Chile: Earthquake an opportunity for renewables?

The shocking devastation of Chile’s recent earthquake has generated a significant amount of new movement on the renewable energy front in recent weeks. The earthquake damaged critical infrastructure ranging from highways to power lines and refineries, causing rolling black outs, telcom failures and of course serious economic fall out.  While stricter building codes and more developed infrastructure allowed Chile to survive its earthquake in much better shape than a country like Haiti, the natural disaster has provoked some important debates over the future of Chile’s energy production and use.

Given how quickly the energy debate in Chile has moved to the forefront of the national political dialogue, we’ve decided to dedicate some space to looking at the state of renewables in Chile.  With only minimal domestic hydrocarbon production and notoriously finicky energy suppliers next door (ie. Bolivia, Argentina), energy diversification and long-term planning is nothing new to this South American nation.  However, Chile’s focus in recent years has revolved around securing natural gas supplies and diversifying crude imports, rather than looking at meaningful renewable energy generation.

The Chilean congress did approve a renewable portfolio standard in 2008 requiring that 5% of the energy generation come from renewables by 2010, which is to be scaled up to 10% by 2024.  Unfortunately, these mandates have not been accompanied by the development of feed-in-tariffs or other incentives that will help to reassure investors, which may be even more necessary now that Chile’s new LNG regasification plants have come online and provided a ready input for power generation.

From a geographic standpoint, many in Chile argue that the legendary Atacama desert should be the heart of Chilean energy production.  Shifting the energy matrix from natural gas, oil and hydro (almost exclusively concentrated in the southern regions), to solar and wind generation would benefit the country from a carbon emissions perspective as well as environmental preservation.  Some in Chile argue that this focus would shift intensive energy production activities from the biodiverse south to the relatively sparse landscape of the Atacama.  One study by German firm GTZ indicated that the country has up to 200 GW of thermoelectric solar capacity in the northern dessert regions.

Generally close international partners, the US and Chile have also begun to coordinate more closely on energy policy following the earthquake.   The US Secretary of Energy Steven Chu and Ricardo Raineri, Chilean Minister of Energy, met in Washington DC last week to discuss how the two countries could collaborate on renewable energy and efficiency research.  Chile’s Programa País de Eficiencia Energética (PPEE), established in 2005 to promote efficiency improvements and generate policy, will likely take the lead on this bilateral effort.

A long with these national development, several recent renewables projects have been announced:

• Tierra de Meteoritos: 100 MW wind farm.  The project had financial backing in 2008 from both Spanish and Korean firms but was set back by the subprime collapse.
• AIQ to license algae technology
• Calama 1 Solar Project launched

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Difficulties still remain in push for new renewable capacity (BNAmericas, sub req’d)