Economic impacts of installing solar power plants in northern Chile

Chile has one of the best worldwide conditions for the generation of electrical energy from solar resources, having an annual average Direct Normal Irradiation (DNI) of 9–10kWh/m²/day. Many important astronomical observatories have been installed in the north of Chile because of the low number of cloudy days and the high sky clearness index. Also, in the north of Chile, there are many mining companies who demand large amounts of load for their operation. They currently use electricity provided from fossil fuels thermoelectric plants (99% of the electrical generation of the Northern Interconnected Power System is thermoelectric) that are subject to fuel-price volatilities and have large global and local impacts on the environment. The work reported in this paper focuses on identifying a limited number of variables, which explain the variations on the investment cost of solar power plants, and use this information to assess the economic benefits of the installation of this type of plants in the north of Chile. In particular, multiple linear regressions were formulated, with information about 45 thermal and 37 photovoltaic existing and projected solar plants, to explain the variations among the investment cost of the different projects. We determine a limited number of variables that adequately explain the variations of the investment cost of solar energy power plants. Using these results, 11 technologies were simulated in four locations to assess the economic impact of these projects in terms of the change induced in the marginal cost of the system and the net present value of the 44 projects. We show that installing a solar power plant in the north of Chile will not bring net economic benefits for the power sector unless current conditions on factors such as carbon bond prices, labor rate, or solar-plant part prices change. The break even capital cost and energy cost for a Stirling Dish solar plant in Calama are 2.33 millions of USD/MW and 9.3 cents/kWh, respectively.