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Peru's President Pedro Pablo Kuczynski and Chile's energy minister Máximo Pacheco met Tuesday in Lima to discuss energy integration, under the umbrella of Andean interconnection initiative Sinea.
Talks focused on the possibility of establishing a pilot plan that would entail a 70km transmission line across border cities Tacna (Peru) and Arica (Chile), the latter country's energy ministry said in a statement.
The ministry said technical studies and a favorable economic evaluation from IDB are in place for the proposed link. Additional information was not disclosed.
"The expected differences of the marginal costs between both systems could be important, as these costs would be fixed by local natural gas and hydroelectric generation in Peru, and by imported natural gas and coal thermo generation in Chile," according to Peruvian grid administrator COES's 2017-26 transmission plan.
COES highlights Peru's push to build up thermoelectric capacity in the south, driven in part by the Sur Peruano natural gas pipeline under development, as well as planned hydropower projects in the area.
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Chile's northern SING grid mainly serves the energy-intensive mining industry and other unregulated clients.
A study commissioned by COES, administrator CDEC-SING and the US Department of State adds: "This interconnection could be the initial step to developing trading arrangements between the two countries, yielding benefits, such as reduction in prices, promotion of investment, increase in reliability and diversification of supply."
According to the study: "In terms of production cost savings, each dollar spent on the interconnector results in a production cost reduction of US$1.9." .