Sector briefing Power and Renewable Energy Opportunities in Chile Why Chile? For a long time the preserve of a small number of large and conservative companies, the electric power sector in Chile is changing fast. Chile has diversified its power generation mix in recent years, and now has two LNG regasification plants, thousand of megawatts of planned coal-fired generation, new river hydro- electric capacity complementing existing plants, and a raft of projects using a range of renewable resources. New transmission lines will incorporate new generation plants and provide greater security to a country whose unique geography and seismic activity present serious challenges to transmission. opportunities and an introduction to other relevant issues. Chile?s power sector has sought to reduce costs and emissions while backing the low cost "Chile has diversified its delivery of reliable power on a large scale. power generation mix in Energy has taken on a higher political profile, recent years. Renewable marked by the promotion of the energy commission to ministerial status in February power opportunities together 2010, the creation of a national energy with the demand for cleaner efficiency programme, and continuous forms of traditional legislative improvements in recent years. generation and for increased Find general information on Chilean market energy security have created conditions on UKTI?s website. The Doing more opportunities and Business Guide for Chile gives an overview of dynamism" Chile?s economy, business culture, potential UK Trade & Investment Sector briefing: Power and Renewable Energy opportunities in Chile Construction of hydroelectric plants slowed in Opportunities the middle of the last decade, but since then legislation has been improved and power prices Gas-fired generation have increased, bringing new players to the Chile invested heavily in natural gas-fired sector that have identified new opportunities. power capacity in the late 1990s, but since Environmental and indigenous opposition to 2004 has been subject to unpredictable gas hydro projects can be strong, and developers supply from Argentina. Reliable supplies are are subsequently redesigning projects to now available again through LNG plants. In minimise areas of land to be flooded and central Chile a consortium headed by BG Group address the concerns of locals. Run-of-the- started first-phase operations in 2009 of an river projects have become more prominent, onshore LNG plant that will eventually produce among which low-head high-volume plants are 10 million cubic metres/day (in a base starting to feature. The largest hydro project is scenario) and 15 million cubic metres/day Hidroaysen, a 2.4GW complex of three (peak). The plant now satisfies existing gas reservoirs in the far south that is currently in demand from refineries, the residential sector the lengthy process of securing environmental and power plants, and new generation capacity permits. is not foreseen. At Mejillones in northern Chile the GNLM consortium of state copper company Nuclear Codelco and French utility Suez have a 5.5 Debate on the need of nuclear power in Chile is million cubic metres/day plant that started growing. The government has taken what it operations in early 2010. The plant has open describes as an insurance policy approach; access, making gas available to those addressing issues and undertaking studies so developers wishing to pursue projects. that a future government would find this groundwork complete in the event that it Other opportunities in gas-fired generation decided to build nuclear capacity. Five plants of arise in the maintenance, repair and efficient 1,100MW each built by the end of the 2030s operations of existing plants. have been mooted, and the Energy Ministry has made a number of gestures and Coal statements in support of French capacities. The ready availability of coal on international markets and its price relative to other fossil Transmission fuels have made it the favoured fuel with which Hidroaysen would require a 1,900km to meet Chile?s generation capacity expansion transmission line to deliver power to Santiago. in the medium term. The market has Plans are for direct current, which would the opportunities for companies that can build first such line in Chile. Part of the line would and/or supply to coal-fired capacity, and run underwater; also a first. While generation because coal has been criticised for its assets were largely unaffected by the February contribution to Chile?s growing emissions levels 2010 earthquake, transmission infrastructure there are also opportunities for companies that was hit hard and efforts are being made to can contribute to cleaner coal-fired generation. improve the security of the power transport New legislation approved but not yet network. The government has identified implemented sets emissions limits of 30mg/m3 investment projects in transmission trunk lines for particulate matter, 200mg/m3 for sulphur worth US$859 million for the 2011-2016 dioxide and 200mg/m3 for nitrous oxide, and period. grants a three year adaptation period. Only one of the country?s 18 coal-fired plants meets RENEWABLE ENERGY the new rules; investment in upgrading the other 17 is estimated at US$50mn each. A Chilean authorities give no tariff support for further 18 coal-fired projects are in the design renewable power and have indicated they will and permitting stages, and will require an not change their policy. Combined with the estimated US$70mn each in additional dominant position of conventional power investment to meet the new requirements. generators and some regulatory obstacles, this makes the development of renewable power generation capacity particularly difficult, and Hydro generation projects have to prove their competitiveness While the desert conditions of the northern grid against conventional sources. The sector mean that generation there is 99% however benefits from Chile?s ability and thermoelectric, more than 60% of installed capacity in the central grid is hydroelectric. UK Trade & Investment Sector briefing: Power and Renewable Energy opportunities in Chile experience in obtaining carbon emission 13 companies bid for 20 concessions, and the certificates. government estimates a 3GW potential. Small scale hydro Marine The need to develop as much generation Chile