Enel wins Chile's latest power auction by narrow margin

Enel Generación Chile has won the entire allocation in Chile's latest electricity auction for regulated customers. The Chilean unit of Italy's Enel SpA secured 100% of the contracted energy in the 025/01 tender organized by the National Energy Commission (CNE).

According to analysis by consultancy Aurora Energy Research, the auction results were decided by extremely narrow margins. A uniform reduction of just 0.7% in competing bids would have been enough to change the winning bidder. The consultancy's report, based on its new Regulated PPA Market Insights tool, states that small changes in price, volume flexibility, or indexation structure could have altered the ranking of several offers.

Six companies participated in the process, submitting 708 bids. These bids represented nearly four times the 3,360 GWh of electricity per year required by the tender. The contracted energy will be supplied from 2027 through 2030 and is equivalent to about 11% of Chile's projected regulated demand in 2027.

Auction dynamics and key risks

Aurora's analysis highlights that the economics of a regulated power purchase agreement (PPA) depend on more than just the expected value of electricity. The consultancy identifies several factors that affect a bid's position, including the value of the base supply profile, capture price risk linked to the generation technology, and the cost of purchasing energy that a generator fails to produce.

Transmission and system costs, volume risk, and modulation factors also play a role. Aurora points to three key locations within a contract's structure: the offer node where a bid is submitted, the withdrawal node where a distributor buys power, and the injection node where a plant delivers electricity to the grid. Differences between these nodes can create economic exposure for suppliers.

Raúl Urtubia, research product manager at Aurora Energy Research, commented on the competitive landscape. "The difference between winning and losing can hinge on a fraction of the price, how volume is allocated across zones, or the indexation structure," Urtubia said.

The challenge of utilization risk

A significant finding from the analysis is the declining utilization rate of regulated contracts in Chile. Aurora's data shows this rate fell from 92% in 2015 to 58% in 2022, with notable differences between geographic zones and time blocks. For one benchmark contract, lower utilization accounted for nearly 20% of the PPA's total value.

Modulation factors, which are designed to compensate for differences between supply and withdrawal nodes, only provide partial coverage. Aurora states these factors do not fully reflect intraday price patterns, particularly during periods of high solar generation. The consultancy therefore argues that bids must account for projections of nodal prices, congestion, and transmission risk over the entire contract period, rather than being assessed on average electricity prices alone.

Forthcoming tender and analysis tool

Chile's CNE is currently organizing the 2026/01 electricity auction. This tender covers 2,835 GWh of annual supply across four geographic zones, divided into two contract blocks and three time bands.

Aurora developed its Regulated PPA Market Insights tool ahead of this ongoing auction. The tool combines historical demand and utilization data with contract economics, demand and price scenarios, competitor analysis, and portfolio simulations. It is designed to help bidders estimate their probability of winning under different strategies and to quantify key sensitivities before participating in a tender.

In one supply zone during the previous auction, the available volume was exhausted earlier than in others, becoming the constraint that ultimately determined the overall outcome.