Chile's President Bachelet advocates unified power grid

Chile's president Michelle Bachelet and energy minister Máximo Pacheco have confirmed the government's commitment to
interconnecting the country's two main power grids.

In a ceremony at the Polpaico transmission substation outside capital Santiago, the two leaders signed a 2014-15 "expansion decree" giving the official go-ahead to a 600km, 2x500kV alternate current transmission line project already underway that will connect the northern SING and central SIC grids.

Known as Transmisora Eléctrica del Norte (TEN), the project is being built by E-CL, the local unit of French utility GDF Suez and the largest power generator on the SING.

TEN will stretch from Mejillones, Antofagasta region (II), south to Copiapó, Atacama region (III), and is slated for completion in 2017. In a 4Q14 investor presentation, E-CL put the required investment cost for the project at US$721mn.

The SING mainly caters to mining companies and other industrial clients in the north and has an installed capacity of just under 5GW. The approximately 15GW-capacity SIC serves the Santiago Metropolitan region and most of Chile's regulated market clients (i.e. residential customers).

In their respective speeches, both Pacheco and Bachelet stressed the economic imperative of interconnection in order to reduce Chile's electricity prices, which Pacheco said were the highest in Latin America.

The interconnection will create a unified system with greater stability and efficiency, Pacheco said, improving transmission bottlenecks and allowing output from nonconventional renewable energy (NCRE) sources such as wind, solar and minihydroelectric plants to reach the entire country from their respective points of generation.

The unification of the grids will reduce energy prices for regulated market customers in the country's central-southern zone by US$13/mwh, according to the government, and by US$17/mwh and US$9/mwh for industrial clients in the north and central-south, respectively.

The timing and location of the ceremony were noteworthy, given recent opposition to a different but closely related transmission project nearer to Santiago.

Legislators and local politicians have criticized Pacheco this week over the planned 730km Cardones-Polpaico transmission line, a 2x500kV stretch that will connect the Cardones substation in Copiapó with Polpaico.

In a release from the lower house of the national congress, legislator Andrea Molina was quoted decrying a lack of will on the part of Pacheco and the energy ministry to meet community leaders and environmental groups to discuss potential negative impacts of the high-tension line, which is meant to fortify the trunk system of the SIC and eventually
connect to the trunk system of the SING via the GDF Suez line.