According to a Bloomberg report, Chile is producing so much solar power that it is forcing a lot of it to be given away for free, creating a massive problem for the energy companies. Through April of this year the price of power has so far reached zero on a total of 113 days, on track to far exceed last years total of 192.
One of the main causes of this problem is that Chile has two separate power grids, a central grid and second in the country’s mining rich north. This is a problem because if one of the grids begin producing a surplus of power it has nowhere to move it too, driving the price down to nothing.
The government is planning to fix this problem by creating a 3,000 kilometer link between the two systems by 2017. They are also developing a separate 753 kilometer link in the northern parts of the central grid responsible for many zero days, where power congestion creates a surplus that, once again, drives the price down.
The installation of solar power has also been accelerating in recent years, since 2013 the central grid alone has more than quadrupled its portion to 770 megawatts. As a whole Chile added 371 megawatts in 2015 and is expected to added an additional 1,400 megawatts in 2016. For reference, in the US a single MW of solar energy can power on average 164 homes for a year.
The fact that Chile’s infrastructural problems are causing the price of solar to drop to nothing at times, may mean banks will be less likely to finance an industry with problematic revenue streams. This has led many to expect progress and investment in renewables to slow, if a solution is not made soon.