TREND: Chile makes progress on energy agenda

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Wednesday, August 27, 2014

It's been a little more than three months since Chile unveiled President Michelle Bachelet's 2014-18 energy agenda.

The 90-page document contains a series of measures designed to stabilize energy costs and attract investment in both renewable and traditional power projects in the face of rising demand.

BNamericas looked back over the last three months to see what progress has been made on some of the agenda's principal goals. 

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It's too early to tell if Chile will reach the agenda's objectives, but so far things seem to be moving in the right direction.

EFFICIENCY

The agenda includes a plan to save 20,000GWh/y nationally by 2025 through energy efficiency measures, which the ministry has begun to implement.

Chile's mining council and state mining company Codelco each signed efficiency agreements with the ministry in July. Under the agreements, miners must follow internationally recognized best practices for energy use and submit to independent energy audits to identify ways to streamline consumption.

The ministry will submit a more comprehensive efficiency bill to congress in mid-2015 to improve efficiency in mining and other industries, homes, small businesses and the public sector.

The ministry launched a campaign in April to educate the public about efficient energy techniques, and pledged to invest US$100mn in efficiency measures next year.

National oil company Enap also signed an efficiency agreement with the ministry, pledging to incorporate the highest international energy optimization standards in its projects.

POWER AUCTION REFORMS

The agenda mandates a 25% reduction in auction prices for contracts to supply power to homes and small businesses.

To achieve this, the ministry submitted a package of reforms to the national congress to overhaul the power auction system.

Under the bill, the state will design and administer power auctions, which are currently run by private distributors. The legislation includes a more flexible design for short and long-term auction blocks and risk control measures to attract investment in new projects.

RENEWABLES

The agenda states that 45% of new capacity installed between 2014 and 2025 must come from non-conventional renewable energy (NCRE) sources, and that NCREs must account for 20% of the country's total installed capacity by the end of the period.

Between January and July, Chile brought 601MW of NCRE projects into operation, more than twice the total amount installed in 2013.

Projects launched in the last three months included the 94MW Amanecer Solar CAP photovoltaic complex and wind farms El Arrayán (115MW) and Los Cururos (110MW).

National energy commission (CNE) head Andrés Romero said this month that Chile has the potential to develop 40GW of wind, 12.5GW of hydro, more than 1,000GW of solar and 2GW of geothermal projects.

ENAP

Another goal in the agenda is "to transform Enap into a robust business that plays an active role in meeting the country's energy challenges."

The NOC is expanding capacity at the Quintero LNG terminal to 15Mm3/d from 10Mm3, and is expected to announce another expansion to 20Mm3/d. Enap publicized in July an agreement with its LNG supplier BG to import US-produced LNG to Quintero and northern terminal Mejillones starting in 2016.

The NOC also signed an agreement with US-based ConocoPhillips to conduct unconventional hydrocarbon studies in southern Magallanes region, where Enap announced in July that natural gas production had reached 2Mm3/d.

Enap inked another deal to import 9Mb of oil from Angola in 2015, which would make the African country Chile's most important crude supplier outside of the Americas.

LONG-TERM ENERGY PLAN

The agenda called for the creation of a long-term energy policy, which the ministry unveiled in July with the Energía 2050 project. The initiative involves drafting a long-term plan over 18 months with an emphasis on societal involvement in energy projects.

The 2050 plan must include concrete goals akin to those in the 2014-18 agenda to be reached by 2035, and a general strategy for 2035-50.