AES Andes to quit on over 1 GW of coal-fired capacity in Chile in 2025

Santiago, Chile-based power company AES Andes SA has revised its voluntary decarbonisation agreement with the Chilean government, committing to an early retirement of four coal-fired units totalling 1,097 MW, it was announced on Tuesday.

The company, which directs Latin American operations of US group AES Corp (NYSE:AES), said that the units 3 and 4 of the Ventanas power plant complex and units 1 and 2 at Angamos will be at the mercy of the Chilean energy authorities as of January 1, 2025.

The selected units “will be available for retirement as soon as the security, sufficiency and economy of the system allow it”, and may cease operation if the authorities decide so, AES Andes said.

The move will reshape AES Andes' portfolio, as the company plans to add 2.3 GW of renewable energy and energy storage capacity to its business in Chile and Colombia by 2024.

The renewed agreement follows the June 2019 voluntary decarbonisation plan that AES Andes, then AES Gener, and three other power producers signed with the Chilean government, pledging to retire all coal-based plants by 2040.

Under the two-phase plan, the companies would close eight plants by 2024, and the remaining 20 by 2040.

Since June 2019, one by one, the companies started petitioning with Chilean authorities to allow them to close their coal-fired units earlier than originally envisioned in the voluntary plan.

AES Andes already petitioned twice to push the retirement of Ventanas units 1 and 2 to an earlier date, and added one gas-diesel plant to the closure pile this spring, before deciding to let the four latest units go offline at any time before 2040.

In the meantime, Italian group Enel SpA (BIT:ENEL) announced it would shut down its last coal-fired power plant in Chile in May 2022, while France’s Engie SA (EPA:ENGI) intends to do the same by 2025.

According to the Chilean energy ministry’s count, there are now 18 coal-fired units lined for retirement by 2025, while eight of them will cease operation by December 2021.

Grid operator SEN and the national energy commission, CNE, will have to approve the new schedule, the ministry added.

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