Energy to Chile

Trends and opportunities

The market

Chile imports 60 per cent of its primary energy and as a net importer it has been subject to volatility in international market prices and supply restrictions. In the last decade Chile’s energy sector has also been marked by gas supply disruptions from Argentina, prolonged and severe droughts, challenging permitting and social environments for new largescale projects, the dominance of three main generation companies and scarce investment in transmission. As a result, the country has one of the highest energy costs in Latin America, with household prices averaging US$188,1p/MWh in 2014. The current government has refocused its agenda on developing a long term energy policy aimed at lowering marginal costs and keeping consumer electricity prices under control by promoting efficient energy use and investment in diverse generation projects.

Chile has an open electricity market. It is separated into three distinct areas which are all financed by private investment: generation, transmission and distribution. Generation and commercialisation are competitive markets while transmission and distribution are subject to regulations that set access prices, ensure third party access and establish investment requirements. Energy consumers are classified in to two categories: regulated customers (customers of local distribution companies) and unregulated customers (those with a minimum demand above 2MW and are free to negotiate directly with generators for power supplies).

Transmission is one of the main challenges of Chile’s energy industry. Chile’s SIC (Central Interconnected System (SIC) located in the centre of the country) and SING (The Northern Interconnected System (SING) serves northern Chile and the mining industry) grids are disconnected, preventing the distribution of surplus energy between the systems. Today, energy intensive mining operations in the north cannot access surplus hydroelectric power from the SIC. Two projects are underway to connect the SIC and SING: the $US1 billion Cardones-Polpaico line developed by Colombia’s Interconexion Electrica S.A. and the US$781 million SING-SIC interconnection by French Engie and Spain’s Red Electrica. Although they are earmarked for completion by late 2017 they are already facing setbacks and opposition with a congressional enquiry investigating their environmental evaluation process.

Transmission is also a barrier for the development of renewable energy projects. Most renewable projects with potential are located in remote areas, the cost of installing lines to connect them to the main systems are a disincentive to their development. Chile does not provide subsidies to support the development of energy projects. In 2015 the energy ministry sent legislators a transmission bill designed to facilitate the transmission of high tension transmission lines in a more efficient and sustainable manner.

The distribution sector relies on a concession system and regulated distribution tariffs to provide services.


Opportunities for Australian exporters include:

  • Limited domestic limited fossil fuel resources (Chile imports most of these).
  • Energy demand is expected to grow at 6 per cent a year, particularly in the nation’s capital where the urban population continues to grow despite global drivers.
  • Chile is actively seeking to diversify energy generation sources and is strongly pushing for renewables. Solar, wind, combined cycle and mini hydro (up to 20 MW) sources encountered less permitting issues depending on their location.
  • With the constant improvement of solar technology and battery storage, solar projects will increase their competitiveness in the market. Until that time, baseload power projects (or combination renewable/baseload) will continue to be required to satisfy demand.
  • The government is actively inviting new players to enter the country. Chile’s Foreign Investment Committee and energy ministry have embarked on a strong international campaign aimed at inviting energy companies to participate in upcoming power supply tenders.

Competitive environment

Generation is dominated by the Spanish-Italian conglomerate Endesa (33 per cent), Italy’s AES Gener (16 per cent) and Chilean Colbun (16 per cent). While the government is actively promoting the entry of new players (particularly in renewables), global drivers (including low oil prices) and unexpectedly long permitting processes have stalled the participation of a number of majors (including Origin Energy and Pacific Hyro).

Transmission is dominated by Chile’s CGE Distribución S.A., Chilectra S.A. (controlled by Endesa and Italian Enel), Chilquinta Energía S.A. (a unit of US’s Sempra Energy), and Inversiones Eléctricas del Sur S.A. (Chilean group SAESA).

Tariffs, regulations and customs

The Chilean economy relies heavily on trade and foreign investment.

The Australia-Chile free trade agreement (ACI-FTA) came into force in 2009 and covers goods, services and investment. In 2015 all tariffs were eliminated with the exception of sugar. Please see the Department of Foreign Affairs and Trade website for comprehensive information on the ACI-FTA.

In 2013, the Double Taxation Agreement (DTA) came into effect. The agreement provides certainty for Australian and Chilean businesses through a framework for the taxation of cross-border transactions. It reduces barriers to the cross-border movement of people, capital and technology, primarily through reducing withholding taxes on dividend, interest and royalty payments. Further information is available at the Australian Treasury website or the Australian Taxation Office website's list of countries that have a tax treaty with Australia.

Chile has 22 preferential trade agreements in place with 59 countries, including 10 APEC member nations such as Australia, Japan, Singapore, India, New Zealand and Korea.

Chile is also a member of Mercosur (Customs Union involving Argentina, Brazil, Paraguay and Uruguay), the Andean Community (Colombia, Ecuador, Peru and Bolivia) and the Pacific Alliance Agreement (Colombia, Mexico and Peru).

Chile’s FTA and DTA with Australia combined with its extensive network of agreements with other Latin American countries reinforces its position as the hub for Australian companies to expand into Latin America.

Chile is not a signatory to the Madrid convention on trademarks, so it is advisable to protect your trademark in Chile with the relevant office.

Chile is a civil law country as opposed to a common law country which has implications in the way that business is done in the country and how contracts are enforced. It is highly advisable to consult with a lawyer before entering the market. Austrade can help you with referrals to law firms.

Marketing your products and services

Market entry

With more than 120 Australian companies doing business in Chile, there is a well-worn path for establishing a sustainable presence in this market. Many Australian companies seek to develop a presence through organically growing a subsidiary office, others have acquired a local company, or developed a joint venture.

Some suppliers may prefer not to establish a presence in Chile but instead prefer to sell into the market through distributors or agents. This approach is certainly less capital intensive but requires patience and a good local partner.

The best approach depends on a variety of factors including the type of business, the appetite for risk, funds available to the company and issues around protection of intellectual property. Relationships are very important in Chile and a local partner can provide valuable connections and networks to decision makers.

Some tips to keep in mind:

  • Setting-up in Chile sends a strong message to customers and signals your commitment to the market and will often convert interest into a solid commercial relationship.
  • Finding a local partner or representative that can help you navigate Chile public and private bidding processes is an advantage.
  • Understand Chilean Government and company structures and their process for procurement. To be successful you need to be patient, persistent and polite. It is not uncommon to have your emails unanswered.
  • Prepare a concrete value proposition which clearly demonstrates how your solution has saved customers money in previous projects.
  • Consider participating in energy related industry conferences in Chile.They are an excellent vehicle for gathering intelligence and networking. Austrade often hosts business networking events alongside these conferences.

Links and industry contacts

Energy industry resources

Asociación de Generadoras de Chile

Government, business and trade resources for Chile

Ministry of Energy

Foreign Investment Committee (CIE)

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

Contact details

The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

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Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.

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