French energy firms EDF and GDF Suez Friday won contracts to supply electricity to regulated clients in Chile under a major power tender.
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A consortium led by EDF won the right to supply 7,000 GWh annually of electricity over 15 years which it will generate at a new gas-fired combined cycle plant in the southern region of Biobio.
Called Campesino, the plant is expected to run on gas imported as LNG through a proposed 10 million cubic meters/d regasification terminal near the southern port of Talcahuano.
US gas exporter Cheniere Energy is one of the companies linked to the terminal project, which could receive gas exported via Cheniere's new Sabine Pass liquefaction project along the US Gulf Coast.
Also, GDF Suez-controlled E-CL won contracts to supply 5,040 GWh annually of electricity over 15 years to central Chile's SIC grid, which provides electricity to more than 90% of the population.
Not currently present on SIC, E-CL will provide the electricity from new and existing operations on northern Chile's SING grid via a new transmission line to link the two grids. These include a new 375 MW coal-fired power plant at the northern port of Mejillones which is expected to cost $1 billion.
The $700 million line will also allow E-CL to run gas-fired power plants left idle by the loss of natural gas supplies from neighboring Argentina on LNG imported through the GDF-controlled regasification terminal at Mejillones.
E-CL currently controls 2,108 MW of installed capacity and accounts for half of the electricity sold in northern Chile.
The tender awarded contracts for an estimated 85% of the 13,000 GWh annually on offer at an average price of $107/MWh, down from $128/MWh reached at the last major tender in 2013.
Andres Romero, head of the National Energy Commission, welcomed the appearance of two new players in Chile's largest grid, where generation is dominated by ENEL-controlled Endesa Chile, AES Gener and locally-owned Colbun, noting that increased competition forms a key part of the government's strategy to bring energy prices down by 2018.
"If we don't attack the problem of competition, we are not going to increase investment and will not improve prices," Romero said.
Changes to the tender rules, allowing developers to offer power supplies during limited hours, facilitated the participation of alternative energy projects, which were awarded almost 20% of the electricity.