Enel sweeps Chile's 2023 power tender

Enel Generacion Chile SA on Thursday emerged as the only winner in Chile’s 2023 power tender for the supply of 3,600 GWh/year, securing 20-year power purchase agreements (PPAs) for the entire volume offered.

The company, which is Enel SpA’s (BIT:ENEL) generation arm in Chile, won all the bids for the block 1 of 1,500 GWh/year and the block 2 of 2,100 GWh/year with a price of USD 56.679 (EUR 52.619) per MWh, the Chilean national energy commission (CNE) announced.

The reserve price, revealed earlier in May, was USD 64.000/MWh for the block 1, including all the combinations of geographic and hourly sub-blocks, and USD 62.000/MWh for the block 2 and its corresponding geographic and hourly matrix.

The win entitles Enel Generacion to supply the committed electricity to distribution companies under PPAs for 20 years beginning from 2027 and 2028, ultimately powering residential customers and small businesses. According to a report by Latin American specialist news outlet Energia Estrategica, Enel Generacion offered the electricity from small run-of-river hydro, large hydro, two wind farms and gas-fired power plants.

The winner was selected from an already shallow pool of bidders, consisting of only five companies -- Enel Generacion, Innergex Energia Renovable SpA, Inversiones La Frontera Sur SpA, FRV Development Chile SpA (a Fotowatio Renewable Ventures vehicle) and GR Power Chile SpA (Grenergy Renovables SA (BME:GRE)). Innergex Energia Renovable and Inversiones La Frontera Sur are both part of Canada’s Innergex Renewable Energy Inc (TSE:INE).

Combined, the five offered a total of 4,779 GWh, according to the CNE.

The executive secretary of the CNE, Marco Mancilla, expressed satisfaction that the 2023 tender process awarded the entire volume at competitive prices compared to the current ones, ensuring that the future needs of regulated customers are met.

This was not the case with the 2022 tender, which despite more bidders and two awarded parties, failed to place most of the offered volume.

Mancilla already announced that the CNE will address the low bidder attendance after the latest round and reaffirmed this commitment on Thursday, stating:

“The CNE will continue to work on improving the terms and conditions to identify the elements that hinder participation in the processes under current market conditions, to ensure these tenders remain an important tool to attract new players, encourage the incorporation of new infrastructure and achieve the lowest possible price for regulated customers, especially residential customers”.

(USD 1.0 = EUR 0.928)

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