interconnectors with neighboring countries. The section also covers details on electricity imports and exports, and upcoming grid-related projects in Chile. Chapter eight describes the competitive landscape of Chile s power market, with a complete description and SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis of the leading companies. Note: All 2012 market numbers provided in the report are estimates, except where actual data was available. 11

11 Key Performance Areas, Key Performance Indicators 3 Chile, Power Market, Key Performance Areas, Key Performance Indicators, Key Indicators 3.1 Chile, Power Market, Macro-economic Factors The GDP of Chile grew at a Compound Annual Growth Rate (CAGR) of XX% from 2000 to However, growth nose-dived in 2009, because of the global economic crisis, and the GDP growth rate dipped to a negative XX% in However, growth again picked up in 2010 and has averaged XX% over the past three years. Between 2013 and 2018, CAGR is expected to be about XX% for GDP growth. The population of Chile has been increasing. Between 2000 and 2012, it increased from XX million to XX million. It is expected to reach XX million in Given that the economy has been rising along with the population, electricity consumption in Chile has also risen. Between 2000 and 2012, consumption grew at a CAGR of XX%. Mirroring the dip in economic activity in 2009, the growth rate of electricity consumption decreased in While consumption had grown in 2008 at XX%, in 2009, it grew at XX%. The growth rate of electricity consumption again grew in 2010, at XX%, and in 2011 it grew by more than XX%. The growth rate of electricity consumption in 2012 is estimated to have been XX%. It is expected to stay at this rate until

12 Key Performance Areas, Key Performance Indicators Figure 1: Power Market, Chile, GDP ($bn), Population (million), and Annual Power Consumption (TWh), GDP and population Annual electricity consumption Source: GlobalData; IMF, 2013 TWh: Terawatt hours GDP (constant prices) ($bn) Population (million) Total consumption (TWh) 13

13 Key Performance Areas, Key Performance Indicators Table 1: Power Market, Chile, GDP ($bn), Population (million), and Annual Power Consumption (TWh), Year GDP (constant prices) ($bn) Population (million) Total consumption (TWh) Source: GlobalData; IMF,

14 Chile, Power Market, Market Analysis 4.2 Chile, Power Market, Key Market Players In 2012, Endesa Chile (Endesa) was the largest power generating company in Chile with a XX% market share in terms of installed capacity. AES Ener Group (AES Ener) followed, with a XX% market share. Colbun S.A. (Colbun) and E-CL S.A. (E-CL) had shares of XX% and XX%, respectively. The remaining XX% of the market share was contributed by other smaller companies. Figure 2: Power Market, Chile, Market Share of Key Power Generation Companies (%), 2012 Others Endesa Chile E-CL S.A. Colbún S.A. AES Gener Group Source: GlobalData Table 2: Power Market, Chile, Market Share of Key Power Generation Companies (%), 2012 Company Share (%) Endesa AES Gener Colbun E-CL Others Source: GlobalData 18

15 Appendix 9 Appendix 9.1 Market Definitions Power The rate of production, transfer or energy use. It is usually related to electricity. Measured in watts and often expressed in kilowatts (kw) or Megawatts (MW). It is also known as real or active power Installed Capacity The generator s nameplate capacity (as stated by the manufacturer) or the maximum rated output of a generator under given conditions. Installed capacity is given in MW on a nameplate affixed to the generator Active Installed Capacity The component of electric power that actually performs work. It is given in kw or MW Electricity Generation The production of electric energy, achieved through the transformation of other forms of energy. This term also refers to the amount of electric energy produced. It is measured in Gigawatt hours (GWh) Electricity Consumption The sum of electricity generated, plus imports, minus exports, minus transmission and distribution losses. It is measured in GWh Thermal Power Plant A plant in which turbine generators are driven by burning fossil fuels Hydropower Plant A plant in which the turbine generators are driven by falling water. 90

16 Appendix Nuclear Power The electricity generated by the use of thermal energy, released from the fission of nuclear fuel in a reactor Renewable Energy Resources Naturally replenishing energy resources that are limited in the amount of energy that is available per unit of time. Biomass, geothermal, solar and wind energy are all renewable resources. 9.2 Abbreviations Table 26: Abbreviations CAGR Compound Annual Growth Rate CCGT Combined Cycle Gas Turbine Ckm Circuit kilometer CNE Comisión Nacional de Energía CORFO Chilean Economic Development Agency or Corporación de Fomento de la Producción FDI Foreign Direct Investment GDP Gross Domestic Product GW Gigawatt GWh Gigawatt hour kv Kilovolt kw kilowatt MW Megawatt PPEE Programa País de Eficiencia Energética PV Photovoltaic SIC Central Interconnected System SING Northern Interconnected System SWOT Strengths, Weaknesses, Opportunities and Threats TWh Terawatt hour V Volts Source: GlobalData 91

17 Appendix 9.3 Bibliography IEA (2012). Oil & Gas Security, Emergency Response of IEA Countries: Chile. International Energy Agency, Available from: IMF, World Economic Outlook Database [database], April Available at: [Accessed on July 11, 2013]. MAS (2013). Chile s Renewable Energy and Energy Efficiency Market: Opportunities for U.S. Exporters. International Trade Administration Manufacturing and Services (MAS), March Available from: 90.pdf McGrath, K. (2013). Foreign investment in Chile hit record rates in 2012, The Santiago Times, May 15, Available from: [Accessed on July 19, 2013]. OECD (2013). FDI in Figures. Organization for Economic Cooperation and Development. Available from: GlobalData s Methodology GlobalData s dedicated research and analysis teams consist of experienced professionals with backgrounds in marketing, market research and consulting in the power industry, and advanced statistical expertise. GlobalData adheres to the codes of practice of the Market Research Society ( and the Strategic and Competitive Intelligence Professionals ( The following research methodology is followed for all country outlook reports. 92

18 Appendix Coverage This report gives detailed information on Chile s power market. It examines Chile s power market structure and provides historical and forecast numbers for generation, capacity and consumption, up to The report provides insights on the market s regulatory structure, import and export trends, competitive landscape and leading active and upcoming power projects Primary Research and Analysis Secondary research is further complemented through primary interviews with industry participants to verify and fine-tune the market numbers obtained through secondary research and get first-hand information on industry trends. The participants are drawn from a diverse set of backgrounds, including equipment manufacturers, industry associations, government bodies, utilities, distributors, and academia. The participants include, but are not limited to, C-level executives, industry consultants, academic experts, business development and sales managers, purchasing managers, plant managers, government officials, and industry spokespeople Secondary Research and Analysis The capacity, generation and consumption data is collected and validated using a number of secondary resources, including, but not limited to: Government agencies, ministerial websites, industry associations, the World Bank, statistical databases Company websites, annual reports, financial reports, broker reports and investor presentations Industry trade journals, market reports and other literature GlobalData s proprietary databases the Capacity and Generation Database, the Power Plant Database and the Transmission and Distribution Database Further to this, the following secondary information is collected and analyzed to project Chile s power market scenario through to 2030, analyzing factors such as the following: Chile s macro-economic scenario Government regulations, policies and targets 93

19 Appendix Government and private sector investment Contract and deal announcements Utility expansion plans The sector s historic track record Other qualitative insights built through secondary research and analysis of company websites, annual reports, investor presentations, industry and trade journals, and data from industry associations. 9.5 Disclaimer All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, GlobalData. 94