Peru and Chile advance $550 million electrical interconnection amid broader regional integration push

Peru’s Energy and Mining Minister Guillermo Shinno confirmed at the XXI Chile-Peru Business Council meeting that the electrical interconnection remains on the bilateral agenda, with discussions expected before November 2025 or at the November 29 binational meeting. The project contemplates a 500-kilovolt transmission line with 1,000-megawatt capacity linking Montalvo in Peru with Kimal in Chile. A 2025 study commissioned by the Inter-American Development Bank estimates the infrastructure would require $550 million in investment and generate average combined benefits of $170 million annually, with bidirectional electricity exchange between 3,600 and 5,700 gigawatt-hours per year.

The interconnection would exploit complementarity between Chile’s solar and wind generation and Peru’s hydroelectric and natural gas capacity. Shinno noted that Peru already benefits from hydrological complementarity with Ecuador and sees different advantages with Chile. The bilateral cooperation extends beyond electricity to mining, where both countries signed a joint declaration with Argentina and Bolivia in August 2025 on critical minerals development. Chile ranks as the world’s leading copper producer while Peru holds second or third position globally.

Regional analysis presented at the XI Energy Week shows the Peru-Chile link ranks among the highest-value projects in a portfolio of 16 candidate interconnections evaluated for Latin America through 2040. The Regional Electrical Interconnection Plan, developed by OLACDE with CELAC and European Commission support, projects net benefits ranging from $1 billion to $5 billion annually depending on scenarios, with benefit-cost ratios between 3.7 and 18.5. Twelve interconnections form the optimal portfolio under base assumptions, with all 16 proving valuable under at least one scenario involving fuel price variations, electrification growth, or climate phenomena.

The Peru-Chile corridor is strategically significant as it would link the Andean system with the Southern Cone, similar to how Panama-Colombia would connect Central America with the Andean region. The interconnection discussions occur as Chinese state enterprises consolidate control over Peru’s electricity distribution. China Yangtze Power owns 83.6 percent of Luz del Sur serving southern Lima, while China Southern Power Grid International acquired the former Enel Distribución Perú in 2024. Together these companies serve approximately one-third of Peru’s electricity users, raising regulatory scrutiny over competition and infrastructure security despite legal frameworks evaluating concentration by corporate entity rather than nationality.