Opportunities and Domestic Barriers to Clean Energy Investment in Chile

This report analyzes the clean energy market for electricity generation in Chile, examining the current state of the electricity grid, investment trends, and the regulatory framework. It identifies significant potential for non-conventional renewable energy (NCRE) but highlights substantial economic, regulatory, and financial barriers that hinder large-scale adoption.

• Chile's electricity grid is highly concentrated, with three companies (Endesa, Colbún, and AES Gener) owning 89 per cent of the public supply installed capacity of the Central Interconnected Grid (SIC) as of 2006.
• The Chilean government has implemented a minimum national quota for clean energy production through Law No. 20.257, requiring 5 per cent of commercialized energy from 2010, increasing to 10 per cent by 2024.
• Electricity demand in Chile is projected to grow at an annual rate of 5.4 per cent over the next 20 years, with the transport sector expected to be the primary driver of this increase.
• The electricity and heating sector is the largest source of greenhouse gas (GHG) emissions in Chile, accounting for 27 per cent of total emissions.
• Foreign direct investment (FDI) in the energy sector peaked between 1997 and 1999 during the introduction of natural gas and again from 2004, though much of this consisted of mergers and acquisitions of privatized companies.
• The Chilean government made a unilateral voluntary commitment at the December 2009 Copenhagen Summit to reduce CO2 emissions by 20 per cent by 2020, with 18 per cent of that reduction relying on the Renewable Energy Law and energy efficiency measures.
• CORFO provides several incentive instruments for clean energy, including subsidies for preliminary and advanced pre-investment studies and low-interest loans co-financed by the German bank KfW.
• A significant barrier to clean energy is the high economic risk associated with the quota system (Ley Corta III), which lacks the long-term price stability provided by feed-in tariffs or auction systems.
• Market concentration hinders the entry of new, smaller stakeholders because traditional generating companies often undertake their own clean energy projects to meet legal quotas.
• The lack of basic technical studies on renewable resource availability, such as solar and wind, forces individual project developers to spend their own resources on these studies.

APA

International Institute for Sustainable Development (n.d.). Opportunities and Domestic Barriers to Clean Energy Investment in Chile. https://www.iisd.org/system/files/publications/bali_2_copenhagen_Chile_Jun2010.pdf

Chicago

International Institute for Sustainable Development. Opportunities and Domestic Barriers to Clean Energy Investment in Chile. n.d. https://www.iisd.org/system/files/publications/bali_2_copenhagen_Chile_Jun2010.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Opportunities and Domestic Barriers to Clean Energy Investment in Chile |url=https://www.iisd.org/system/files/publications/bali_2_copenhagen_Chile_Jun2010.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopmentndopportunities, author = {{International Institute for Sustainable Development}}, title = {{Opportunities and Domestic Barriers to Clean Energy Investment in Chile}}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/system/files/publications/bali_2_copenhagen_Chile_Jun2010.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }