Chile is producing so much solar power, it's giving it away

Market forces often produce strange quirks in the economic system, like the one we're seeing in Chile this year: the country is producing so much solar power that it's being sold for... nothing at all.

While it's incredibly encouraging to see so much expansion in the country's renewable energy output, this huge amount of supply does actually cause problems for the companies looking to invest in solar energy.

Solar capacity on Chile's central power grid (called SIC or Sistema Interconectado Central) has more than quadrupled over the past three years to 770 megawatts– good news for the environment and customers paying their electricity bills.

Now the challenge is to upgrade the infrastructure to cope with the influx of solar energy.

As Vanessa Dezem and Javiera Quiroga report at Bloomberg, spot prices (set bysupply and demand) for electricity have hit zero for 113 days this year up to the end of April. That compares with 192 days in total in 2015.

Increasing energy demands and investment followed by a slowing of economic growth means that regions are being oversupplied with power – 29 solar farms are now online in the country with a further 15 in the pipeline.

It's fantastic to see so much solar energy being produced, but next-to-nothing prices will discourage future investment and mean power plants just aren't profitable, warn experts.

The solution lies in increasing the country's ability to take on extra capacity, and there are plans to build a 3,000-kilometre (1,854-mile) transmission line to link the SIC with Chile's northern power network for the first time.