Why Chile could aim for 100% renewable – and what Australia can learn from it

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Chile’s is going big on solar and wind, and could reap huge benefits from 100% renewables – particularly their mining industry. Meanwhile, in Australia…

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If you want to know what the future holds for large-scale renewable energy development, take a look at Chile. That is a rough summary of what Origin Energy chief Grant King told a media briefing at the utility’s results announcement last week, while talking up the prospects of large-scale solar in Australia.

According to King, Chile is “where the prospectors are” – that is, energy company project developers lining up big solar project sites – including Origin, which has a 40 per cent share in a 69MW solar project in Chile, and bought the rights to develop a 280MW project in northern Chile.

BRLASFall2010-AtacamaSolarPanels_chilerenovables

Indeed, according to Bloomberg data, developers from around the world, led by SunEdison and Enel Green Power, have invested $US2 billion in Chile’s clean-energy industry in the first half of the year, more than double the pace of the same period a year ago.

And they’re investing there, says King, because it is “at the leading edge of large-scale solar, in terms of costs and deployment.”

So what is Chile doing right?

Currently, it has a national renewable energy target of 20 per cent by 2025 – and could certainly afford to aim higher. A study released on Wednesday by the NewClimate Institute finds that by shifting to 100 renewables by 2050 could save Chile $5.3 billion a year on fossil fuels, 1,500 lives a year due to reduced air-pollution in the capital, Santiago, alone, and create 11,000 new jobs.

But in many other ways, the Latin America nation offers a prime example – not least of all for Australia – of what can be achieved through effective policy and compelling economics; as well as with what SunPower CEO Tom Werner has described as “phenomenal sunshine.”

Since setting the country’s RET, the Chilean government has taken steps to liberalise its energy market, allowing solar and wind suppliers to sell power in favourable time blocks – a  measure designed to boost the addition of intermittent power sources on to the grid.

It has also used energy auctions to loosen up the market, allowing generators to compete for contracts to deliver electricity under long-term agreements.

As Bloomberg reports, 10 companies including SunEdison, Acciona and Abengoa have already won contracts in the Chile auctions since their introduction in December, and are working on power plants that will supply at least 1GW of solar and wind power, about the same as a nuclear reactor.

The next tender, which is open to bids until April 2016, is designed to allocate 29 per cent of Chile’s regulated energy supply for the next decade.

Before the auctions, however, it was Chile’s energy-hungry resources industry, which also happened to be shouldering some of the world’s highest energy costs (three times more than the OECD average), that drove the nation’s renewables market.

State-owned Codelco copper mine, for example, in Chile’s Atacama desert, is now 80 per cent powered by a solar thermal plant run by Chile’s Energia Llaima and Denmark’s Arcon-Sunmark, which has replaced most of the 67,000 barrels of diesel it once consumed.

US-based SunPower, meanwhile, will kick off its $1.5 billion, 1GW development plans for Chile with the construction, later this year, of a 100MW solar farm in the country’s central region, to help meet the power needs of some of the large mining operations that exist nearby.

The scale of what is happening in Chile is currently unique in the world,” said Mike Elliott, head mining analyst at Ernst & Young. “It’s occurring in Chile because the economics just make sense.”

Ernst & Young recently estimated that mines in Latin America would collectively invest more than $US1 billion in renewable energy projects by 2022, up from $37 million in 2013.

Another report, released this week by THEnergy and mining analysts Cronimet, has estimated that mining projects that integrate solar PV generation can achieve typical cost savings in the range of 25-30 per cent, or more than 70 per cent for those mines in remote locations, which are not connected to the grid, and are thus exposed to elevated diesel prices.

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23 Comments
  1. john 4 years ago

    Chile is perhaps one country that is suited to using the sun due to the remote areas being elevated so cooler and hardly any cloud cover so PV works very well.
    Relying on diesel dearest method of making power so any RE beats that hands down.
    No wonder every major PV manufacturer- large scale developer is there because the offerings are great value to the country; a typical example of an underdeveloped country with good RE assets being able to leap the FF hurdle and move forward.
    I am wondering what wind resources does the country have?
    If able to dovetail wind with the solar and perhaps wave as well they will have all squares ticked.

    • Sabe_Moya 4 years ago

      You are clearly not familiar with the geography, climate, and weather conditions in Chile ( a common enough problem with both Ozians and North Americans). There are a comparatively small number of people who live and work in the clear-sky desert north of Chile. A substantial number of people who live in this country are in higher latitude regions with considerable cloud cover and short winter daylight hours, and no significant wind resources. And no, “anything RE but diesel” is not necessarily the most cost effective solution in many parts of this country, and in fact only reveals the near-religious nature of RE advocacy.

      • JamesWimberley 4 years ago

        No significant wind resources? Here’s an old 1996 NREL map for a sample central region, at 30m:
        http://www.nrel.gov/wind/pdfs/chile_regionix_pacific.pdf
        Current hub heights are 80-100m, so the effective wind resource is much better. It is a puzzle why solar is going great guns in Chile, even in the central region, while wind lags.

        • Sabe_Moya 4 years ago

          No, not “no significant wind resources” in the south but rather there are many portions of the country where the population centres are not near adequate wind conditions, and much of the country is not on the central grid or even a regional grid. Even in such places where wind turbines are being used (such as Alto Baguales) there is such unreliable wind that it is still necessary to operate considerable redundant diesel generation, with the result of the redundancy and the erratic wind that when subsidies are discounted and life-cycle costs included, the generation system costs are quite high. The problem is made more difficult because regional politics and foreign lobbying have prevented the most cost-effective renewable source: hydro, which the region is ideally suited for. In fact the Aysén region with this wind-diesel mix now has some of the highest costs and rates in the country. As far as the solar component in the extreme north (low population density), that region is not connected to the national grid and placing solar generation plants adjacent to mining operations saves in transmission subsystem costs and losses, and the local-solar-generation costs are largely borne by the mining companies.

