Invest in Chile: Opportunities in Energy

Chile is not only Latin America's best evaluated economy but also one of the best evaluated emerging economies internationally.

Its hallmark stability, transparency and competitiveness and excellent business prospects position the country not only as the best destination for foreign investment in Latin America and but also as one of the world's leading destinations.

According to the World Investment Report 2013 released by the United Nation Conference on Trade and Development (UNCTAD), Chile was the world's 11 largest recipient of foreign direct investment in 2012. With a record inflow of US$30,323 million, Chile was among the top 20 recipients for the second consecutive year, rising from 17th place in 2011 to 11th place in 2012.

Why invest in Chile?

A reliable country

Chile is a safe place in which to do business as borne out by risk ratings agencies which have increased or maintained their high ratings for the country, highlighting its low level of public debt, the health of its 9nancial system and its solid institutions.

A competitive country

In the 2013 World Competitiveness Yearbook published by the Institute for Management Development (IMD), Chile took 30th place out of 60 economies, ahead of all other Latin American countries.

An attractive business climate

According to the World Bank's Doing Business 2013 report, Chile is the easiest Latin American economy in which to do business, ranking 60 positions above the regional average.

A transparent country

In Transparency International's 2012 Corruption Perceptions Index, Chile obtained a score of 72 points, ranking among the 20 best-placed economies out of the 176 countries included in the Index and ahead of all other Latin American countries.

An internationally integrated country

Chile has signed 22 trade agreements with 60 countries, expanding its domestic market of 16.6 million inhabitants to one of over 4,302 million potential consumers around the world (representing 85.7% of global GDP and 62% of the world's population).

A globally connected country

Chile has world-class highways and telecommunications services, with a high penetration of technology and excellent connectivity. In the Networked Readiness Index 2013 published by the World Economic Forum (WEF), it took 34th place out of 144 economies, ranking 9rst in Latin America.

A country with talent

Chile stands out not only for its high-standard professionals but also as the home of two of the universities that, according to the latest Academic Ranking of World Universities (ARWU), are among the top ten in Latin America. In addition, it took 31st place out of 60 economies in the Global Talent Index 2011-2015 of the Economist Intelligence Unit (EIU).

A country to live in

The capital Santiago is Latin America's second most liveable city, according to the Economist Intelligence Unit (EIU), and the country is also well evaluated in studies such as the Global Peace Index which, in 2012, ranked it 30th out of 158 countries.

Headquarters in Chile

Santiago offers overseas companies some of the world's most attractive installation costs. In its Prices and Earnings report for 2012, the UBS investment bank gave Chile's capital a score of 52.8 points and 60th position out of 72 cities in a ranking where 9rst place indicates the most expensive city (Oslo) and New York is the base of comparison with 100 points.

Foreign investment in Energy

Why invest in Energy?

In Chile, demand for energy is increasing. At the end of 2012, the country had a net installed power generation capacity of 17.6 GW provided through four systems - the Central Interconnected Grid (SIC), the Northern Interconnected Grid (SING) and the smaller systems of the Aysén and Magallanes Regions. Out of these systems, SIC is the largest.

CHILE: NET INSTALLED POWER GENERATION CAPACITY

In 2012, gross electricity generation in SIC and SING reached 65,547 GWh, up by 5.8% compared to 2011. Based on projections for Chile's economic growth, it is anticipated that demand for electricity will rise by around 5% per year until 2020, implying the need to increase the country's installed power generation capacity.

CHILE: DEMAND FOR ENERGY IN SIC AND SING, 2002-2030

In 2012, 65.9% of Chile's electricity was generated from fossil fuels while Non- Conventional Renewable Energies (NCREs) accounted for 4.8%.

Investment opportunities

TRADITIONAL HYDROELECTRIC GENERATION (MORE THAN 20 MW)
  • The government's National Energy Strategy 2012-2030 envisages that, by 2024, hydroelectricity will account for 45-48% of total generation, up from 29.3% at present.
  • Southern Chile has great hydroelectric potential.
  • There is interest in harnessing Southern Chile's water resources for projects that produce clean, renewable and efficient energy, enabling Chile to diversify its electricity matrix.
CONVENTIONAL GENERATION
  • Renewable energies cannot satisfy 100% of the high growth of electricity demand and investment in projects using fossil fuels will also be required.
  • Fossil fuels give electricity systems both technical and economic stability as well as the level of certainty that is indispensable for the required development of the country's electricity matrix.
NON-CONVENTIONAL RENEWABLE ENERGIES (NCRES)
  • Due to its geography, Chile has enormous potential for the development of NCREs. 
  • In the case of solar energy, the potential of northern Chile is among the greatest in the world. 
  • The Antofagasta, Coquimbo, Biobío, Los Lagos and Magallanes Regions have important potential for the development of wind power. 
  • Chile also has considerable geothermal potential along the length of the Andes Mountains 
  • In the South of the country, there is potential for the use of biomass. 
  • Chile has important resources for the development of mini-hydro plants. 
  • The growth of mining investment and the longer periods required to obtain approval for conventional energy projects mean an attractive opportunity for investment in the development of NCRE sources. 
  • Law N° 20.257 for the promotion of renewable energies establishes a target of 10% NCRE-based generation by 2024 and this will require new investment in these sources. 
  • There is interest in increasing this target for NCRE-based generation and this would create additional investment opportunities.
TRANSMISSION
  • Currently, the country's transmission system has some fragilities and investment is required to ensure the development of a system that is more robust and offers a higher level of security. Tenders for the system's expansion have been launched.
  • Interest in connecting SIC and SING in order to increase the system's security implies opportunities for new projects in this field.
  • The development of new power plants also implies a need for additional transmission lines.

Companies that have already invested in Chile

Click to download Chilean Foreign Investment Committee's guide: "Invest in Chile: Opportunities in Energy".

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