In recent years, hundreds of investors have opted for the electricity sector in Chile and, in particular, for renewable technologies. But wind and solar energy are not the only ones that attract the interested, since another source that is growing – and will make it strong in 2019 – is the production with diesel oil.
This is a situation that, according to several actors, contradicts the trend of recent years, with ads announcing the closure of polluting plants, such as coal, favoring cleaner production. However, their role as system backup, critical to supporting intermittent energies, has made them attractive.
In sum, in 2019, 14 oil plants will be installed, with a total capacity of 512 MW. Thus, it will be the most active year since 2009, when emergency units were lifted by 1,259 MW to face the gas crisis in Argentina.
Prime Energy, with US capital, will invest more, with three additional mills adding 275 MW of power. Then there is Los Guindos Generación, a subsidiary of General Electric, with a 132 MW plant and Empresas Electricas Vallenar, with a 64 MW plant.
How do they win?
Although these mills do not normally invest their energy permanently because of their higher cost, they are a profitable business for investors because, according to experts, if the plant remains in the reserve, it is also paid for the available energy.
Hugh Rudnick, a scholar and director of Systep, said that "there is more than twice the MW capacity of power plants in the national electricity system, so no additional diesel-type power capacity is needed."
One possible explanation is that these investors have access to very cheap diesel equipment (used equipment), which would move more expensive equipment, in access to the remuneration of power, "he said.
Meanwhile, Carlos Finat, executive director of the Chilean Association of Renewable Energies (Acera), expressed a more critical opinion and said that "a business is being carried out in which electricity is not being supplied."
He added that these "are central and have a very high operating cost, in fact they are the most expensive of the system, so they have a very low probability of being dispatched, acting only as a backup." These plants, in fact, rent their income for power, which responds to a need of the system, but not to the quantity that the system has today.
Today the system already has about 3,000 MW of support and this year another 500 MW would be added. That's one third of the maximum demand the system has and it compares to no international standard, "he said.