Country series: Chile leads the way with commitment to renewable energy

Long and narrow, Chile is wedged between the Pacific Ocean and the Andes Mountains. It is the world's second-longest country from north to south, after Brazil, and spans 4 200 kilometres between Peru and Cape Horn. With its sun-baked deserts, windswept coastlines and cascading waterfalls, Chile has an abundance of natural resources that can provide clean energy. And it needs it: Chile is one of Latin America's fastest-growing economies, and its energy demand is rising accordingly.

Ever since the colonial era, commodity exports have formed the foundation of Chile's economy, with copper being the most important. Over time, wine, fruit, timber and fish have also become key export commodities. After 17 years of dictatorship, democracy was reinstated in 1990, and the country's subsequent positive economic development has led to Chile becoming the first South American member state to join the OECD in 2010.

Towards zero environmental impact

The effects of climate change are already being felt in Chile. Over the past ten years, the country has experienced a mega-drought, a record number of forest fires, melting glaciers and an increased incidence of extreme weather.

The country's government has announced a very ambitious goal: Chile will be the first developing country to achieve carbon neutrality by 2050.

"The goal is for Chile to absorb as much CO₂ as it produces, so that by 2050 the environmental impact will be zero," explains María Teresa González, who is Statkraft's country manager in Chile.

The government has announced, among other things, that all Chile's 28 coal-fired power plants – which are mainly operated by companies from the United States, France and Italy – will close by 2040. The first phase involves closing eight thermoelectric plants.

Green commitment

Although coal is still the most important source of energy in the Chilean power system, renewable energy sources are playing an increasingly important role. In 2013, the authorities set a target of 20 per cent renewable energy in the country's electricity grid by 2025. 

Latin America's first concentrated solar power plant, Cerro Dominador, is located in Antofagasta in the north of the country, with 210 MW of electricity, 17.7 hours of electricity storage and an investment of USD 1.4 billion.

A number of new hydropower, wind power and solar power plants are under construction in Chile.

The Chilean government has also promoted the introduction of electric buses in the public transport system and is encouraging alliances between bus operators, electricity companies and bus manufacturers using electric technology.

Rich in natural resources

In the Bloomberg report Climatescope 2020, Chile is ranked as the country with the best opportunities for developing renewable projects.

"The study was conducted in 108 new economies, and Chile and India topped the list, followed by Brazil, Jordan and China. The study highlighted Chile's implementation of government policy, investments and commitment to replacing coal in its power generation," says González.

"Electricity production in Chile is probably the sector where coal production is being reduced most rapidly, thanks to the ever-increasing and extensive use of renewable energy."

She adds that the key energy challenge facing Chile will undoubtedly be to meet the stated goal of phasing out all coal power in the national electric system by 2040. The country's power transmission system is another area that needs further development and upgrading.

With its rich natural resources, Chile still has vast potential to become the leading renewable power country in South America.