Potential powerhouse

Over the last few years Chile has seen an important increase in the use of thermal energy. Last year for the first time in its history more than 50% of the electricity supply was generated by non-renewable fuels. Chile’s alternate energy resources could change that.

Chile is a developing country with important annual growth prospects. But its limited domestic energy resources are not enough to meet demand. Energy consumption in Chile has grown fast in recent decades, especially electricity consumption, which has increased at an annual rate of 2.4% since 2001 and 4.2% since 1990.

Chile’s proven crude oil reserves in January 2006 were estimated at 150 million barrels (equivalent to 20 million tons or Mt), which is insignificant in comparison with annual domestic consumption of 11.7 Mt. Proven natural gas reserves varied between 42 and 98 billion cubic meters (bcm) in 2006 compared with annual consumption of 7.8 bcm that year.

Chile does have significant low- sulfur, sub-bituminous coal reserves, estimated at between 200 Mt and 500 Mt. But domestic production falls far short what the country uses. In 2007 for example, Chile produced 0.8 Mt of coal compared to the 5 Mt it consumed.

Similarly, Chile has abundant hydropower potential but its hydropower supply is not as geographically diverse as that of other countries making it vulnerable to hydropower supply disruptions caused by recurring droughts every two or three years.

Filling the demand

To meet its energy demand, Chile turned to Argentina to supply natural gas in the 1990s and the share of natural gas in electricity generation increased from 1% in 1997 to 33% by 2004. However, beginning in 2005 because of restrictions on gas exports by Argentina, as well as low hydrology, the situation reversed in favor of coal and oil.

Electricity companies turned to coal-fired plants, an easy solution since Chile is not required to reduce CO2 emissions by the Kyoto Protocol. Another solution was the construction of two liquefied natural gas (LNG) terminals.

energy1The first project at Quintero Bay, located 114 km from Santiago, cost $1.2 billion and was developed by GNL Quintero and processes 2.5 million tons of LNG annually. A second plant, GNL Mejillones, owned equally by Suez Energy International and CODELCO, is an on-shore LNG regasification terminal in Antofagasta.

The government is also supporting the exploitation of Chile’s vast but mostly undeveloped renewable energy potential. Hydropower will remain a significant component of its energy mix with the construction of a major new complex in southern Chile.

Chile’s two largest generators, Endesa and Colbún, have created a joint venture, HidroAysen, to build a 2,750 MW installed capacity power hydroelectric plant and a 2,000 kilometer transmission line, with a total investment of almost $10 billion.

energy2Hydroelectricity is the main source of renewable energy there is in the world,” says Colbún Chairman Bernardo MatteLarrain. “Any other alternative in Chile involves importing fuel. As we don’t have gas, we have to bring it from far away. We have very little coal and it’s not enough, so we have to import it from Australia, Colombia, the U.S. and so on. So as an energy base, hydroelectric power is without a doubt the way forward for Chile.”

Non-conventional renewable energy

Wind has the potential to contribute to a large share of additional renewable energy capacity. The country currently counts with more than 160 MW of wind generated capacity, but nearly 500 MW of additional capacity is planned to start construction by 2020.

Chile also has 10% of the world’s active volcanoes, highlighting an abundant potential for geothermal energy. Seven 40 MW geothermal generation projects are planned to be built between 2016 and 2020.

The north of the country is rich in solar energy. The Atacama Desert gets among the world’s highest of amount of sun daily per square meter and more than a dozen solar installations are planned there.

For more information:
Chilean National Energy Commission
Central Energia

Success Story
How do you say fjord in Chilean?

With a strategic vision about clean power in emerging markets, Norwegian company SN Power is busy developing renewable and low-CO2 energy projects in Chile and Peru.

Based in Oslo, Norway, SN Power is a joint venture between Statkraft and Norfund. Founded in 2002, the company had 2010 revenues of $114 million, from eleven countries on three continents. SN Power first decided to invest in Chile in 2004, after several months of evaluation period and feasibility study.

Convinced of the potential in the country, SN Power first committed to invest about $800 million in two hydroelectric projects, La Higuera and La Confluencia, about 250 kilometers south of Santiago. Both hydropower plants will each produce around 750 GWh annually.

Completed in 2009, SN Power’s wind farm at Totoral, about 300 kilometers north of Santiago, was the company’s third investment in Chile. The wind farm’s 23 turbines produce almost 110 GWh every year, supplying energy for about 36,000 people (or 12.000 households).

“What makes Chile all the more interesting for us,” explains Torger Lien, CEO of SN Power (Norway), “is that we can start using Chile as a regional platform for our other South American operations, namely our twin projects in Peru and our developments in Brazil.”