Electricity group Statkraft Chile: “We hope to make an acquisition this year”

In search of renewable energy projects, hopefully with a certain degree of progress to be able to quickly increase its production capacity, is the Chilean subsidiary of the Norwegian state multinational Statkraft.

“We hope to make an acquisition this year to meet the goal of having 1,000 MW of installed power by 2028, with wind, solar, hydroelectric generation, and also batteries. We need to speed up our pace, so we are looking at several projects”, says the general manager, Maria Theresa Gonzalez.

The haste arises from the update of the growth strategy made by the matrix in mid-2022 and which raised its growth goal to 4 GW per year of installed capacity by 2030 worldwide. This will not be carried out with the same impetus in the 21 countries where it maintains a presence, but Chile is classified as one of the promising ones, along with Brazil and India.

“We want to speed up the pace with the purchase of assets in different stages of development: with RCA (Environmental Qualification Resolution), operational or project portfolios. Statkraft is in a strong financial position, so we have urgency to meet the deadline to 2030 with growth both through the development of our own projects and through the purchase, especially of wind projects in the south-central zone, to complement our important portfolio of plots”, emphasizes María Teresa González, who joined the company in 2017 as sustainability manager and corporate affairs and in 2020 he assumed the general management.

He adds that as long as the assets meet the expected rates of return and the risk profile, it is not a requirement that they have PPAs (long-term power purchase and sale agreements), as in the project financebecause Statkraft finances almost everything with its own cash: “That gives us agility to make good offers.”

The firm absorbed in 2014 the assets of the company SN Power, through a joint venture in equal shares with Pacific Hydro (Tinguiririca Energía), which operates the La Confluencia (163 MW) and La Higuera (155 MW) run-of-the-river plants in the O’Higgins Region. In 2015, it acquired Empresa Eléctrica Pilmaiquén, which had the Rucatayo hydroelectric plant (52 MW) in operation, on the Pilmaiquén river, between the Los Ríos and Los Lagos regions; and rights to develop two other plants on the same river, Osorno and Los Lagos, both with environmental approval.

To date it has 212 MW of installed capacity in hydraulic power plants and builds the Los Lagos power plant (52 MW) on the Pilmaiquén river, whose civil works present 70% progress. The same progress is presented by the three wind farms that it is developing in Litueche −Cardonal, Manantiales and Los Cerrillos− with an installed capacity of 105 MW and an investment of US$ 148 million. The latter would be finished this year and they have already closed closed contracts with free clients.

In the case of the Central Los Lagos, start-up is more uncertain. Its construction began in August 2019 with an initial investment of US$173 million; The health emergency affected the original program and adjustments were made, but in November 2021 the Supreme Court ordered an indigenous consultation to characterize the ceramic archaeological remains found in the reservoir, which the National Monuments Council has not yet started. “We are already 22 months behind schedule with a cost overrun for 2022 of US$ 50 million,” says the executive.

There they have faced opposition from a group of community members, but the general manager affirms that they maintain good relations with the ancestral communities of the area and work on associative projects of reforestation with native species. “We don’t take away from investing in areas with a high prevalence of indigenous communities. I believe that it is possible to build positive cases of community relations. The specific situation of Los Lagos is not a brake in the face of our growth strategy in Chile, with an investment horizon of US $ 1,000 million to 2028 ″, she emphasizes.

In January, after years of studies and dialogue with the communities, the company withdrew from the RCA to build the Osorno hydroelectric plant, after verifying that it was not possible to carry it out without affecting a sacred space of Mapuche-Huilliche spirituality, and returned the rights to water.

Statkraft Chile has a portfolio of projects under development for 1,700 MW, mainly solar, in the north: Pauna (671 MW), already environmentally approved; Parina (248 MWp), in environmental evaluation; and Tamarugo (303 MWp), which is in the baseline campaigns. The company obtained a onerous land use concession in the Taltal area to develop the Vientos del Desierto hybrid project (wind and solar with battery) for 411 MW.

In parallel, it evaluates an H2V project associated with Pauna. Pauna Greener Future will produce hydrogen and green ammonia. To develop it, they look for partners in different fields, from off takers to equity partners.

Since the company is in the growth stage, it does not expect to generate profits until at least 2028.

The executive states that carrying out energy projects is always challenging and even more so in a phase of adaptation to the renewable revolution: “There are enabling conditions that make the challenge greater, such as community issues and social acceptance. Other important ones are the permits, which today with the enormous number of projects that are entering evaluation, not only environmental but also sectoral, are having significant delays compared to three or four years ago. Transmission is another challenge where very close work between the public and private sectors is required to solve bottlenecks”.

A few weeks ago, nine renewable energy generators asked the ministry of the branch to introduce a regulatory modification, of a transitory nature, that incorporates generating units operating at their technical minimum in the calculation of the marginal cost.

María Teresa González says that the company does not agree, despite being 100% renewable: “We believe that it would generate very radical changes in the regulatory system that add uncertainty that is not good for investments. There are certain systemic effects that must be modified, but with a very solid support in technical and legal analysis. Introducing these changes via regulations can be very dangerous in terms of the signal that is given to the investor and the uncertainty that is introduced”.

– Can the price of renewable energy in Chile drop further? It is said that it has a long way to go before the H2V becomes competitive…

We are looking at the development of H2V in different countries and Chile is one of the countries with the most competitive prices in Magallanes and in the Atacama desert. But it is far from the centers of consumption, which obviously works against it. For this reason, in the delays, which are hitting us hard, the profitability of the projects is at risk today. It is very important to advance in the enabling conditions and have regulatory signals and adequate remuneration for storage and transmission; agree on how we will develop the large number of projects so that they harmonize with territories and communities. Before, a green project was always good news, but as there are more and more we have to see where it makes the most sense to locate them from a social, environmental and landscape point of view.

Energy consumption will double by 2050 and we need to electrify consumption with clean energy, because otherwise the effects for the planet will be disastrous. There are projects that sometimes make us uncomfortable, but they are what will allow us to avoid climate disaster, so we have to reach an agreement.

– Will the cost of wind and solar technologies continue to fall?

During the pandemic, prices rose due to logistical issues and now they are tending to stabilize. I don’t think they will go down much.

Electricity group Statkraft Chile: “We hope to make an acquisition this year” – La Tercera