Australia’s Origin Energy has increased its pipeline of global hydro-electric projects to nearly $10 billion after buying a majority stake in a $3 billion hydro project in Chile.
The 51 per cent stake in the 1000MW project was bought from mining giant Xstrata, which has large mining projects in the country and retains the remaining stake. In return, Origin has undertaken to spend $US150 million over the next three years, half on completing a feasibility study and half towards a final investment decision.
The project, which local reports have valued at around $3 billion, is located in southern Chile and would likely comprise three hydro-electric plants and a transmission system to link to the grid. And like the $5 billion, 2,100MW hydro-electric project that Origin Energy is studying for PNG – with a transmission link to northern Australia – it will come under intense environmental scrutiny.
Chile, however, sees increasing hydro as an essential part of its strategy to meet its burgeoning energy needs. Its government recently released an energy strategy out to 2030, which – in sharp contrast to a similar Australian document – laid out its plans for a significant increase in clean energy sources over the next 20 years.
Based on its rapid economic growth, and a boom in mining projects, particularly copper, Chile expects demand out to 2020 to increase by 7 per cent a year, or a total of 8000MW.
It plans to offset more than 1,100MW through energy efficiency measures, it hopes to lift the share of hydro-electric from current levels of around 35 per cent to 48 per cent, and the share of “non conventional renewables” – a label it uses to describe solar, wind, biomass and geothermal – well beyond the current target of 10 per cent by 2024. It describes this as inadequate and intends to “more than double this target.”
These renewables currently account for just 3 per cent, around the same as Australia. It says its policies are motivated by the need for cleaner energy sources and to reduce its reliance on imported gas from Argentina. Its strategy envisages more than 3000MW of wind, 500MW of biomass, 400MW of solar and a smaller input from geothermal.
Origin Energy is also pursuing geothermal energy developments in Chile, which has a large volcanic-based resource, along with some other smaller Australian geothermal companies. It is also pursuing geothermal projects in Indonesia, and it has a majority interest in Contact Energy, which has 750MW of hydro-electric capacity.
Origin Energy boss Grant King says the Energía Austral project is situated in an area of reliable rainfall and stable water flows, making it ideal for hydroelectric generation, which could play an important role in providing an efficient, flexible and reliable supply of electricity from a renewable resource.
“Origin’s investment in Energía Austral is consistent with the company’s pursuit of a portfolio of renewable energy opportunities in markets with attractive growth options,” King said in a statement.