Chile is giving away its surplus solar energy for free

Chile has become a prime example of why solar energy can be a blessing and a curse; good for consumers but bad for many businesses in the energy industry. This year, the price for electricity in some parts of Chile fell to zero on 113 days between January 1 and April 30, reports Bloomberg, and that puts the South American country on a path to surpass last year’s 192 days of zero-priced power.

Chile has invested heavily in solar power. 15 solar farms are slated to be built, adding to the 29 farms that supply electricity to Chile’s central grid. Even more solar farms have been developed in the north, which is on a separate grid. Though these projects were initially spurred by economic growth and an uptick in mining operations, growth has begun to slow, mining production has idled, and power plants are now oversupplying energy to places that lack the infrastructure to manage it. Since the north and central grids don’t connect with each other, they can’t transmit electricity when one has a surplus and the other has a deficit. These surpluses can drive energy prices down dramatically — to the point that Chile gives its electricity away for free in the northern parts of the central grid.

Chile’s Energy Minister, Maximo Pacheo, admitted that much of the country’s trouble came from rapid expansion and inadequate infrastructure. “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,” he said. “When you embark on a path of growth and development like the one we’ve had, you obviously can see issues arising.”

There’s hope though. By next year, the Chilean government intends to lay a 1,865-mile transmission line that will connect the north and central grid, enabling it to transfer excess electricity. Still, the surplus and subsequently cheap (or free) electricity is bad for business, and may make it difficult for future projects to earn funding.