Rurelec in Chile: 'A cookie-cutter project'

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Wednesday, December 3, 2014

This is the final installment in a three-part series. For background, see part one, Rurelec in Chile: An uphill battle to add cleaner capacity and part two, Rurelec in Chile: Trouble begins.

Chilean President Michelle Bachelet's 2014-18 energy agenda prioritized increased competition, efficiency and diversification in the power sector in order to put a lid on emissions and steadily rising electricity costs.

"We will promote the use of liquefied natural gas [LNG] for power generation in place of diesel," the document says.

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The agenda also mandates measures to "increase LNG capacity and install new combined-cycle, natural gas projects in the energy matrix, through new actors when possible."

Bouwens said that when he and his partners have managed to get Arica residents and community leaders in a room, it has been easy to make the case for Termonor.

"We're a cookie-cutter project for the energy agenda," Bouwens said. "We're the case study, and yet it's the government that's delaying the project."

The agenda also stipulates that 20% of Chile's energy come from renewable sources by 2025.

Opponents of Termonor have instead called for investment in solar projects, which Termonor would ironically help, not hinder, according to Bouwens.

Termonor is a backup generation project that would serve to fortify the SING grid in the event of transmission failure and provide needed balance to intermittent solar output.

Despite northern Chile's abundant solar resource, Bouwens said that solar projects on the SING have had difficulty securing PPAs with mining companies – the grid's primary energy consumers – which want baseload energy to power their operations.

In fact, Bouwens said, solar companies have approached Rurelec seeking backup arrangements with Termonor in order to balance capacity.

Apart from facilitating the entrance of renewable projects, he said, Termonor would increase competition on the SING, which is largely dominated by two power companies, AES Gener and E-CL.

The problem for Rurelec is that they're running out of time. The 2009 DIA expires on January 26, 2015, meaning that the company must begin construction – either on the fuel oil or combined-cycle plant – before that date.

Bouwens said he has no doubt in Rurelec's ability to convince residents that Termonor would be a clean and beneficial project, but bureaucracy and local opposition have made things tough.

"It's not encouraging to foreign investors," Bouwens said. "Chile is supposed to be a country where you can get things done and where there are established environmental procedures," he added. "The reality for me as head of environment for Rurelec is that it's not easy."