Chile aims to position itself as a leader in offshore wind energy in Latin America. In this expert blog, we tell you why.
With over 6,000 kilometers of coastline, Chile stands out for its seafood exports (which exceed US$ 8.7 billion annually) and is emerging as one of the countries with the most significant potential for offshore wind power plants in Latin America.
The country’s combination of steady winds, deep water close to shore and a strategic location in the South Pacific offers a new frontier for clean, sustainable energy generation with commercially competitive solutions that have proven viable.
Chile’s renowned energy transition undoubtedly reflects a significant, steady wave of investment. The trend is such that Corporación de Bienes de Capital (CBC), a private entity that compiles data on projects undertaken in Chile, estimates sector investments will exceed US$13 billion by 2028—a figure second only to mining investments.
Moreover, the country has considerably reduced its dependence on external energy thanks to renewables in the electricity sector. It now plans to become a renewable energy exporter, as established in the country’s 2050 Energy Policy and National Green Hydrogen Strategy.
To achieve this goal, Chile will need to significantly increase its renewable generation capacity in the coming years. By 2060, it will require 150 GW of installed capacity—10 times the current figure—to cover demand growth, the electrification of consumption and the production of green fuels such as green hydrogen and its derivatives.
The magnitude of the required investment is large enough to warrant consideration of all competitive power generation sources. As observed in other parts of the world, offshore energy represents one possible source.
Offshore wind generation around the world
Offshore wind energy is a competitive renewable energy source in most markets with high penetration of non-conventional renewable sources.
According to data from the International Renewable Energy Agency (IRENA), global offshore wind energy currently comprises approximately 7% of the world’s total installed wind energy capacity. Offshore wind totals 75 GW, distributed across 18 countries, with China, the United Kingdom, and the Netherlands accounting for more than 80% of the total installed capacity.
These figures will likely increase significantly in the coming years, reaching an estimated 218 GW by 2028, approximately 15% of total global wind energy capacity, thanks to the opening and commissioning of new markets in the Americas, Oceania and Asia.
Almost all of today’s installed capacity corresponds to solutions fixed to the seabed developed for shallow waters of less than 50 meters. Between 2010 and 2022, economies of scale and innovation have driven the global LCOE (weighted average) for offshore wind energy down by 59%, from US$197/MWh to US$81/MWh.
However, the market is slowly migrating toward floating structures for use in deeper waters. This technology considerably expands the potentially compatible geographical areas, particularly countries without an extensive continental shelf.
Systemic benefits
Given the near-shore depth characteristics of the Chilean seabed, offshore wind energy technology will to the extent that the floating solution becomes competitive.
This should happen toward the beginning of the next decade, thanks to the economies of scale from the 250 floating GW currently under development globally2 and technological innovations that will lead to a cost reduction similar to that seen in fixed-foundation solutions.
Given this reality and Chile’s need to develop over 100 GW of additional renewable energy capacity, offshore wind farms could represent a crucial opportunity in terms of energy security and sustainability, as well as local economic growth and development.
Indeed, there are at least four strong reasons to think so:
- The proximity of generation to consumption centers: One of the world’s great challenges in transitioning from fossil fuels to renewables is that renewable energy sources are often located far from today’s thermal power plants and/or demand centers. Chile’s geography ensures that any offshore generation project can be located within a few kilometers of demand centers, significantly reducing the stress related to the high complexity of long transmission lines' construction and operation.
- A renewable solution capable of supplying base and nighttime demand: Unlike onshore wind power, where construction and natural barriers like valleys or mountains affect wind resource quality, offshore wind is much stronger and steadier. This enables the construction of parks with higher capacity and capacity factors, potentially enabling wind generation to compete with solutions that currently supply base demand during daylight hours when the sun is not shining.
- Sites with high offshore wind potential coincide with areas where coal-fired power plants are being decommissioned: Initial studies by the Energy Ministry indicate that regions with excellent wind power potential coincide with many of the locations where coal-fired power plants will be decommissioned over the next decade. This presents an opportunity to repurpose grid infrastructure and support economic reconversion for local communities.
- Production chains and economic development: Offshore wind farms pose an opportunity to develop a new sustainable industry with skilled jobs and essential parts of the production chain. This is true of the opportunities related to floating platforms and the full range of services required during the construction, operation and
maintenance stages. Furthermore, the offshore wind sector shares significant synergy with the infrastructure- and logistics-related enabling measures that Chile plans to implement in the coming years as the industry around green hydrogen and its derivatives expands.
Chile takes the first steps toward offshore wind energy
Harnessing the opportunity offshore wind energy presents in Chile will require accelerating the pace. So, it is excellent news that foreign developers submitted the first maritime concession applications last year and expect to launch operations by 2035.
Currently in preliminary development stages, these projects involve more than US$20 billion in potential investment. They could create thousands of new jobs, mainly in the Biobío Region (451 kilometers south of the capital city of Santiago), where application demand is highest.
A primary function of InvestChile, the state’s foreign investment promotion agency, is to support foreign investors who wish to invest in the country and accompany them at each stage of their projects.
The agency is already working with these first potential investors and other institutions, including the Energy Ministry, the Economy Ministry, the Undersecretary for the Armed Forces and DIRECTEMAR, to better understand the conditions these projects require and their potential impact. This information will inform the preliminary steps that could lead to the birth of a new industry in Chile.
International experience indicates that the feasibility of offshore wind energy in Chile hinges on regulatory and market actions that make its development viable and facilitate its coexistence with other sectors and economic activities at sea and along the coastline. It will also require key enablers, like available ad-hoc port infrastructure and logistics and service providers for the construction and maintenance of wind generation farms.
To address these challenges, the Energy Ministry has recently announced a roadmap, drafted in collaboration with international partners, to outline Chile’s strategy for developing the offshore wind energy industry.
To learn more about investment opportunities in Chile, check out our website or contact us.
