The strong standing of NCRE in Chile

The incorporation of sources of non-conventional renewable energy (NCRE) is one of the major challenges in terms of developing an efficient and sustainable energy grid that conforms to international standards. In addition to possessing the geographical characteristics necessary for the incorporation of this type of energy generation, Chile has increased the installed capacity of NCRE fivefold between 2011 and 2015, from 540 MW to 2,649 MW, according to figures from the Chilean Renewable Energy Association (ACERA).

These figures illustrate the marketing opportunities available in the NCRE sector. For example, Chile was ranked 11th in the world in research compiled by the audit firm EY, in which it described the country as a highly attractive location for investors interested in planning and executing renewable energy projects.

This potential has also been recognized by Bloomberg, which ranked Chile third out of 55 developing countries in the area of NCRE in its 2015 Climascope assessment entitled New Energy Finance. The high score and rank are largely due to the increased installed capacity of solar energy and the execution of projects involving the use of wind energy.

Despite the favorable conditions for the development of NCRE in Chile, certain obstacles still need to be overcome. These include aspects relating to the implementation of new technology, the lack of specialized human capital, and the application of measures to mitigate noise pollution and visual impacts produced by energy generation facilities, such as wind turbines.

Legislative barriers represent an additional challenge, in spite of recent progress in this area. In Chile, the Non-conventional Renewable Energy Act, known and ‘Law 20/25’, seeks to raise the proportion of energy in the national energy grid generated from renewable sources to 20% by 2025. Furthermore, the Tender for Electricity Supply Act has contributed to the entry of renewable sources of energy in the market.

However, such legislative progress remains insufficient for the wide scale development of the Chilean energy sector. This is particularly the case with regard to obstacles relating to pre-investment in NCRE, as well as areas such as: the evaluation of new resources for project implementation; the lack of technical skills, which impedes the process of evaluating new initiatives; and the absence of sufficient methods for accessing financing.

In terms of NCRE, Chile has numerous challenges to overcome in the coming years, including those that constitute part of the National Energy Strategy 2012-2030; the main goal of which is to reduce energy consumption nationwide by 12% by 2020. To fulfill the objectives of this strategy, it is crucial that the private sector embraces NCRE as a key part of achieving energy efficiency. An example of progress in this regard relates to the incorporation of 44 energy-related projects totaling US$10.036 billion of investment to the Environmental Impact Assessment System (SEIA), between January and February 2016.

At present, US energy companies such as First Solar, Pattern Energy, SunEdison and Solar Reserve are active in the Chilean NCRE market. These firms primarily relate to solar power plants in northern Chile; a location which has the potential to position Chilean renewable energy as a benchmark for the region. Given this positive scenario, it is important to ensure faster and more efficient progress by learning from other markets that have experienced similar growth, for example, the US state of California.

With this in mind, the Chile-US Energy Business Council of AmCham Chile has staged a number of public-private trade missions to the United States, as well as positively received and highly valued discussions pertaining to industry challenges held between energy stakeholders from the public and private sectors. By means of this collaborative approach, Chile’s challenges relating to the field of energy will be tackled efficiently and with far more positive results.