Chile Has So Much Solar Energy It’s Giving It Away for Free
https://www.bloomberg.com/news/articles/2016-06-01/chile-has-so-much-solar-energy-it-s-giving-it-away-for-free
by
Vanessa Dezem
and
Javiera Quiroga
Spot prices reached zero for 113 days this year through April
Solar power on Chile’s central grid quadrupled since 2013
Chile’s solar industry has expanded so quickly that it’s giving electricity away for free.
Spot
prices reached zero in parts of the country on 113 days through April, a
number that’s on track to beat last year’s total of 192 days, according
to Chile’s central grid operator. While that may be good for consumers,
it’s bad news for companies that own power plants struggling to
generate revenue and developers seeking financing for new facilities.
Chile’s
increasing energy demand, pushed by booming mining production and
economic growth, has helped spur development of 29 solar farms supplying
the central grid, with another 15 planned. Further north, in the heart
of the mining district, even more have been built. Now, economic growth
is slowing as copper output stagnates amid a global glut, energy prices
are slumping and those power plants are oversupplying regions that lack
transmission lines to distribute the electricity elsewhere.
“Investors are losing money,” said Rafael Mateo, chief executive officer of Acciona SA’s energy unit, which is investing $343
million in a 247-megawatt project in the region that will be one of
Latin America’s largest. “Growth was disordered. You can’t have so many
developers in the same place.”
A
key issue is that Chile has two main power networks, the central grid
and the northern grid, which aren’t connected to each other. There are
also areas within the grids that lack adequate transmission capacity.
That
means one region can have too much power, driving down prices because
the surplus can’t be delivered to other parts of the country, according
to Carlos Barria, former chief of the government’s renewable-energy
division and a professor at Pontifical Catholic University of Chile, in
Santiago.
"Michelle Bachelet’s government has set the energy
sector as a priority,” said Carlos Finat, president of the country’s
renewable association, known as Acera. “But planning has been focused in
the short term when it is necessary to have long term plans to solve
these type of issues."
Inadequate Infrastructure
The government is working to address this issue, with plans to build a 3,000-kilometer (1,865-mile) transmission line to link the the two grids by 2017. It’s also developing a
753-kilometer line to address congestion on the northern parts of the
central grid, the region where power surpluses are driving prices to
zero.
“Chile has at least seven or eight points in the transmission
lines that are collapsed and blocked, and we have an enormous challenge
to bypass the choke points,” Energy Minister Maximo Pacheco said in an
interview in Santiago. “When you embark on a path of growth and
development like the one we’ve had, you obviously can see issues
arising.”
Solar Growth
Solar capacity
on Chile’s central power grid, known as SIC, has more than quadrupled
to 770 megawatts since 2013. Much of that comes from the grid’s northern
sections, the Atacama region that’s home to the copper industry. Total
installed capacity increased 5 percent in the past year, with half
coming from solar farms, according to the grid operator, Cdecsic. SIC supplies power to the regions where 90 percent of the country’s residential demand is located.
The
country is expected to install almost 1.4 gigawatts of solar power this
year, up from 371 megawatts in 2015, according to Bloomberg New Energy
Finance.
When power companies aren’t giving away electricity, it’s
cheap. At the Diego de Almagro substation in the Atacama region, for
example, prices didn’t exceed $60 a megawatt-hour for most of March.
That’s less than the $70 minimum price for companies that won long-term
contracts to sell solar power in Chile’s energy auctions in October and March.
The
issue may limit future development because the uncertain revenue means
banks will be reluctant to finance new power plants, according to
Rodrigo Violic, head of project finance at the Chilean lender Banco
Bice. “It’s a big problem,” he said.
Solar ‘Surprise’
Salvatore Bernabei, head of Enel Green Power SpA’s
operations in Chile, has 170 megawatts of capacity in operation and 300
megawatts under construction in the country. He wouldn’t say if his
company has surplus power.
Bernabei, however, is adamant that
change is needed. “The rapid development of renewables was a surprise
and now we have to react quickly,” he said.
Until this is
resolved, low prices will plague companies that own power plants,
according to Jose Ignacio Escobar, general manager for Acciona’s Chile
unit.
