August 16, 2016 / 5:27 PM / 2 years ago

Chile to choose from 84 bids on massive energy contracts

SANTIAGO, Aug 16 (Reuters) - Chile is due to announce on Wednesday the winners of bids to provide around a third of the country’s energy needs for two decades from the 2020s as the world’s top copper miner seeks to encourage renewables and cut high prices.

Divided into five blocks, the winners will supply a total 12,430 gigawatts per hour annually for 20 years from 2021 and 2022.

The massive auction - the biggest in the country’s history - has attracted 84 bids from home and abroad, including European firms Gas Natural, Ibereolica, Acciona Energia , AustrianSolar, wpd and Solairedirect.

Chilean state energy firm ENAP, which runs the country’s two major oil refineries and which the government wants to expand, is also participating.

Demand for energy has risen rapidly in Chile, which has among the highest power prices in Latin America and an energy-intensive mining industry that produces around a third of the world’s copper, much of it from remote desert areas.

It has practically no hydrocarbons of its own, but ample potential for renewable energy. Solar energy generation in particular has expanded quickly in recent years.

The government says the auction should lead to reduced prices for consumers, cutting household bills by at least 15 percent. Analysts agree that tariffs would probably fall as a result of the auction, pointing to likely aggressive offers from the large number of renewables firms participating.

“This will be one of the most competitive auctions in Chile’s history, with bidders presenting offers almost seven times higher than the amount being auctioned,” said ratings agency Fitch.

Chile has historically had one of the most reliable generation networks in the region and the government would likely take preserving that into account as well as pricing, it added.

Reporting by Fabian Cambero and Rosalba O'Brien; Editing by Alan Crosby

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