AES Corporation, Chile agree to retire more than 1 GW of coal generation

Published on July 13, 2021 by Chris Galford

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In an agreement reached between the government of Chile and the AES Corporation, AES was given the go-ahead to close 1,097 MW of coal generation as early as 2025, marking a record coal retirement arrangement for the country and potentially eliminating as much as 20 percent of Chile’s total coal capacity.

AES will be able to retire units as soon as January 2025, as allowed by the national power grid. Globally, the company intends to sell or retire nearly 12 GW of coal capacity over the coming years, and in Chile specifically, it has also paired this with plans for replacements. Current plans call for the company to invest $3 billion into the building of 2.3 GW of renewable and energy storage across Chile and Columbia by the end of 2024.

“The retirement of these conventional assets will remove approximately 6 million tons of CO2 from the atmosphere, the equivalent of taking over 2.4 million cars off the streets of Chile,” AES President and CEO Andrés Gluski said. “Our purpose is to accelerate the future of energy, and AES Andes is a great example of how we have committed to responsibly decarbonize the Chilean electricity sector, working constructively with the authorities and our customers.”

The details of the plan in Chile were agreed to by AES one side, and Chile’s President Sebastián Piñera, Minister of Mines and Energy Juan Carlos Jobet and Minister of the Environment Carolina Schmidt on the other.

For AES, this marks a major forward step toward decarbonization, and for Chile, an equally momentous opening for renewable energy. The South American country has already positioned itself as a major spot for foreign renewable energy projects, guided by a major National Energy Policy.

In addition to these latest moves for AES, the global company intends to reduce its coal generation below 10 percent on a pro-forma basis by the end of 2025. It also intends to hit net-zero emissions from its electricity sales by 2040.