Country report: Chile

Materials World magazine
19 Dec 2018

Chile’s recent commitment to renewable energy has been described as a revolution, built on progressive policies, and solar and wind potential. But flagging efficiency reveals the scale of transition remaining. Khai Trung Le reports.

In May 2018, Materials World wrote about Chile’s mining potential – so optimistic was mining firm Wealth Minerals that it declared the country ‘the Saudi Arabia of lithium’ – particularly of the Salar de Atacama, the largest salt flat in Chile (see Materials World, May 2018, page 16). But just as the salt flat houses both some of the world’s most promising lithium brines and solar resources, so has Chile steadily been increasing its commitment to renewable energy sources, more than tripling its green generation since 2013.

So proud is the country of its efforts that former Chilean Energy Minister, Máximo Pacheco, published the book, Energy Revolution in Chile, on 10 May 2018, but while its progress is undeniable, the country’s energy efficiency holds it back from overthrowing its commitment to imports.

Before 2014, Chile generated only 5% of its total energy from renewable sources. The energy mix was complex, subject to disruptions to its gas supply from Argentina, severe drought affecting hydropower, and opposition to large generating projects from the population. This mired average electricity prices from the two largest grid connections, the Central and Great Northern Interconnected Grids, reaching around US$112/MWh, some of the highest prices in Latin America.

However, Chile managed to triple its low-carbon generation by early 2018, reaching 18% in May 2018  – split across 8% solar, 6% onshore wind, 2% biomass and 2% small hydroelectric. Many attribute this growth to far cheaper energy auctions held in December 2017, averaging 75% lower than in 2013, which produced a reduced average price of US$32.5/MWh.

Wide open spaces

Part of the transformation lies in the abundant physical potential. The Atacama region, the driest desert in the world, boasts some of the highest global levels of solar radiation, and significant annual sunshine hours. Atacama houses numerous solar plants, including the 100MW Amanecer Solar CAP that opened in June 2014, at the time the largest solar plant in Latin America, and the 70MW Salvador solar park, known as the first plant in the world to supply competitive solar prices within government subsidy, which came online shortly after in November 2014.

Atacama represents perhaps an ideal amalgamation between Chile’s forward-thinking energy plans and pursuit of mining success. In 2013, Chile passed a law mandating that 20% of its energy come from renewable sources by 2025. Mining represents around a third of the country’s power usage, and mining interests have long committed to renewable energy in the country, drawn to the low costs and abundant physical circumstances – state-owned copper producer, Codelco, which owns the world’s largest open pit based in Chile, has invested in its own solar and wind projects, while others have contracted third-party renewable companies.

EIG Global Energy Partners is constructing the Cerro Dominador solar-thermal plant that will concentrate solar energy into a tank of molten salt to function as a thermal battery, while Arcon-Sunmark and Energía Llaima have partnered with Codelco on the Pampa Elvira solar-thermal array built at the Gabriela Mistral mine, which uses solar energy to heat water used to create sheets of purified copper.

Other projects include the Bolero solar photovoltaic plant, operated by EDF Renewables and owned by EDF EN Chile and Marubeni Corp, which provides power for the northern grid, Enel Green Power’s Sierra Gorda and Valle de los Vientos wind farms, and the striking Atacama 1, the world’s largest solar farm.

Part of the growth in renewable generation is due to the foundation work provided by mining interests. Previously, the Central and Great Northern Interconnected Grids were separate. However, a 2015 project that connected the two grids enabled access to Atacama’s wind and solar energy.

Energy efficient

The Chilean government has set numerous revised targets for non-conventional energy generation in 2050, typically around 70–80%, following its success since 2013. But the country remains behind energy efficiency goals set in its Energy Agenda 2050 pledge.

Maximiliano Proaño, a Parliamentary Advisor in energy and environmental issues for the Chilean government, states that the Chilean government has struggled to enforce lawful initiatives to address its efficiency. ‘Ever since its introduction in 2014, the 2020/2025 goals have never really been monitored, lacking any insight of the supposed reduction of Chilean energy consumption. Another important announcement was for the energy efficiency goal translated to state policy, known as the Energy Efficiency law. This project, regrettably, was never presented to the Chilean government.’

Proaño further notes that ‘energy generation cooperatives are almost non-existent in Chile. The main reasons why the deployment of renewable energy has been so difficult in Chile and has not resulted in greater citizen participation are because there are not suitable public policies nor incentives, for instance feed-in tariffs and net metering systems in place. There is also a lack of specific regulation for energy cooperatives to foster their foundation and operation […] It is possible that Chile has begun an energy transition process. In that case, the focus should now be set on energy efficiency.’

Customer service

Proaño also points to the low rate of energy
generation by its population – 0.1% – as a sign of a flagging revolution, and the country remains in a dispute about whether its citizenry should be able to profit from the sale of surplus energy back into the grid. In May 2018, a Senate committee sought to abolish payments for surplus energy that was previously established in law in 2012.

Gabriel Prudencio, Head of the Ministry of Energy’s Renewable Energy Division, said, ‘We hope that this proposal will not succeed, and that we can continue with citizen-generated energy. Without the contribution of this sector, the goal of 80% non-conventional energy by 2050 will not be achieved.’

Prudencio believes the senate fears that allowing profiteering from surplus energy will encourage the population to consider it a business proposition, used to cut electricity bills for individuals and small businesses, and not strictly for self-consumption. He continued, ‘They are legislating against a ghost. Energy should be born from thousands of connected points and by a system that allows buying and selling.’