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Chile

With a cumulative score of 2.19, Chile ranks number 4 among emerging markets and number 22 in the global ranking.

  • Emerging markets
  • Americas

2.58 / 5

Power score


1.84 / 5

Transport score


1.37 / 5

Buildings score



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Low-carbon strategy

Net-zero goal and strategy

Chile pledged to achieve carbon neutrality by 2050 in its updated ‘nationally determined contribution’ (NDC), which is its plan to help achieve the goals of the Paris Agreement.

Nationally Determined Contributions (NDC)

Chile submitted its updated NDC to the United Nations Framework Convention on Climate Change (UNFCCC) in April 2020. It is aiming for its greenhouse gas (GHG) budget to not exceed 1,100 million metric tons of CO2 equivalent (MtCO2e) between 2020 and 2030, with emissions peaking in 2025. It has a goal for emissions to be 95MtCO2e by 2030.

Fossil fuel phase-out policy

Chile aims to phase out its coal power fleet by 2040 and has established a schedule to retire 50% of its coal power plants by 2025.

Power

Power policy

Chile has a target for 20% of its electricity generation to come from renewables by 2025. It achieved this goal ahead of schedule, with 25% of generation coming from clean energy sources in 2020. Wind and solar made up 18% of the total generation in 2021.

Power policies

Renewable energy auction
Feed-in Tariff
Import tax incentives
Net Metering
Renewable energy target
VAT incentives

Power prices and costs

Chile holds power auctions with standardized power purchase agreements (PPAs) denominated in US dollars. Developers can also sign bilateral contracts outside the regulated market with large consumers. Miners are a large portion of Chile’s corporate clean energy PPA market, and they usually sign long-term contracts.

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Power market

In November 2019, Chile created a temporary mechanism to stabilize retail power prices. This was in response to civil unrest that rocked the country in mid-October 2019. However, the government is not subsidizing the stable prices. Instead, generators such as AES, Enel, Colbun and Engie will incur a loss as a result of the law. They will be compensated from the savings the government accrues from 2021 onward when renewable PPAs kick in, lowering generation costs. The government must pay generators back by 2027.

Installed Capacity (in MW)

20122014201620182020010K20K30K MW

Electricity Generation (in GWh)

20122014201620182020020K40K60K80K GWh
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Utility privatisation

Which segments of the power sector are open to private participation?


Generation
Transmission
Retail

Wholesale power market

Does the country have a wholesale power market?


Available
Not available

Doing business and barriers

Despite recent improvements, Chile face limitations on its transmission infrastructure. Clean energy generators faced high levels of curtailment in the past before the country added two important new transmission lines. Curtailment rates averaged 2% in 2020. However, a large pipeline of wind and solar assets is set to be commissioned in upcoming years and the country may face significant bottlenecks again.

Currency of PPAs

Are PPAs (eg. corporate PPAs and all other types) signed in or indexed to U.S. Dollars or Euro?


Available
Not available

Bilateral power contracts

Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?


Available
Not available

Fossil fuel price distortions - Subsidies

Does the government influence the wholesale price of fossil fuel (used by thermal power plants) down through subsidies?


Available
Not available

Fossil fuel price distortions - Taxes

Does the government influence the wholesale price of fossil fuel (used by thermal power plants) up through taxes or carbon prices?


Available
Not available

Transport

EV market

Chile’s electric vehicle (EV) market is in its infancy. Less than 0.3% of the country’s vehicle sales were battery electric vehicles or plug-in hybrid electric vehicles in 2021.

EV policy

Chile released its latest National Electromobility Strategy in October 2021, which aims for 100% of passenger and public transportation (buses and taxis) vehicle sales to be electric by 2035. It also has a target for 100% of freight transport sales to be electric by 2045.

Transport policies

Electric vehicle target
Electric vehicle purchase grant or loan incentive
VAT incentives for EV
Import tax incentives for EV
EV charging infrastructure target
EV charging infrastructure support

Fuel economy standards

Does the country have a fuel economy standard in place?


Available
Not available

Buildings

Buildings market

Chile’s residential heating sector is highly dependent on wood, with over 40% of households using it for heating. The government has a policy to aid consumers to switch to more efficient and less-polluting wood-based heaters.

Chile passed an energy efficiency law and launched a heating and cooling strategy in 2021. The strategy has set a target for renewables to supply 80% of energy used for heating and cooling by 2050. It has also laid out a goal to cut 65% of emissions from the heating and cooling sector.

Energy efficiency policy

Does the country have a national energy efficiency plan?


Available
Not available

Energy efficiency policy

Are there minimum energy performance standards for buildings?


Available
Not available

Energy efficiency incentives

Is there access to loans or grants for energy efficiency measures (i.e. Wall or loft insulation or double glazing)?


Available
Not available

Buildings policy

There are no specific laws.

Buildings policies

Low-carbon heat target/roadmap
Tax credits
Boiler scrappage schemes
Heat pumps purchase grants/loans incentive
Ban on boilers: new build homes
Ban on boilers: all homes

Additional insights
from BNEF

Explore more detailed information on global commodity markets and the disruptive technologies driving the transition to a low-carbon economy.

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