Risks are Rising in Chile’s Power Sector

Chile privatized its electricity sector in the 1980s and private capital owns all generation, transmission and distribution assets in the country. We are positive on the fundamentals for renewables, and negative on thermal power, leading to our stable outlook.

A stable political environment and a relatively attractive business will continue to make Chile a preferred destination for international investors in the power sector. The government is actively promoting the adoption of LNG and offering attractive terms for renewable energy projects.

Renewable Energy Projects Will Drive Power Prices Lower

We think the push towards renewables in Chile will push power prices lower, at the expense of thermal generating capacity. That said, we think that the implementation of some of the larger hydropower projects will face delays due to a long environmental permitting and opposition from local citizens. We do expect the smaller hydro projects to be completed on schedule.