“Energy prices in Chile will keep declining until there is a solution
for the infrastructure problem,” Escobar said in an interview in
Santiago. “This situation was expected, but new regulatory measures
weren’t taken, infrastructure wasn’t built.”
A proposed 300-MW pumped storage hydropower plant combined with 600-MW solar PV plant is taking shape in Chile. Valhalla, the team behind the Espejo de Terapaca plant said in an interview that it has hired Marathon Capital to help find strategic investors in the project. If the right partners are found, the US $1 billion project could begin construction in early 2017.
It’s the perfect location for a project like this because of the natural landscape. No dams will need to be built and the land will not be disturbed because it is a desert.
“There is a big coastal mountain range very close from the ocean and [the landscape] has natural concavities, said Francisco Torrealba, co-founder of the company. “That is something that you rarely see anywhere else in the world,” he added.
The project will use Francis-type turbines from a European supplier and PV with single-axis tracking to generate baseload power at an extremely competitive price.
“This is most likely going to be one of the cheapest pumped storage plants in the world," said Torrealba referencing the power auction held in Chile in early September where Valhalla bid $65.9 per MWh compared to gas at $69.9, hydro at $76.1, biomass at $85.6 and coal at $89.7.
“We actually came cheaper than hydro plants, cheaper than coal, cheaper than almost all natural gas plants,” he said.
The cost to build a project of this size is “significant,” said Laurie Kelly, CFO at Valhalla. For that reason, the company has recently begun working with Marathon Capital, a 17-year old investment bank and financial advisory firm headquartered in Chicago.
Thiago Alfaia, Director at Marathon Capital leads Latin American initiatives for the bank and is working closely with Valhalla.
“We are very confident that we will be able to raise the required capital,” he said in an interview.
Alfaia said Marathon finds the project intriguing not so much for the technologies in use (solar PV and pumped hydro are fairly commonplace these days) but for the concept and the costs.
“It is probably one of the most competitive baseload renewable energy sources in the world,” said Alfaia, adding “we think this is one of the most interesting renewable energy projects out there.” Repeatable? While the company is laser-focused on getting this project built, there are a select few other locations where pumped hydro and solar might make sense. However, Torrealba said environmental permitting for hydropower is very difficult. “If you think in the states in the East Coast, you have a number of forests and you would generally have to build at least one dam and sometimes two dams so it is very invasive," said Torrealba. “There is some potential in Peru. Some in Mexico and in theory there is some potential in California [but] as I said, any chance of doing something in California is just too tricky [because of permitting].” If all goes according to plan the pumped storage plant should take approximately 3.5 years to build with the PV portion of the project taking approximately 2 years, said the company. The project is expected to be completed by 2020. -------------------------------------------------------------------------------------- 轉載自: http://www.renewableenergyworld.com/articles/2016/03/solar-firm-seeks-backers-for-600-mw-project-in-chile.html Solar Firm Seeks Backers for 600-MW Project in Chile March 28, 2016 By Vanessa Dezem and Javiera Quiroga, Bloomberg Valhalla Energia is seeking partners to build a 600-MW solar project in Chile that will incorporate hydropower to deliver energy 24 hours a day. The company is in talks with investors to raise as much as 40 percent of the estimated $1.3 billion needed for the project — $900 million for the solar component and $400 million for a 300-MW hydropower system — according to Juan Andres Camus, Santiago-based Valhalla’s co-founder and chief executive officer. The rest will come from bank loans. “We are looking for sponsors that can be part of the project as equity," Camus said in an interview in Santiago on March 18. "We are in advanced negotiations." The Cielos de Tarapaca solar project aims to produce electricity around the clock, using an integrated solar and hydro system that pumps sea water uphill to a reservoir during the day and letting it flow through turbines at night. The project is in Chile’s northern Atacama desert, the same region where the struggling Spanish developer Abengoa SA recently mothballed its $1 billion, 110-MW solar-thermal power plant that retained heat to generate power at night. The two plants represent rival technologies