Projects

General government authorisation

What government authorisations must investors or owners obtain prior to constructing or directly or indirectly transferring or acquiring a renewable energy project?

Depending on the NCRE project’s characteristics and the environmental impacts that it may generate, it may be necessary to obtain an RCA that certifies the project as environmentally favourable. This resolution will also identify the required permits for the project, depending on its particular characteristics. If the project is transferred after an RCA is obtained, this must be reported to the Environmental Assessment Service.

In addition, the project must obtain other relevant permits such as construction permits for permanent buildings, issued by the Department of Works of the relevant municipality, and the corresponding health and electric permits, issued by the Regional Authority of Health and the SEC, respectively.

If the construction of the project is to be in public areas, it will also be necessary to obtain a concession from the Public Property Ministry, which will enable by way of concessions the use of public lands for these purposes.

In practice, although it is not a requirement for the construction of a project, it is customary to protect the land from third parties by requesting mining concessions where the energy project will be developed, as the mining concessionaire has the ability to impose easements on the area of the concession.

In the case of hydroelectric projects, it is also necessary to obtain water rights for use in the energy generation project and an authorisation from the General Water Direction if it is necessary to build, modify, change or unify a water intake to develop the NCRE project.

Offtake arrangements

What type of offtake arrangements are available and typically used for utility-scale renewables projects?

The energy offtaker concessionaires’ distribution companies are those that contract for provisions to supply energy to regulated customers. As a general rule, such contracts are preceded by a public tender procedure called by the energy distributor and supervised by CNE.

The preliminary report of electricity supply tenders for the period 2018-2038 projected an electrical demand for regulated customers of 37,393 GWh for 2025. With this information, the Bidding Bases for Power Supply and Electric Power have been prepared, whose process is in force and will be awarded by the end of 2019.

To participate in the public bidding processes called by the energy distributors, the bidder is generally required to have a risk rating of at least BB+. In practice, that rating is given taking into consideration the sponsor’s credit rating.

Clients whose connected power is between 500kW and 5,000kW have the right to choose between being regulated clients or free customers. This right to choose can be exercised once every four years. These clients can freely negotiate electricity prices with energy generators and set supply conditions through PPAs.

Procurement of offtaker agreements

How are long-term power purchase agreements procured by the offtakers in your jurisdiction? Are they the subject of feed-in tariffs, the subject of multi-project competitive tenders, or are they typically developed through the submission of unsolicited tenders?

The PPAs for supplying energy to regulated customers are usually preceded by public tender procedures. On the other hand, as a general rule, non-regulated customers call for public or private bidding processes, whether they have a high demand for supply or they add demand, and subsequently enter into PPAs with the successful bidders from such processes.

Operational authorisation

What government authorisations are required to operate a renewable energy project and sell electricity from renewable energy projects?

There are no specific government authorisations required to operate renewable projects and sell electricity. Nevertheless, as mentioned above, according to the General Law on Electrical Services, the owner, lessee, usufructuary or anyone that operates power plants connected to the electrical system under any title and subject to the coordination of the National Electric Coordinator must incorporate a company that is domiciled in Chile and whose line of business is the generation of energy.

The energy broker or energy trader is not regulated in Chile; this is the reason generators are the only entities that can commercialise energy to be sold in the spot market to other generators, or in the contract market (either to distribution companies, other generators or non-regulated customers).

Finally it is important to note that, for NCRE projects to be commissioned, they must have been previously declared to be under construction by the CNE, and they must have the authorisation of the National Electric Coordinator to energise the corresponding facilities.

After the energisation and interconnection of the facilities, and after a test period to prove that the power plant does not cause distortions in the electrical system, the National Electric Coordinator will approve the commissioning of the respective NCRE project.

Decommissioning

Are there legal requirements for the decommissioning of renewable energy projects? Must these requirements be funded by a sinking fund or through other credit enhancements during the operational phase of a renewable energy project?

Once the useful life of NCRE plants has been surpassed, they are dismantled. The process will be carried out in compliance with the measures and procedures set forth in the project’s RCA, required by all power plants above 3MW. The cost of implementing such measures shall be considered as one of the costs of the project.