Chile has been facing an overwhelming boom in its solar energy industry in the past couple of years that it is forced to give away electricity for free.
According to a new report by Bloomberg, the Latin American country's solar capacity has reached 770 megawatts - a four-fold increase since 2013.
This year, because there are many solar power projects lined up in Chile, another 1.4 gigawatts will be added to its central grid.
In 2015, electricity in several parts of Chile became free for 192 days. Now, in just the first quarter of 2016, spot prices dropped down to zero for 113 days, the report said.
The surge in energy demand was pushed by the country's increasing mining production and economic growth. This has contributed to the development of 29 solar farms that currently supply the central power grid.
Another 15 solar farms are under construction. In farther north, where the mines are located, the rush toward solar energy is even more pronounced.
Although the overwhelming boom may seem beneficial to consumers, it spells trouble for the nation's power industry, especially for companies with power plants struggling to generate revenue and developers expecting financing for facilities.
As Chile grapples with its unique circumstances, the situation also reflects a broader trend all over the world as countries, companies and citizens seek cleaner and more sustainable energy.
Carlos Finat, president of Chile's renewable association, tells Bloomberg that the current administration has set the energy sector a priority.
"But planning has been focused in the short term when it is necessary to have long-term plans to solve these type of issues," says Finat.
Indeed, there is another problem: the country's main power grids are separated from one another, and should the other need an energy surplus, the transfer is impossible.
The Latin American country is not alone in its struggles for clean energy, which prompt traditional industries to adapt to the changes, and which challenge governments to create appropriate policies.
For instance, California is aiming to make all new homes become zero net energy by 2020. These new homes will have to produce as much energy as they consume over a year by using advanced water heaters, solar panels, smart thermostats and other efficient technology.
Additionally, Alex Laskey, president of Opower, a company that offers software to utilities, says changes in production have caused utilities to reconsider their business models.
"What they want to be is an energy services provider," Laskey tells the Christian Science Monitor.
Meanwhile, Chile will have to invest more in its transmission infrastructure for the entire country to tap into the solar power grid located in the north and stabilize demand.
Maximo Pacheco, minister of energy in Chile, says the country has about seven or eight points within transmission lines that are blocked and collapsed. He says it will be an enormous challenge to bypass these choke points.
"When you embark on a path of growth and development like the one we've had, you obviously can see issues arising," says Pacheco.
Chile will develop a 1,865-mile transmission line that will link both grids to one another.
Photo: Global Panorama | Flickr
