Chile ahead of renewable energy target

Chile will likely reach its goal of a 20% contribution from non-conventional renewable energy (NCRE) sources to the national energy mix four to five years ahead of schedule and without subsidies.

That's according to Carlos Finat, who directs the country's renewable energies association, Acera.

A signature goal of the government's 2014-18 energy agenda is the '20/25' objective, which calls for 20% of Chile's power generation to come from renewable sources by 2025.

Finat and Acera vice-president José Ignacio Escobar told media members at Acera's annual press conference in Santiago that transmission infrastructure and community participation will be crucial to NCRE development this year.

Chile added more than 1GW of NCRE capacity in 2014, and in November NCRE accounted for more than 10% of the country's power output for the first time.

But despite increased participation from hydroelectricity and other renewable sources, marginal costs on Chile's central SIC grid increased 23.8% year-on-year in December.

Finat told BNamericas that this is due to the decoupling of electricity prices between the point of production and the point of consumption, a problem caused by transmission congestion.

Despite the availability of low marginal cost output from hydro and wind plants, transmission bottlenecks prevent that energy from reaching consumption zones, which are forced to rely on more expensive fossil fuel sources.

"Acera's position is that the transmission system is what enables competition," Finat said. "We have high expectations about the revision of Chile's transmission law, which will allow us to plan a system with room to grow."

Also on the agenda is a mandate for community participation in power projects, which increasingly have been delayed or scrapped altogether due to social opposition.

"The [community participation] law is fundamental," Finat said. "We're convinced that generation projects, especially NCRE projects, are capable of generating development in zones that today have no commercial activity."

Chile added more than 1GW of NCRE capacity in 2014, allowing total installed NCRE capacity to surpass 2GW.

The ministry also plans to submit a geothermal concessions law in 2015, and to implement schemes to mitigate the risks geothermal exploration drilling. Finat said that Acera expects Chile's first geothermal project to enter construction by 2019-20.

More than US$300mn has been invested in geothermal exploration in the country so far, Finat said, calling the segment's delayed implementation a "pebble in the shoe" for the development of renewables in Chile.