Chile has so much solar energy that the price of solar frequently drops to zero, which is great news for consumers but frustrating for energy companies and investors.

Under President Michelle Bachelet, Chile has been aggressively expanding its solar energy generation, adding 371 megawatts of solar power last year alone. However, construction of new energy infrastructure has lagged behind, with no national power grid and many unserviced areas. This leads to an overabundance of power in certain areas while others get left out.

This overabundance has led to the spot price, or current price, of solar dropping to zero over a hundred times so far this year through April. Bloomberg reports that this number is set to beat 2015's total, which saw 192 such price drops for the whole year.

Currently, Chile has two separate power grids, a northern and a central grid. Since 2013, Chile has quadrupled its solar capacity in the central grid to 770 megawatts, leading to a surplus in that region that can't be shared with other parts of the country. Furthermore, several line outages make it difficult or impossible to route power from one end of the grid to the other.

Plans are underway to connect the northern and central power grids by 2017 with 3000 kilometers of transmission line, which should bring some stability to the energy price. In addition, the government is constructing 753 kilometers of line to bypass the outages in the central grid.

With construction of new solar plants bringing an estimated 1.4 gigawatts of additional solar capacity this year, Chile's solar problems may get worse before they get better. The solar price drop may discourage energy companies from operating in Chile, and banks may refuse to finance construction of new power plants. Whether the new infrastructure will be built in time to stabilize the solar industry remains to be seen.

Source: Bloomberg