Chile's Renewable Boom Attracts Attention: Stocks in Focus

Latin America has lately emerged as the new hub for renewable expansion, with more than a quarter of primary energy coming from renewables, which is twice the global average. Chile stands out among its Latin American neighbors, with its rapidly expanding clean energy grid, which includes vast solar fields and wind farms.

No doubt this has been attracting renewable players as well as utilities to join this nation’s clean energy transformation, in an attempt to secure profits.

What is Driving Chile’s Renewable Boom?

Chile's renewables market benefits from big energy demand from the country's mining sector. It also boasts some of the best solar resource on the planet. According to the nation’s latest power outlook report, the Chilean Copper Commission (Cochilco) estimates copper mining industry’s electricity consumption will increase at a CAGR of 3.1% from 2019 to 2030. To meet this demand, Chile will have to add approximately 1.4 GW of power generation capacity by 2030. Such huge electricity demand are driving the nation’s renewable energy market.

Moreover, areas like the Atacama Desert in the north of the country gets almost 356 days of clear skies. Also, high solar radiation and low humidity make it one of the best areas in the world for solar PV.Moreover, declining costs of solar technologies in this nation has been boosting solar expansion.

These must have been boosting renewable energy market in Chile. Notably, per GlobalData, non-hydro renewable capacity in Chile increased at a compound annual growth rate of 31.5% from 2000 to 2018.

Bright Future

Bloomberg NEF estimates that some of the cheapest PV projects financed in the last six months will achieve an LCOE of $27-36/MWh, assuming competitive returns to their equity investors. Chile is among the few places in the world where these figures can be recorded. GlobalData expects non-hydro renewable capacity in Chile to reach 27.5GW by 2030 at a CAGR of 16%.

Stocks in Focus

Per a report published by Bloomberg New Energy Finance in December 2019, wind and solar represent a $35 billion investment opportunity in Chile between 2019 and 2050. Considering the aforementioned cost-effectiveness of Chile’s clean energy market, industry players’ interest in this space seems justified.

Below we have mentioned a few companies, carrying a Zacks Rank #3 (Hold), which have already set foot in Chile’s renewable market and may expand going ahead. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

First Solar, Inc.’s FSLR Luz del Norte power plant is the largest photovoltaic (PV) solar power plant in Latin America, located in Chile. The 141 megawatt (MW) project is powered by more than 1.7 million First Solar advanced thin film PV modules. In addition to supplying the solar modules for this project, First Solar provided Engineering, Procurement and Construction, Operations and Maintenance and recycling services.

Notably, the plant has secured approval in August 2020 from Chile’s independent system operator (ISO), Coordinador Eléctrico Nacional, for delivering ancillary grid services on a commercial basis. With the latest sanction, this plant has become the world’s first known utility-scale solar facility licensed to deliver grid services.

The AES Corp.’s AES subsidiary, AES Gener is committed to reduce the coal intensity of the Chilean power grid and plans to increase renewable energy capacity in its portfolio. As part of this commitment, AES Gener purchased the 110 MW Los Cururos wind farm and its substation in northern Chile.

The most important projects for the company this year include its flagship Alto Maipo hydroelectric plant, Mesamávida wind farm, Los Olmos wind farm, Andes Solar II plant and AlfalfalVirtual Reservoir Energy Storage pilot project.

JinkoSolar Holding Co., Ltd JKS announced in July 2020 that it has inked a deal to provide more than 300 of its bifacial solar modules for a solar photovoltaic park in Chile. The modules, with generation capacity of 126 megawatt (MW), will be installed for the expansion of the park, which already has more than 600 of JinkoSolar’s modules.

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