to store solar energy and guarantee supply after sundown. ‘Risky Project’ Valhalla received environmental approval in January for the project and expects to start construction in the second half of 2016. Both the solar and the hydro plant will be about 100 kilometers (62 miles) southeast of the city of Iquique and are scheduled to go into operation in 2020. "It is an expensive and risky project as the technology is rare in the region," said Ana Verena Lima, an analyst with of Bloomberg New Energy Finance in Sao Paulo. "But of course everything will depend on its efficiency, on the contracts and financing conditions they can get." Valhalla is competing with a 616-MW solar plant owned by Empresa de Desarrollo de Energias Renovables Alen Walung SA, now under construction in Chile, to be the largest in Latin America. In terms of profitability, Cielos de Tarapaca will be competitive with new thermal electric plants, according to Camus, who didn’t provide details on financing. The company will focus on long-term, bilateral contracts with the copper mines that dot northern Chile and wants to participate in the next auction of Chilean power contracts later this year. It is negotiating with local and international banks for financing. "The big opportunity in Chile is energy supply 24 hours a day and, for now, solar energy cannot accomplish that,” Camus said. “The hydro project is a very efficient way of storing energy.” ---------------------------------------------------------------------------------------------- 圖文轉載自: www.marathon-cap.com/investment-banker/Thiago-Alfaia Thiago Alfaia, Director for Marathon Capital, is responsible for executing M&A and private placement engagements in the energy sector. Mr. Alfaia has been involved with the Energy and Infrastructure markets since 2003. At Marathon Capital, he has worked on several significant wind, solar, biomass and geothermal financing and M&A transactions and led one of Marathon’s landmark transactions, the successful equity capital raise and project financing of Mexico Power Group’s La Bufa 1 Wind Farm. Other noteworthy transactions are: the sale of Suzlon’s 240 MW Big Sky Project to EverPower, the equity and construction financing of 30 MW Patua Geothermal Project, the sale of Coram Energy Group’s 124MW portfolio of operating wind projects in California to Brookfield Renewable Energy Partners and the sale of Central Hudson’s Shirley Wind Project to Duke Energy. Previously, he has also worked in various project finance and M&A assignments in the Brazilian energy industry, including the valuation and sale processes of an electricity transmission company, a 300 MW coal and gas-fired thermal power generation project and a 600 MW hydro power plant, in addition to many other renewable energy development projects. Mr. Alfaia is a member of the Beta Gamma Sigma Society and received his MBA with High Honors and with concentrations in Accounting, Analytic Finance and Entrepreneurship from the University of Chicago. Mr. Alfaia holds his Series 7, 63 and 79 licenses. -------------------------------------------------------------------------------------------------
For many years El
Hierro, the most westerly of the Canary Islands, obtained its
electricity from an 11.36 MW diesel-fired plant that supplied
erratic and expensive (€0.242/kWh) power to the 10,920 residents of
this scenic tourist destination:.........
El Hierro landscape
Then on June 27th of
2014, culminating a process that began in 1997, the island proudly
inaugurated its new renewable energy system, which will replace the
diesel-fired generation with hydro and wind and eliminate 8,700
tonnes of CO2 emissions and save €1.8 million in fuel costs each
year.
Renewable energy enthusiasts were predictably ecstatic.
Even ENEL, Europe’s second largest utility, hailed El
Hierro as an example of how sustainable development can be made to
work:
El Hierro has realised its dream of achieving a sustainable
ecosystem. The island, which was designated a UNESCO Biosphere
Reserve in 2000, has actually become a global model of sustainable
development in which technology, renewable energy and protection of
the environment come together in a single project, one that is set
to become a benchmark for the global energy market.
But will it?
El Hierro location
The El Hierro system is
still in the start-up/testing phase so no operational data are as
yet available. The operating concept, however, is a novel one that
combines wind power and pumped hydro storage in the opposite sense
to the way they are usually combined. Instead of the pumped hydro
being used as load-following backup for the wind power, the wind
power will be used to keep the pumped hydro reservoirs full,
allowing the hydro plant to function as a baseload and
load-following generation source.
