News ID: 207804
Published: 0458 GMT January 09, 2018

Clean energy sources manage to cut electricity bill in Chile

Clean energy sources manage to cut electricity bill in Chile

A 75 percent drop in electricity rates, thanks to a quadrupled clean generation capacity, is one of the legacies to be left in Chile by the administration of Michelle Bachelet, who steps down on March 11.

In December 2013, the electricity supply tender for families, companies and small businesses was awarded at a price of $128 dollars per megawatt hour, compared to just $32.5 dollars in the last tender of 2017, Ipsnews reported

“An important regulatory change was carried out with the passage of seven laws on energy that gave a greater and more active role to the State as a planner. This generated the conditions for more competition in the market,” Energy Minister Andrés Rebolledo said.

Four years ago, large companies were concerned over the rise in electricity rates in Chile, and several mining companies stated that due to the high price of energy they were considering moving their operations to other countries. Currently, big industrialists have access to lower prices because they renegotiate their contracts with the generating companies.

The new regulatory framework changed things and allowed many actors, Chilean or foreign, to enter the industry, thanks to bidding rules that gave more room to bids for generating electricity from non-conventional renewable energies (NCRE), mainly photovoltaic and wind, the most efficient sources in the country.

“This happened at a time when a very important technological shift regarding these very technologies was happening in the world. We carried out this change at the right time and we took advantage of the significant decline in cost of these technologies, especially in the case of solar and wind energy,” the minister said.

Eighty companies submitted to the tender for electricity supply and distribution in 2016, and 15 submitted to the next distribution tender, “in a phenomenon very different from what was typical in the Chilean energy sector, which was very concentrated, with only a few players,” he added.

Manuel Baquedano, president of the Chilean non-governmental Institute of Political Ecology, believes that there was “a turning point in the Chilean energy mix, with a shift towards renewable energy.”

This change occurred, Baquedano said, “because people didn’t want more megaprojects like the Hydroaysén hydroelectric plant in the south, and Punta de Choros in the north (both widely rejected for environmental reasons), and that curbed the growth of the oligopolies.”

“Globally, solar and wind energy are much more competitive than even fossil fuels. Today solar energy is being produced at a lower cost than even coal. That has led to the creation of a new scenario, thanks to this new regulation policy,” he added.

In addition, said the expert in geopolitics of energy, “that change was approved by the community and environmentalists who have raised no objections to the wind and solar projects.”

Marcela Mella, spokesperson for the environmental group No al Alto Maipo, said that they have various strategies to continue opposing the construction of the hydroelectric project of that name, promoted by the US company AES Gener on the river that supplies water to Santiago.

The project would involve the construction of 67 km of tunnels to bring water to two power plants, Alfalfal II and Las Lajas, with a capacity to generate 531 megawatts. Started in 2007, it is now paralyzed due to financial and construction problems. But in November the company anticipated that in March it would resume the work after solving these problems.

"The project puts at risk Santiago's reliable drinking water supply. This was demonstrated when construction began and heavy downpours, which have been natural phenomena in the Andes mountain range, dragged all the material that had been removed and left four million people without water in Santiago," said Mella.

He added that Alto Maipo will also cause problems in terms of irrigation water for farmers in the Maipo Valley, who own 120,000 hectares.

“In the past four years, the government enjoyed a fairly free situation to develop projects (of those energy sources) that some have qualms about from an environmental perspective,” he said.

“It is not a process that any future government can stop. It is a global process into which Chile has already entered and is being rewarded for that choice. There is no longer a possibility of returning to fossil fuels, as is happening in the US where there is an authoritarian government like that of Donald Trump,” Baquedano added.

The environmental leader warned that although “there is a margin for the rates and costs to decrease, it will not last forever.”

For that reason, he proposed “continuing to raise public awareness of NCRE.”

The energy sector was a leader in investments in the last two years in Chile, surpassing mining, the pillar of the local economy.

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