Colbún and Chile's Energy Transition

In May 2023, Colbún, Chile’s second-largest electricity generator, plans capacity expansions using renewable energy and storage. This strategy supports Chile’s commitment to carbon neutrality (also known as net zero emissions) by 2050. The case delves into the advantages and disadvantages of several energy sources and storage technologies, taking into account Chile's energy transition pathway. Colbún aims to expand while ensuring a reliable 24/7 power supply, a challenge due to the intermittent nature of some energy sources, such as solar and wind technologies. To this end, the company must consider complementary energy sources and storage solutions. Additionally, there is a need for new or upgraded transmission lines to transport electricity from new plants, along with regulatory changes to accommodate energy source characteristics. However, these changes are not unfolding as rapidly as renewable energy projects across the country. Chile has become a global hotspot for solar and wind energy developers, but several companies are already running into obstacles. José Ignacio Escobar, who became Colbún’s CEO in 2022, must navigate this intricate landscape to determine whether to expedite the company's shift into renewable energies. This choice includes selecting the most suitable technologies to invest in while striking a balance among competitiveness, energy security, reliability, and the sustainability of the energy system. Taking a close look at Colbún’s operations, this case illustrates the intricacies of conducting business in the context of global energy markets. It particularly underscores the challenges posed by the ongoing decarbonization of energy systems.