Duration:
Dec 2013 - Jun 2022

Total LACIF contribution (€):
15 300 000

Projected total investment size (€):

1 400 000 000

Types of Support:

  • Investment grants

Sectors:

  • Sustainable energy

COUNTRIES:

Chile

Lead financing institution:



Co-financing institutions:


Context

The Chilean economy is expected to grow at 4% per year until 2030. This requires adding roughly 8 GW of new power generation capacity over the next decade, considering that 90% of electricity demand comes from large industries, mainly from the mining sector, the major engine of the Chilean economy (19% of GDP).

Before the “Chilean Solar Energy Programme” began, the country’s per capita emissions were estimated at 3.84 tons C02e/pp, significantly larger than the Latin American average of 2.16. Without a policy intervention, most of the energy required for Chile’s growth was expected to come from fossil fuels, which would further increase emissions.

As the northern region of Chile has the highest rates of solar irradiation worldwide {>3,000 kWh/m2-year in various locations) and is also the region where most of the growth in electricity demand will occur, the government decided to undertake one of the most ambitious projects in Latin America: the transformation of the energy sector through green generation of electricity by constructing a solar energy complex with the first concentrated solar power plant in the region.

Testimonial

Chile and the EU are climate partners and work closely together on the shared goal of carbon-neutrality by 2050. The launch of Cerro Dominador is a symbol of our strategic alliance, values, technology and investment. The EU is proud to have provided European technology and a grant of EUR 15 million towards its construction, thereby leveraging large-scale funds for the development of energy sources for the future.” - León De la Torre, Ambassador of the European Union to Chile.


IFrame


The project

The Chilean Solar Energy Programme, known as ‘Cerro Dominador’, is one of the most innovative and successful projects funded by the European Union through its Latin America and Caribbean Investment Facility (LACIF). 

The ‘Cerro Dominador’ energy complex is located in the Atacama Desert, one of the sunniest places in the world. It consists of two interconnected systems: a photovoltaic power plant, with an installed capacity of 100 megawatts (MW), and a concentrated solar power plant, with an installed capacity of 110 MW, the first of its kind to be built in Latin America.

The thermal storage capacity of the Cerro Dominador solar thermal plant relies on molten salts, thanks to a pioneering thermal storage system. The solar field, totalling more than 700 hectares, comprises 10,600 heliostats (mega mirrors that follow the path of the sun) to direct solar radiation to a receiver located at the top of a 252 metre tower.

The blending operation involved a contribution from LACIF, KfW and KfW IPEX-Bank of EUR 113 million to support the financing of the solar thermal tower technology, which has a storage capacity of 17.5 hours. This allows electricity to be supplied reliably to 380,000 homes 24 hours a day and prevents the emission of 235,000 tons of CO2 per year.

The LACIF grant of EUR 15 million was combined with loans from the International Climate Protection Initiative (IKI) of the German Federal Ministry for the Environment, which were managed by KfW Development Bank. The latter provided a loan of EUR 53 million to the Republic of Chile via the government-owned Chilean Economic Development Agency – Corporación de Fomento de la Producción (Corfo) – which transferred the funds to the Cerro Dominador project via a local bank. In addition, debt capital of EUR 45 million in USD equivalent was provided through project financing from KfW IPEX-Bank and a group of international financial institutions and other institutional investors.

Impact

The financial leveraging achieved by LACIF, by attracting public and private sector investors, tripled the amount of initial investment funding. The involvement of the private sector in financing and operations made it possible to increase the energy generation capacity of the plant from 50 MW to 110 MW.

Furthermore, this project was the “spearhead” of Chile's energy transformation. In December 2019, the Ministry of Energy updated the country’s Long-Term Energy Plan 2018-2022, based on:

  • eliminating coal-fired plants by 2040;
  • achieving carbon neutrality by 2050; and
  • optimising energy generation and transmission to increase the flexibility and resilience of the national energy system.

Today, ‘Cerro Dominador’ is the benchmark for five other concentrated solar power projects in northern Chile. These projects will add a total of 1,305 MW to national installed capacity. It is expected that, from 2030, the CSP will become a profitable technology, able to meet the growth in demand, so long as the cost of the technology remains competitive.

Key figures
  • 235,000 tons CO2 equivalent per year of direct GHG emissions avoided through the project
  • 580,200 MWh/year generated by the concentrated solar power plant
  • 380,000 homes supplied with electricity 24 hours/day
  • at least 1,906 jobs created through the “Mirror Programme”
  • 20% of the jobs in an important construction area (the Heliostat Manufacturing and Assembly Plant and the Solar Field) taken by women from the region; currently, 51% of the Cerro Dominador workforce are women;
  • an educational workshop “The Power of The Sun”, about solar energy and climate change, was developed for children to coincide with COP25.