Thursday, August 8, 2013

Chile seeks to diversify energy sources

The Talinay Wind Farm in the Chilean region of Coquimbo required an investment of US$165 million. It has 45 wind turbines that provide an installed capacity of 90 MW. (Courtesy of the Talinay Wind Farm)
SANTIAGO, Chile – The Andean nation is seeking to harness energy created by the wind, sun, tides and heat generated deep below the earth’s surface.
Currently, 62.9% of the total amount of energy produced in Chile comes from generators that use oil, coal or natural gas, while 31.2% is hydropower, according to the country’s National Energy Commission (CNE).
Given that the country imports almost all of the coal, gas and oil used to generate electricity, Chile’s residential consumers pay, on average, 60% more for electricity than the 2012 average of the world’s most industrialized countries, according to a report by the Organization for Economic Cooperation and Development (OCDE).
Fifty-eight percent of the country’s business owners and executives said the cost and security of the country’s energy supply is Chile’s main challenge, according to a recent survey by the National Chamber of Commerce.
Additionally, the International Energy Agency estimates Chile’s energy demand will grow at an annual rate of 4.3% until 2018.
As a result, the country is seeking to diversify its energy matrix and utilize clean sources of energy, known as Non-Conventional Renewable Energy (NCRE).
Chile’s NCRE generation capacity currently totals 1,047 MW, which is equal to 5.9% of the country’s total. The Chilean government’s Renewable Energy Center expects to incorporate an additional 416MW of NCRE by the end of the year.
But here’s why NCRE’s potential within the country’s energy matrix is much greater, according to the Chilean Renewable Energy Association (ACERA):
200,000 MW of solar energy could be generated mainly in the northern regions of Arica and Parinacota, Tarapacá, Antofagasta and Atacama;
10,000 MW are in the country’s rivers and can be generated by using small hydroelectric power plants in the regions of Bío Bío, Araucanía, Los Ríos and Los Lagos in southern Chile;
5,000 MW of wind energy could be generated throughout the country, particularly in the regions of Antofagasta, Coquimbo, Bío Bío and Los Lagos;
16,000 MW of geothermal power, which relies on heat generated beneath the earth’s surface, particularly in volcanic areas, can be generated through the steam that is released from great depths;
164,000 MW can be obtained from ocean currents and tides, from the coastal area of Valparaíso to the south, capitalizing on areas with rough seas that push the water through turbines that produce energy.
The Chilean government will invest US$26 million between 2013 and 2021 to finance research through development centers for solar and marine energy. The country opened a center to study of geothermal energy in 2010.
“[These stimuli] have had very positive effects, providing the impetus for the development of pilot projects,” said the head of the Ministry of Energy’s Renewable Energy Division, Carlos Barría.
The NCRE station that produces the most energy in Chile is CMPC’s Santa Fe plant, Chile’s largest producer of paper and cellulose, in the region of Bío Bío, 500 kilometers south of Santiago.
This forest biomass plant, which uses excess pulp production to generate electricity, required an investment of US$200 million and has a production capacity of 98 MW.
By the end of 2013, wind energy is expected to be the main source of NCRE in Chile.
The system currently receives 302 MW from this source through 11 existing wind farms. By the end of the year, an additional 271 MW are expected to come online.
The recent inauguration of the Talinay Wind Farm in the region of Coquimbo, 350 kilometers north of Santiago, required an investment of US$165 million and features 45 wind turbines, with an overall installed capacity of 90 MW.
The Santa Fe plant in the region of Bío Bío produces the most energy among all of Chile’s Non-Conventional Renewable Energy (NCRE) stations. (Courtesy of CMPC)
The first step toward creating an energy project in Chile is obtaining approval through the Environmental Impact Evaluation System (SEIA), which is run by the Ministry of the Environment.
SEIA has approved 175 NCRE projects since 2006, equivalent to 8,620 MW, with an additional 4,227 MW in the process of being evaluated.
Once SEIA approves a project, private companies must seek out financing to build power stations through the sale of future energy contracts.
However, SEIA’s approval does not mean these projects will be developed, given the difficulties that NCRE generation companies face when entering the energy market, according to Barría.
The market is concentrated among a limited number of operators, and without future contracts, financiers will not provide funding for the plants’ construction, according to ACERA Executive Director Carlos Finat.
“If they are unable to obtain contracts, the NCRE project developers face the problem of not being able to obtain financing,” he said.
Other problems that must be resolved by NCRE companies include the intermittent supply of wind and solar energy, the high cost of harnessing geothermal energy, transmission infrastructure for mini-hydro plants and the high cost of certain technologies, such as those for maritime energy, Barría said.
Chile is home to 10% of the world’s volcanoes, representing significant potential for the generation of geothermal energy, but its energy matrix does not yet include these types of plants.
“Geothermal is one of the NCRE sources with the greatest potential in Chile during the next 20 years,” Barría said. “It’s a resource that exists almost across the entire country.”
By 2030, between 1,380 and 1,865 MW of geothermal capacity is expected to be installed, according to Chile’s Advisory Committee for Electrical Development.
For example, the Cerro Pabellón geothermal project by the Geotérmica del Norte company, which was approved by the SEIA in 2012 and will be in Chile’s extreme northeast, requires an investment of US$180 million for 50 MW.
However, the total does not include associated projects such as the transmission lines, which must run about 200 kilometers to the nearest town and is pending SEIA’s approval.
New Zealand is currently the world leader in geothermal energy and obtains 13% of its needs (750 MW) from this source, according to data from New Zealand’s Geothermal Association.
While there are no geothermal initiatives under construction or in operation at the moment in Chile, a total of 76 exploration concessions will receive US$370 million in investments through 2018.
In early June, a group of Congressmen agreed to propose a bill requiring that a minimum of 20% of the country’s energy generation come from NCRE by 2025, which has the government’s support.