The system has three
basic components – an 11.5 MW wind farm, a 380,000- cubic-meter
upper pumped hydro reservoir in a conveniently-located inactive
volcanic crater at 709.5 meters elevation and a lower
150,000-cubic-meter reservoir at 56 meters elevation. The system
layout is shown below. The Spanish labels will hopefully be
interpretable:
Hydro/wind plant layout
And here are the
individual components:
The upper reservoir, in an inactive volcanic crater
The lower reservoir and the hydro plant
The wind farm
On the face of it the
El Hierro plan looks workable, even elegant. Hard numbers on
exactly how it’s going to work, however, are difficult to find,
although one thing we do learn from the quote below is that the
system is designed to provide only about two-thirds of the island’s
electricity, not 100% as some articles claim:
A production study has been carried out for the hybrid hydro-wind
plant. The results obtained are that total demand on the island is
47.4 GWh. Available wind energy is 49.6 GWh. Wind energy that can
reliably be produced during periods of demand is 25 GWh, with 9.2
GWh for pumping and 1.8 GWh for synchronous compensation.
Hydroelectric production is expected to be 5.6 GWh, and in the end
the hydro-wind plant is expected to provide 30.6 GWh during periods
of demand, for a total of 64.56% of total energy needed for the
island.
Below is my summary of
facts, assumptions, deductions and suppositions gleaned from the
information that is available. Selected data sources (as is usual
in cases like this there are a large number of articles that say
the same thing) are listed at the end of the post.
Cost: The system was expensive. Capital
costs are given as either €64.7 million (€5,600/kW installed) or
$US112 million ($9,700/kW installed) depending on which source one
consults. Between a third and a half of the cost was financed by
the Spanish government, again depending on the source of
information.
Hydro storage capacity &
duration:I can find no
published storage capacity estimates for El Hierro, but scaling
down the Dinorwig pumped hydro plant in Wales (7 million cu meters
of reservoir storage, 500 meters head, 1.72 GWh) to El Hierro
dimensions (0.15 million cubic meters, 650 meters head) gives
approximately 50 MWh, or about half the island’s average daily
electricity consumption. If this estimate is correct the hydro
system will be able to supply the island’s needs for only about
twelve hours after the wind stops blowing, assuming it was fully
charged to begin with.
Wind generation: According to the
italicized quote above annual “available wind energy” is 49.6 GWh,
and since this is in line with the 47.4 GWh annual demand I am
assuming that 49.6 GWh is what the 11.5 MW wind farm is expected to
generate. But it has to run at a 49% load factor to generate this
much electricity in a year, and while the Canary Islands are indeed
windy this seems a little optimistic. As illustrated in the graphic
below the Canaries experience periods when the wind doesn’t blow,
just like the UK, and it blows twice as hard there in the summer as
it does in the winter – the opposite of the UK, but still creating
a seasonal balancing problem:
And with only five wind turbines in operation we can also expect that breakdowns and scheduled maintenance will make significant dents in output from time to time. The fact that the pumped hydro system is only ~80% efficient also implies a further ~20% loss of input wind energy.
There may well be factors I haven’t considered, but based on the available information it’s questionable whether the El Hierro wind farm will generate enough electricity to keep the hydro plant running year-round.
Water availability: No information is provided as to where the water to fill the pumped hydro reservoirs and keep them topped up will come from, although it’s obviously coming from somewhere or the photos wouldn’t show the reservoirs with water in them. The reservoirs aren’t in major catchments so natural inflow will be minimal. Fresh water is also in short supply on El Hierro and much of it comes from sea water desalination plants that burn a lot of electricity. Hopefully the reservoir water isn’t coming from them.
The capacity differential between the upper and low reservoirs: As far as I can see the productivity of the hydro system is limited to the 150,000 cubic meter capacity of the lower reservoir – unless the plan is to drain this reservoir into the ocean after it’s full, whereupon the problem becomes how to replace the lost water. And if this isn’t the plan then 230,000 cubic meters of the 380,000 cubic meters of water in the upper reservoir is effectively unusable. Am I missing something here?
Performance of the hydro plant: The hydro plant has a capacity rating of 11.3MW, comfortably in excess of peak demand (7.6 MW), and to generate the 47.4 GWh needed to satisfy annual consumption it would have to operate at a load factor of 48%, which is not beyond the bounds of feasibility. So if the wind turbines can generate enough power to keep the reservoirs topped up the hydro system should be able to fill demand.
Finally comes the question of the fate of the 11.36 MW diesel-fired power plant that has historically supplied the island’s electricity. It’s going to remain in service “to be used in exceptional or emergency situations, when there is neither sufficient wind nor water to produce enough electricity to meet demand.” This sounds like a wise precaution.
Although the locals don’t expect they will ever have to fire it up:
