Chile Strives for Reliable, Sustainable, Inclusive and Affordable Energy Matrix

Thursday, April 16, 2015

According to the International Energy Agency (IEA), Chile is Latin America’s fifth largest energy consumer. However, it is a small producer of fossil fuels and therefore heavily dependent on energy imports. To strengthen energy security and improve competitiveness, the government is implementing an energy agenda based on seven strategic pillars which contemplate priority actions in the short, medium and long term. This ‘road map’ was developed through dialogue among multiple and diverse social actors, policy decision-makers, parliamentarians, businessmen and academicians who jointly analyzed the nation’s energy landscape.

Pillar 1: The New Role of State for Energy Development: Meeting Chile’s energy challenges require a proactive government engaged in energy planning, regulation and management. The proposed measures envision strengthening the Ministry of Energy by establishing new regional ministry secretariats across the country; modernizing the Superintendence of Electricity and Fuels (SEC by its acronym in Spanish); developing a state energy policy validated through social, political and technical consultations and enhanced science and energy innovation.

Pillar 2: Reducing Energy Prices: This pillar seeks to provide greater competition by injecting new energy players into the market, furthering technology diversification, and expanding non-conventional renewable energy resources. Proposed measures include improving the regulation of supply bids to regulated customers and promoting the use of Liquefied Natural Gas (LNG) as a diesel substitute for electricity generation. In this regard, 17 offers were received during the last electricity supply bid, with significantly reduced prices compared to previous bids, which in several occasions were voided.

Pillar 3: Development of Indigenous Energy Resources: The National Energy Agenda seeks to foster energy matrix diversification and sustainability by promoting the deployment of solar, wind and hydro energy. The goals in this front include the sustainable development of the hydropower sector and the integration of non-conventional renewable energy by promoting. This strategy will further the creation of a new, self-sufficient, socially inclusive renewable energy market.

Pillar 4: Connectivity for Energy Development: Expanding connectivity requires the establishment of a regulatory framework that enables the adequate transport of energy (trunk- and sub-transmission), the interconnection of the two main national electrical systems and the adaptation of the Interconnected Operation Systems for the efficient and safe introduction of non-conventional renewable energy. It is worth highlighting that the Energy Minister has signed a decree by which the 2014-2015 expansion plan determines the interconnection of the two main national electric systems-the SIC and SING-among others.

Pillar 5: An Efficient Energy Sector Focused on Consumption: The industry and mining sectors consume 39% and 67% of the nation’s energy and electricity respectively. The new Agenda contemplates a new Energy Efficiency Act, the deployment of energy efficiency projects, municipal energy management support and the development of educational campaigns and programs.

Pillar 6: Promotion of Energy Investment: Enabling investment in the energy sector and integrating new actors and technologies will facilitate transitioning toward a more affordable, reliable and sustainable supply.

Pillar 7: Public Participation and Land Management: The energy sector requires a plan which identifies alternatives that facilitate the conditions for the development of projects involving a participatory and inclusive approach.

The new Chilean Energy Agenda essentially seeks to unlock investment, increase competition in the sector, and improve relations with communities.