      • Phil 4 years ago

        “A substantial number of people who live in this country”

        So you live in Chile now? I though you previously claimed to live in Argentina? What’s your ethnic background again?

        • Sabe_Moya 4 years ago

          I am indeed in Argentina, in fact at the moment quite close to a large and so far rather unsuccessful coal-fired plant that was conceived with the possibility of selling power to Chile. It didn’t work out. The nature of the coal supply that was supposed to fire the plant fell short of the necessary conditions and now they have to operate the plant on a combination of local coal and diesel imported to the area. It’s a characteristically Argentine project. I am looking into the report that the plant has no plans for what it is going to need to do with the calculated 1,000 tonnes per day of ash when (or rather if) the plant goes to full capacity operation. But the principal purpose of this plant is not so much to provide an overabundance/overcapacity of electricity, but as a means of keeping the Río Turbio miners (and their political support) on the side of the Kirchnerist government.

          • Phil 4 years ago

            So what’s your obsession with ranting about Argentinians?

          • Phil 4 years ago

            Is your obsession with ranting about Argentinians based on a British, German or Chilean background? Based on your argumentative approach (obvious extreme nationalist agenda but trying to pawn off your motives as objective) I’m leaning towards modern Anglo roots. Unfortunately you are too much of a coward to say. Instead you evade and act like you don’t notice the question what are your ethnic roots?

          • Phil 4 years ago

            So you live near San Nicolás? Do the local Argentinians know how you feel about about them when you hide behind your internet connection to rant about Argentina?

          • Phil 4 years ago

            It’s funny when you rant about Argentina and praise Chile… when Chile and Argentina have a similar agricultural third world economies that pale in comparison to anything in Europe. Even Greece has a far more productive economy than Chile.

            What’s the Chilean word for hypocrite?

          • Phil 4 years ago

            Here is what you wrote on another thread.

            “In particular, you should come here to Chile and understand why the foundations laid by the recent military government “

  2. Dan Duke 4 years ago

    The great driver for RE in Chile its lack of coal and petroleum. So many other
    countries have great RE potential but too many other options to (cough,cough)
    exhaust before they take it seriously. That´s the great opportunity for Chile,
    and wondering ¿which specific reneweable source and location? follows that fact in much the same way it would for so many other places if they had the economic
    imperative.

    • Sabe_Moya 4 years ago

      Chile’s present national energy strategy relies heavily on imported natural gas for electrical generation in much of the country (actually regasification of imported LNG to natural gas) while reliance on traditional hydro power has been falling as hydro has become “politically incorrect.” In the extreme south of Chile there are coal and hydrocarbon resources (mostly natural gas).

      • Dan Duke 4 years ago

        I didn´t know that about coal in the far south. thanks
        yes, LNG I should have said, not just petroleum
        And yes…. I was at theater in Puerto Varas recently to see “DamNation” and the audience was really cheering. The environmental activistists in Chile basically stop any sort of hydro project before it gets started
        thanks

      • Ian Malcolm Scott 4 years ago

        To Sabe- moya,

        I m a chile resident for 25 yrs.

        Gas was imported from argentina until they pulled the plug and coal was mined in Lota but for varios reasons production has died. So we are heavily reliant on imported fossil fuels. As many have said hydro is politically sensitive, leaving wind and solar as key contenders. The north has excellent sunshine and the coast and mountains good wind. (please see chile wind map at http://walker.dgf.uchile.cl/Explorador/Solar2/ )

        My neighbour in Lebu is expanding his wind farm with 7 / 8 m/s average proven. Feed in tariffs are excellent so I m offering my coastal site to developers. have a nice day ..

      • Phil 4 years ago

        Chile is practically third world. Should be sold off as scrap.

        • Sabe_Moya 4 years ago

          Chile is indeed third world. But within the context of South America, Chile has the most successful economy of the region, and the highest per capita income. Its inability to overcome socio-political objections and develop a coherent energy programme has resulted in high electricity costs for many consumers and industries.

          • Phil 4 years ago

            So you agree that Chile, with a far inferior economy compared to anything in Europe, should be “sold of as scrap”. (your choice of words as I recall)

          • Phil 4 years ago

            Chile has never contributed anything to the world. Sell it off as scrap (your words right?)

          • Phil 4 years ago

            LMAO. Chile is third world.. but within the context of third world….

            Does that really make sense to you? Do you think you speak from a position of moral and intellectual strength when you wag fingers at other countries for lack of productivity.. when your own country is far far less productive than those you criticize?

  3. onesecond 4 years ago

    “Currently, it has a national renewable energy target of 20 per cent by 2025”
    20% of what? Electricity? Total energy consumption? And how is that impressive? Germany already has ~30% renewable electricity and aims for 18% of all energy consumption to be renewable by 2020 and it is by far consuming more energy than Chile and I would think Chile even has much better renewable energy producing conditions thanks to a lot of windy coast and sun. Chile could probably go to 50% renewable energy by 2025 AND save a lot of money in the process.

    • Michael 4 years ago

      Please take into account that not even 30 years ago Chile was under a dictatorship (instated by the US by the way), and had a far smaller industry to kick off with after that – so in that sense they are doing pretty good. but you are also right that chile has insane prerequisites for renewable energy, especially when it comes to solar and wind.

    • PedroPablo 4 years ago

      the only problem is that best conditions for that kind of energy are up in the north of the country, in a distance larger than germany plus some other europeans countries altogether from the inhabited areas of the country.

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