Consumer durables is a cataloguing of consumer goods that are not essential to be bought very often as they are fashioned in a way so as to last for an extended period of time. Profits in the consumer durables sector were most profoundly…
BMI View: Chile's power market will be one of the most attractive and dynamic in Latin America over the
next few years, owing to the country's stable business environment and investor-friendly regulations, a solid
macroeconomic outlook and robust growth in power consumption. The government's use of energy auctions
for the regulated market, coupled with energy demand from miners located far from the main power
network, will create long-term business opportunities for power generators. Meanwhile, the need to expand
Chile's power grid will drive demand for transmission and distribution infrastructure.
Latest Updates And Structural Trends
? Our view that the Chilean power market will be one of the most dynamic in Latin America over the
coming years, as well as our bullish growth outlook for renewables in the country, was reinforced by the
results of Chile's latest power auction. Finalised in August 2016, the auction saw 84 domestic and
international firms compete for power purchase agreements, with contracted companies expected to start
supplying power in 2021 and 2022. The average price per bid at the auction was USD47.59/MWh -
significantly lower than the USD79.34/MWh registered at the previous auction. The government expects
this to translate into lower electricity bills for household and businesses in Chile starting from 2021.
? Companies bidding with renewable energy projects obtained more than 50% of the 12.430 terawatt hours
(TWh) that the government was looking to secure in order to satisfy the demand of clients of the SIC and
SING central and northern power grids. As a result, we have upgraded our forecasts for renewables
power capacity and generation, driven by a stronger than expected expansion of wind power. The rest of
the power will be supplied by utility Endesa Chile, via existing power plants (currently undisclosed).
? Conversely, as new gas-fired power projects failed to win any contracts at the auction, we have
downgraded our long-term forecast for Chile's gas-fired power generation growth, although we continue
to expect gas to increase its share in the country's power mix over the coming decade. Competitively
priced renewables capacity will represent a hurdle for the contracting of new natural gas-fired power
plants in Chile's upcoming power auctions. In order to mitigate this problem and contributing to its longterm
goal of boosting the role of natural gas in Chile's energy mix, the government could implement
changes in future auctions to boost gas plants' competitiveness.