When one considers how low retail electricity rates in the U.S. are relative to other countries, the continued growth of the solar and wind industries is particularly impressive. But what happens when renewable energy developers look outside the U.S. and target those countries which don’t have the abundance of coal and natural gas that has kept U.S. electricity rates so low.

Data from the Energy Information Agency shows that average end user retail electricity rates are around 10 cents per kilowatt-hour. The Japanese pay 26 cents per kilowatt-hour. The Germans pay 35 cents per kilowatt-hour and the Danes pay a whopping 41 cents per kilowatt-hour.

One nation that I’ve been paying attention to recently has been Chile. It has ideal market conditions for renewable energy development. Chile has essentially zero domestic gas or coal, and there are earthquakes, making the prospect of nuclear power unappealing. Additionally the nation is at high altitude, with cool desert weather and a high level of solar radiation. Chile gets most of its power from hydro and coal.

Most importantly, power generators can often fetch a reliable 20 cents per kilowatt-hour. In the spring I spoke with Dylan Rudney, the founder of Verano Capital which invests in and develops solar projects in Chile, who noted to me that Verano’s research indicates that Chile’s electricity rates are 220 percent higher than the rest of South America. Verano is developing a 100 megawatt project and partners with other funds interested in construction equity.

“All of those reasons make it more surprising to me that it’s just taking off. And it is taking off but I’m surprised that just now it’s happening,” said Verano. “As panel pricing has gone down dramatically, it’s becoming so obvious that it’s hard to miss. We’re targeting a 40 percent levered IRR [internal rate of return] for our spot market sales.”

The bottom line for Rudney is that Chilean solar doesn’t require government subsidies to turn a profit. Rudney is not alone in seeing the opportunity even if he remains surprised at the dearth of developers in Chile.

Sunpower plans to build and maintain a 70-megawatt deployment in the Atacama region of Chile in affiliation with Total and Etrion Corporation. First Solar acquired Solar Chile earlier this year, a solar developer with 1.5 gigawatts of early stage pipeline.

What’s unique about Chile is that many projects are being developed without power purchase agreements in place, which means developers are taking the risks associated with selling solar power openly on the spot market. But they are confident that because electricity prices are so high, the cost of solar will be able to more than compete.

Some projects still look for power purchase agreements because when developers have such agreements banks will loan them a higher ratio of capital, increasing leverage and return for investors. Local banks will typically only finance with a PPA, and Verano says they’ve gone to larger international development banks like the World Bank for finance.

Currently there is a miniscule 3.2 megawatts plugged into the Chilean grid with 2000 megawatts in the pipeline. Not surprisingly the main bottleneck remains grid connection, a common problem dogging every renewable energy market, including leading markets like China and the U.S. Rudney estimates that projects are often looking at 6-12 month lags to figure out grid connectivity. Additionally, as solar becomes big in mining focused Chile where energy can be required in the evening, grid energy storage and demand side energy management could become necessary.

Where else in South America is Rudney curious about? While Chile is the low hanging fruit, he notes Uruguay has a government program that is opening up the country to solar. He’s also investigating projects in Colombia and Peru. But for now with panel prices falling and electricity rates sky high, Chile is optimal for solar development.