has some of the best wave and tidal potential as possible has created significant resource in the world, and interest and growth in the development of small scale confidence in the technology is starting to hydro, previously overlooked in favour of the increase. At such early stages, opportunities greater efficiencies afforded by larger plants. are mainly in resource mapping and There is a deficit of engineering capacity and quantifying and project planning. expertise for small scale plants, and there are further opportunities in the development and Biofuels supply to the 2,000MW of Chile?s estimated Studies are underway regarding biofuel small scale hydro potential which would production from marine algae, forestry waste command investment in the region of US$2.5 and bushes/shrubs, taking care to avoid billion. interfering with the food chain and to minimise demand for other resources such as fresh Solar water. With a couple of exceptions, projects Grid-connected solar power on a commercial are still in the research and pilot phases. The scale is still a way off in Chile, although pilot mining sector and power generators operating projects are underway and some commercial in the country?s northern power grid have proposals have been submitted for shown particular interest in biofuels. environmental approval. The mining sector in particular has expressed its interest in solar Transmission solutions. The market for solar water heating Power sector players are concerned about that solutions is small and made up of many large amounts of renewable power being companies with sharply differing standards and incorporated to Chile?s relatively small power qualities. For PV and thermal solar alike, there grids could trip the systems and cause are opportunities for companies with quality blackouts. Opportunities therefore exist for the products and proven capacities who can safe and secure grid integration of renewable guarantee results. generation plants. Another problem is in the high cost per MW of transmission lines Wind evacuating power from small scale renewable Wind is an onshore business in Chile, and the power projects. This provides further country has close to 150MW installed capacity. Capaci opportunities in the planning and consolidation ty growth has been slow, with early developers guilty of planning wind plants that of transmission infrastructure. would work in countries that offered renewable power tariffs, but not in Chile?s unsubsidised environment. There are opportunities in the If you have any questions on the opportunities effective planning, design, construction and above, contact the UKTI contacts named in this operation of plants. report. Biomass & Biogas Business opportunities aimed specifically at UK Waste materials from the forestry, agricultural companies are added daily to UKTI?s website. and livestock sectors are the principal source of These leads are sourced by our staff overseas biomass for power generation. The government in British Embassies, High Commissions and has identified 5 million hectares of eroded/poor Consulates, across all sectors and in over 100 quality land that could be used for biofuel markets. cultivation. Projects so far have tended to use biomass directly rather than gasifying it. You can be alerted to business opportunities on Biogas is produced ? for flaring, and inputting a regular basis by registering on the UKTI to natural gas distribution networks more than website. Find out more on UKTI?s business for power generation ? from animal faeces, opportunities service on the UKTI website. waste water treatment and landfills. Geothermal Located on the Pacific Rim of Fire, Chile has rich geothermal resources. In November 2010 UK Trade & Investment Sector briefing: Power and Renewable Energy opportunities in Chile Major events and activities UKTI contacts Elecgas 2011 Karl Royce Contact: Karl Royce Senior Commercial Officer Email: karl.royce@fco.gov.uk British Embassy Santiago Time: 26-27 May 2011 Tel: (0056-2) 3704179 Email: karl.royce@fco.gov.uk Apemec 2011 www.ukti.gov.uk http://www.ukti.gov.uk/export/event/12 1950.html Tom Warwick Contact: Karl Royce Director of UK Trade & Investment Email: karl.royce@fco.gov.uk British Embassy Santiago Time: 20-21 June 2011 Tel: (0056-2) 3704174 Email: tom.warwick@fco.gov.uk Ambiental 2011 www.ukti.gov.uk www.ukti.gov.uk/export/event/121082.h tml Contact: Karl Royce Email: karl.royce@fco.gov.uk Time: 12-15 October, 2011 Northern Grid Forum (Foro SING) Contact: Karl Royce Email: karl.royce@fco.gov.uk Time: October 2011 Find full details of all events in this country and sector on the UKTI website. New export events are added daily to the site and you can register to be alerted to them on a daily, weekly or monthly basis UKTI?s Tradeshow Access Programme (TAP) provides grant support for eligible Small & Medium Sized Enterprises (SME's) to attend trade shows overseas. Find out more about UKTI support for attendance at overseas events UK Trade & Investment Sector briefing: Power and Renewable Energy opportunities in Chile Next steps - How UKTI can help ? Arranging appointments British companies wishing to develop their ? Organise seminars or other events for business in the Chilean market are advised to you to meet contacts and promote your undertake as much market research and company in the Chilean market planning as possible in the UK. UKTI?s team in Chile, with its wide local knowledge and This work is available via our Overseas Market experience, can provide a range of services to Introduction Service (OMIS) a chargeable British-based companies wishing to grow their service which assists British-based companies business in global markets. wishing to enter or expand their business in overseas markets. This can include: ? Provision of market information To find out more about commissioning this ? Validated lists of agents/distributors work, or accessing other UKTI services and ? Key market players or potential specialist advice, please visit the UKTI website customers in the Chilean market to find contact details for your local UKTI ? Establishment of interest of such office. contacts in working with you Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published 2011 by UK Trade & Investment. Crown Copyright © UK Trade & Investment Sector briefing: Power and Renewable Energy opportunities in Chile