Supporting Chile’s
Coal Phaseout Through
Innovative Transition Pathways
Supporting Chile’s
Coal Phaseout Through
Innovative Transition Pathways
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Background of the Project
Chile is positioning itself as a global frontrunner in the shift from coal to clean energy. Renewables provided 70% of the country’s electricity last year, compared to 47% five years ago. Its progress is driven by a combination of strong policies, ambitious clean energy targets, and abundant renewable resources that continue to draw strong investment.
In 2019, the government and major energy companies agreed to retire or repurpose the country’s 28 remaining coal-fired power plant (CFPP) units by 2040. By 2025, eight units across three CFPPs still lacked a clear retirement plan. CSV partnered with several organizations to help Chile accelerate the transition of these units and generate insights to guide other countries in their coal-to-clean journey.
What We Did and Key Findings:
A consortium composed of CSV, Climate Action Teams (CAT), Reviva Transition Partners, and Dictuc conducted a technical study titled “Developing Pathways for Accelerating the Transition of Select Coal-Fired Power Plants in Chile.” The study was commissioned by CAT with support from the Coal Asset Transition Accelerator (CATA). The study explored decommissioning options through various approaches including refinancing, repurposing, co-firing with ammonia, and utilizing transition credits.
The report identified five key findings:
- Refinancing is a critical enabler for an accelerated CFPP transition.
- Repurposing the CFPP site to synchronous condenser and battery energy storage system (BESS) would present a financially viable transition pathway for CFPPs.
- Transition credits may further accelerate and increase ambition in CFPP phase-out.
- Co-firing with green ammonia would not be financially viable despite its technical potential.
- Different financing structures and approaches can be explored to finance and activate the transition.
A more detailed project summary can be found here.
Outcomes and Next Steps
- With CATA’s support, CSV and its partners successfully mobilized interest from independent power producer (IPP) owners to explore managed phase-out and energy transition pilot projects. The technical assistance provided also helped secure support from other key players in the Chilean power sector, establishing a foundation for long-term collaboration.
- Looking ahead, key next steps include assessing how the archetype transition pathway model can be applied to guide MPO and energy transition pilots for the remaining CFPPs, continuing engagement with regulators and market actors, and leveraging lessons learned to inform future policy recommendations.
- This study provides a practical and scalable framework for accelerating coal phase-out, not only in Chile but also for other emerging economies committed to a sustainable energy future.