Rethinking Chile's energy future starts with making the right choices now

With abundant renewable energy potential throughout the region, Latin America is poised to be a global clean energy leader – but only under the right policy conditions according to a new report from the Inter-American Development Bank (IDB). The report, Rethinking our energy future, has interesting implications for Chile, especially during the current election period as energy issues are hotly debated. One of the key takeaways from the report is that Latin American countries, including Chile, must start leveling the playing field for renewable resources if they hope to take advantage of the low-carbon growth opportunities these sources can provide. In addition to environmental, health and energy security benefits, renewables can bring new jobs and investment. Countries that start implementing appropriate mechanisms to boost this sector today will have a clear advantage tomorrow. 

The IDB report debunks a series of myths about renewables in Latin America, namely that there is insufficient renewable potential to meet growing demand and that sources are too expensive and burdensome on power grids. In fact, contrary to these misperceptions Latin America has renewable energy potential that is 22 times greater than the region’s expected electricity demand by 2050. The costs of the region’s vast renewable resources are also falling rapidly, and in some cases are already competitive with more traditional sources of energy. The report also points out that the region could facilitate the integration to the grid of some of the more intermittent sources of renewable power by using techniques such as demand response mechanisms, storage technologies and better generation scheduling and dispatch processes. Planning transmission infrastructure to accommodate smaller scale clean energy power plants, rather than centralized, conventional generation would also help integrate renewables.

Chile is a great example of many of the points made by the authors of the IDB report. It has abundant non-conventional renewable energy sources that are broadly distributed through the country’s territory. Moreover, since 2011 Chile’s geothermal, wind, min-hydro, biomass and biogas have been cost-competitive with new conventional energy sources such as large coal plants and hydroelectric dams like the proposed HidroAysén dam complex in Patagonia. Solar energy technologies are also becoming increasingly cost-competitive and attracting investment. Nearly 4,000 MW of the 10,328 MW that are already approved or are under review are solar-based. When coupled with the country’s existing fleet of power plants, an increasing use of LNG and enhanced energy efficiency – especially in the industrial sector – Chile’s abundant renewable options can comfortably meet growing demand.

The IDB report also highlights some key benefits of non-conventional renewable power sources. Chile’s presidential candidates should keep these in mind as they think about Chile’s energy future. While the country’s carbon emissions are currently comparatively low at the global level, they are expected to grow. Renewables can help ensure that Chile follows a low carbon development path while at the same time enhancing long-term energy security, reducing vulnerability to climate-change related changes in hydrological cycles, and minimizing negative public health and environmental impacts. Chile’s non-conventional renewable energies are also job creators that can attract investment. Preliminary outcomes of a new report that NRDC will soon launch show that producing 20 percent of Chile’s energy needs with renewables over the coming decade would create more jobs and add more to the GDP than following the business as usual plan. New data from Bloomberg New Energy Finance also identifies emerging economies, including Chile, as key markets for increased renewables investment.

Significantly, the IDB’s report also points out that non-conventional renewable energy projects can help minimize environmental and social concerns related to large-scale energy projects. Citing the controversial HidroAysén proposal as an example of a project that has met widespread opposition (sixty-seven percent of the Chilean public is against the proposal) the study notes that deploying non-hydroelectric renewable sources would help avoid the grave concerns associated with mega dams in Latin America.

As Chile gears up for its next presidential election in November and energy continues to be the topic of intense debate, one thing at least is clear: Chile’s energy future can be based on clean and low-carbon alternatives, but for this to happen the right choices must be made today. How the country’s energy matrix will look thirty years from now will depend on whether policies are in place to set sufficiently ambitious targets for renewables, facilitate the integration of renewables to the power grid, and define a clear path for enhancing energy efficiency. It will also depend on whether Chile’s decision-makers listen to the growing voices, in Chile and internationally, that are pointing to cleaner and better energy alternatives to polluting fossil fuels and destructive mega-dams.