Chile energy agenda

Chile energy agenda aims to reduce prices, promote renewables.

Chilean President Michelle Bachelet and energy minister Máximo Pacheco unveiled the 2014-18 energy agenda on Thursday during a ceremony in the presidential palace La Moneda.

Bachelet's agenda seeks to reduce electricity prices and promote unconventional renewable energy development in a country which imports approximately 60% of its primary energy resources, the document said.

Specifically the agenda stipulates a 30% reduction in marginal electricity costs on Chile's central SIC grid by the end of Bachelet's term in 2018. The commitment implies SIC marginal electricity costs would fall to less than US$105.96/MWh by 2017 from an average of US$151.36MWh in 2013. It also seeks to lower electricity prices for homes by 25% over the next decade.

The program aims to lift barriers to the development and implementation of unconventional renewable energy. It stipulates that 45% of electricity capacity installed between 2014 and 2025 will be renewable in order to reach Chile's previous commitment of achieving a 20% nationwide renewable energy mix by 2025, according to the document.

The government also expects to see Chile saving 20,000GWh/y by 2025 through efficiency measures and setting up a stabilization system to shield consumers from fuel price volatility.

Chile's government will support the agenda with US$250mn over the next four years and provide another US$400mn to state oil firm Enap, primarily for energy exploration, Bachelet said.

"It is a document that addresses all the aspects that make up the complex energy sector and pledges concrete actions and goals with deadlines and measurable results," according to Alfredo Solar, president of the country's renewable energies association Acera.

"The agenda recognizes the important contribution that [non-conventional renewable energy] NCRE can make to the country in the coming years and pledges actions to eliminate barriers," added Acera executive director Carlos Finat.

LOOMING CRISIS

Also Thursday, local think tank Libertad y Desarrollo's (LyD) senior economist Susana Jiménez warned of future energy scarcity and high prices on Chile's SIC grid.

"Our principal problem is that generation and transmission projects are facing growing challenges from social and environmental opposition and difficulties in the approval process," Jiménez said in an LyD press release.

The Chilean government needs to fast track projects to confront the "alarming" absence of new generation projects, she added.

Increased use of LNG can address short-term issues. Nevertheless Chile will need to develop new coal and hydroelectric projects, according to Jiménez.