Deals

Mainstream, Endesa win big in Chile’s 12GWh auction

Average prices for this latest renewables tender, the largest in the country's history, were slashed 40% compared to the previous one.

-

Two European energy companies have scooped the lion's share at Chile's latest renewables auction by securing a combined 70 percent of government contracts up for bid.

Dublin-based Mainstream Renewable Power was awarded seven contracts to build 985MW of wind projects over the next five years, representing 30 percent of the total capacity up for auction. Mainstream said these deals will account for $1.65 billion worth of investments. 

Empresa Nacional de Electricidad (Endesa), a subsidiary of Italy's Enel Group, won 40 percent. Another notable winner was Spain's Acciona, which obtained contracts worth 506GWh per year.

Eighty-four companies submitted proposals for bids totalling 85,000GWh, seven times the amount of power that was up for auction.

This tender, the largest energy auction in Chilean history, is also notable for how low participants proved ready to go to win the proposed projects. 

The average price per contract fell from $79.34 per MWh at Chile's last auction to $47.59 per MWh this round. Mainstream's lowest bid was $38.8 per MWh and its highest was $47.2 per MWh. Endesa's average price per bid was $50.83 per MWh.

“Today's win underpins Mainstream's standing as the leading independent renewable energy company in high-growth emerging energy markets,” Mainstream's chief executive Eddie O'Connor said in a statement. “We had the industry foresight to take early positions in Chile and South Africa and we are rolling out similar plans across Africa, Central America and Asia.”

Mainstream, which entered the Chilean market in 2009, has since built a 2GW portfolio across 40 projects. Through Aela Energia, a platform it owns alongside emerging market buyout firm Actis, the company operates 300MW of wind projects that will begin construction this year.

In June, Mainstream raised $117.5 million to help fund wind and solar projects in Africa through its Lekela Power platform. Investors in the venture include the IFC, the IFC African, Latin American and Caribbean Fund , IFC Catalyst Fund, Missouri-based Ascension Investment Management, South African fund manager Sanlam and the Rockefeller Brothers Fund.