Chile at an Energy Crossroads: Grid Improvements Should Underpin a Nation-Wide Transmission Proposal

Chile’s Ministry of Energy has proposed a public electric highway law, to be considered in Congress, known as the “Proposal for a Sustainable and Robust Transmission System.” The plan would increase government oversight in transmission planning to reduce hold-up for companies and to accommodate unused capacity to meet the future demand of a growing population. The government would authorize the location of easements and open up a bidding process for companies, which would still undergo an environmental review process and negotiate a price for easements. Absent in this plan is a clear and specific government assessment of where lines should be developed in order to strategically drive generation investments to benefit renewable energy projects.

What conditions should government transmission planning be held to in order to prevent it from simply enabling large fossil-fuel generation and hydro-electric projects such as HidroAysén? Given the frequent blackouts that currently occur in Chile’s main grid, the government’s transmission planning should be part of a greater grid upgrade process. Existing smart grid developments in the U.S. could serve as useful examples for Chile.

What are the shortcomings of traditional electric grids?

Generated electricity must be consumed immediately, so a traditional grid is engineered to satiate consumers even during periods of peak demand. Yet these peak occurrences are extremely rare, meaning that the system is inherently inefficient. Eight percent of the U.S. grid’s output is lost along its transmission lines and 90 percent of all power outages and disturbances are the result of glitches in the distribution network. This is because power plants have no way of communicating with end-consumers, and vice versa.

What is a smart grid and what benefits does it offer?

A smart grid eliminates this problem by creating a two-way communication flow between those who generate and transmit electricity and those who consume it. Using information technology, the smart grid maintains a careful balance of supply and demand. It takes corrective actions to respond to real-time information provided by sensors and automated meter reading. One of its basic features is the installation of advanced meter infrastructure (AMI), that is, household meters equipped with wireless communication that are in constant contact with both home appliances and the grid. The effect of this interaction between a household and its electric company is that the grid can ask households for help. Price signals are remotely relayed to appliances such that can marginally reduce their electricity use when the grid needs power. This adjustment is not noticeable to the homeowner, but improves the grid’s distribution efficiency and lowers user prices.

What are examples of smart grid developments in the U.S.?

Utilities and consumers across the U.S. are taking advantage of funding from the Department of Energy to upgrade energy infrastructure and enhance energy independence. For example:

• Utilities across Vermont have joined a state-wide effort beginning in 2004 to install smart meters, communication systems, supervisory control and data acquisition systems including phasor measurement units, which monitor voltage and current many times a second at a given location on a transmission line, and distribution automation including switches, regulators, and circuit monitors.
• Since the late 1990s, the city of Naperville, Illinois has nearly doubled the number of miles of lines it operates and the number of consumers has increased by over 14 percent. Despite this growth, Naperville has consistently improved its ratings for service interruptions by 14 to 55 percent annually through the installation of data acquisition equipment and automated switches. Such case studies offer an example for growing urban areas like Santiago to improve grid stability in the face of demand growth without increasing dependence on remote energy sources.
• Sioux Valley Energy, an electric cooperative in South Dakota and Minnesota, offered critical peak pricing to its consumers during the summer of 2011. Such a pricing strategy incentivizes consumers to reduce electricity use at times of high demand when the cooperative would normally need to buy more expensive power from its suppliers by returning cost-savings to consumers the remainder of the time.
• By 2012, CenterPoint, a Texas service provider, installed 2 million smart meters that offer automatic outage notification. It also offers its consumers a web portal that provides real-time usage data, uploaded every 15 minutes, such that consumers can adjust their consumption patterns to lower electricity bills.  
• Texas’ largest delivery business, Oncor Electric Delivery, has complemented its smart meter installation with a dynamic line rating (DLR) project. DLR monitors changing solar radiation, ambient temperature, and wind speed conditions in real time to determine a flexible rating that enables suppliers to maximize the current at which the line can safely be operated.
• Smart grid technology is also improving efficiency in the agricultural domain. A demand response program designed by M2M Communications includes a system to monitor and control the use of irrigation pumps. Unlike other summer stressors, such as air conditioning, irrigation pumps can be easily shut off for the peak periods spanning several hours. Participating farmers are notified of peak demand events 24 hours in advance, and can select to have pumps automatically shut down during these events. 
• Deploying the smart grid also entails job creation. Fifty-one organizations in the U.S. have received funding to participate in a workforce training program that will galvanize a workforce of instrument control and relay specialists, line workers, substation operators, and meter technicians to oversee the grid’s operation.

Much of Chile’s present energy predicament is the result of the fact that electricity planning is exclusively in the hands of a few private entities. The recent shift toward increased government guidance in transmission planning could help big companies dominate the grid with fossil fuels and large-hydro, or it could promote grid upgrades and incentivize smaller non-conventional renewable energy generation. It remains to be seen which path Chile will choose.

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Elif Tasar is a MAP sustainable energy fellow working with the Latin America team in NRDC's International Program. She recently graduated from Stanford University with a major in Earth Systems, and spent months interviewing farmers in southern Chile on their land use practices.