Opportunities and Domestic Barriers to Clean Energy Investment in Chile

The report analyzes Chile's transition toward non-conventional renewable energy (NCRE), noting that while installed capacity in the Central Interconnected Grid (SIC) nearly doubled between 2007 and 2009, the sector remains hindered by high market concentration and financial risks. It details the impact of Law No. 20.257, which mandates a clean energy quota of 5% by 2010 and 10% by 2024, and evaluates CORFO's incentive programs. The document highlights a critical tension between the growth of clean energy and a simultaneous increase in coal-fired generation, which threatens Chile's climate goals and long-term competitiveness.

• Chile's electricity grid is highly concentrated, with three companies and their subsidiaries owning 89 per cent of the public supply installed capacity of the Central Interconnected Grid (SIC) in 2006.
• Clean energy, defined as non-conventional renewable energy (NCRE), represented only 3.1 per cent of the national electricity grid's installed capacity in December 2007, consisting primarily of biomass and small-scale hydroelectric projects.
• Law No. 20.257 (2008) establishes a mandatory national quota for clean energy production, requiring 5 per cent of commercialized energy from 2010, increasing to 10 per cent by 2024.
• The electricity and heating sector is the largest source of greenhouse gas emissions in Chile, accounting for 27 per cent of the total.
• Despite the push for renewables, there is a projected increase in CO2 emissions from the energy sector, largely driven by the construction of coal-burning thermal power stations.
• 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 rather than new investments.
• CORFO provides several incentive instruments for NCRE, including subsidies for preliminary and advanced pre-investment studies and low-interest loans co-financed by the German bank KfW.
• The Clean Development Mechanism (CDM) has not served as a significant financial incentive for Chilean companies due to bureaucratic complexity; projects are often pursued for reputation rather than carbon credit earnings.
• Significant barriers to clean energy development include high economic risks due to the quota system's lack of long-term price stability, high market concentration that excludes small stakeholders, and a lack of specialized human capital.
• Technical data gaps persist, such as the lack of updated solar resource measurements since 1987 and the use of meteorological rather than energy-specific wind measurements.
• The Chilean government made a unilateral voluntary commitment at the 2009 Copenhagen Summit to reduce CO2 emissions by 20 per cent by 2020, with 18 per cent of that reduction attributed to the Renewable Energy Law and energy efficiency measures.

APA

Dufey, A. (2010). Opportunities and Domestic Barriers to Clean Energy Investment in Chile. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/bali_2_copenhagen_Chile_Jun2010.pdf

Chicago

Dufey, Annie. Opportunities and Domestic Barriers to Clean Energy Investment in Chile. International Institute for Sustainable Development, 2010. https://www.iisd.org/system/files/publications/bali_2_copenhagen_Chile_Jun2010.pdf.

Wikipedia

{{cite report |last1=Dufey |first1=Annie |title=Opportunities and Domestic Barriers to Clean Energy Investment in Chile |publisher=International Institute for Sustainable Development |date=June 2010 |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{dufey2010opportunities, author = {Dufey, Annie}, title = {{Opportunities and Domestic Barriers to Clean Energy Investment in Chile}}, institution = {International Institute for Sustainable Development}, year = {2010}, month = jun, url = {https://www.iisd.org/system/files/publications/bali_2_copenhagen_Chile_Jun2010.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }