EARTH, WIND AND FIRE: Chile turns to renewables.

Despite Chile’s considerable natural resources, the country had until recently done little to exploit its potential for renewable technologies. Now caught between high oil prices and dwindling supplies of natural gas from Argentina, the government is planning new legislation to encourage investment in clean energy.

Since early 2004 when Argentina announced a freeze on new export licenses for natural gas, the hunt has been on in Chile for new reliable sources of energy.

The issue is a crucial one for Chile’s vigorous economy.

Energy prices have risen sharply in the last three years as generators are forced to burn more expensive fuels as Chile’s neighbour gradually begins cutting off the gas.

And it is not just about replacing existing supplies of cheap Argentinean gas, which are thought to have saved the country some US$3 billion since in the first pipelines were laid across the Andes in the mid-1990s.

With Chile’s electricity consumption set to double by 2020, the country needs to finds secure alternatives for the future

Renewable energy is seen as one very likely candidate.

From roaring rivers, windy coastlines and skies that remain cloudless all year round, Chile´s diverse geography certainly presents significant potential.

And the benefits are multiple, says energy minister Karen Poniachik.

Not only will renewable energy boost the country’s green credentials but it will also cutting its reliance on increasingly expensive imported fuels such as coal and oil, attract new players into Chile’s highly concentrated energy market and make the country more autonomous in energy matters at a time when energy supplies appear under threat.

But promoting renewable energy, insists Poniachik, make up just one part of the government’s multi-pronged response to the difficult energy scenario facing the country.

New laws governing the power markets and passed by the previous administration are encouraging investment in conventional methods of producing electricity, most notably a series of coal-fired power stations and a project to develop hydroelectricity in the little-developed far south.

Meanwhile, state energy firm ENAP is leading a project with UK gas group BG to import liquefied natural gas through a specially built installation at Quinteros on Chile’s central coast

But the government’s ambitions for renewable energy are significant.

Taking office earlier this year, President Michelle Bachelet said that she wanted 15% of the new capacity installed during her four year term (an estimated 400MW) to come from renewable sources.

Chile, like South America in general, lags behind much of the developed world in the use of renewable technologies, largely because of a lack of supporting legislation.

This stance altered slightly with the recent reform of the power markets, which for the first time guaranteed non-conventional renewable energy projects (smaller than 20MW) access to the grid and offered them reduced transmission charges.

Although a major break from its previous position of letting the market alone decide the best way of producing power, the new government believes that more needs to be done.

New legislation is being drawn up, based largely on laws put in place in Australia, that would oblige distributors to source 5% of their power from certified renewable projects, generating a guaranteed demand for the raft of new projects now being planned.

Failure to meet this requirement would result in a fine but the law will allow a trade in certificates so that those companies without little access to renewable energy, such as in the arid north of Chile, can still comply with the norm.

Wind energy could be one of the first technologies to be benefit from the new legislation proposed by the government, due to go to congress early next.

Already half a dozen proposed wind-farms have been presented to Chile’s environment commission for approval, mostly on windy stretches of the country’s northern coast.

The country already has one wind farm, Alto Baguales supplying the remote southern city of Coihayque, but at 2MW it is relatively small to compared to the new investments being planned.

Once approved, Spain’s Acciona Energia, one of the world’s leading producers of wind energy and one of the companies develop the technology in Chile, says it would take just months to install the turbines.

Blessed with 4,000 kilometres of mountains rich in volcanoes and hot springs, Chile’s potential for geothermal energy has long been known although has yet to be successfully developed as rusting machinery at the popular tourist site Geysers del Tatio bears witness.

However, now working with Italian energy firm EMEL, the world’s biggest producer of geothermal energy, state oil company ENAP reckons the chances of developing the country’s subterranean potential are better than ever.

A joint venture between the two companies ENAG is due to begin drilling four sites next year – two in central Chile and two in the north, near the border with Bolivia.

These latter two have sparked protests by local people fearful that the project will infringe upon the Geysers del Tatio, a major attraction in the region.

But ENAP has said that the investment will not affect the part of the site visited by tourists.

If the drilling proves successful, the government believes the country could be producing geothermal power within five years.

Further south, Chile’s mountains provide another source of power in the form of hydroelectricity, a technology which has been used in the country for more than one hundred years.

However, after the controversies that surrounded the building of the Ralco hydroelectric dam (opponents claimed that the project was ridden roughshod over environmental considerations and the right of local indigenous people) the emphasis now is on small run-of-river installations rather than the giant dams that mark much of southern Chile.

Smaller projects, known as mini-hydros, promise not only a reduced environmental impact, but, according to supporters, more efficient use of water flow, if several are used in series on a single river.

Biomass is another technology with considerable potential.

The country’s powerful forestry industry is already a leader in this field, burning those parts of the tree it cannot use in lumber or wood pulp to produce electricity.

Arauco, the country’s largest wood pulp producer, generate enough power to run all its operations and sell 110MW back to the grid, says the country’s commercial manager Charles Kimber.

That makes the company a larger producer of power than the controversial Ralco project to produce hydroelectricity on the upper Biobio river valley, he notes.

With wood pulp production set to expand by around 50% by the end of the current decade, there should be some significant potential for developing bio-mass energy in the near-term.

And other sectors are looking to climb aboard the energy bandwagon.

In November, ministers announced plans for legislation that would allow the production and distribution of bio-fuels, produced from crops such as sugar beet or rape seed.

A study by state energy firm ENAP and agribusiness IANSA said that these could replace up to 5% of the diesel and gasoline produced by Chilean motorists.

It would also provide a welcome boost to the country’s crop farmers who struggle to survive against cheaper imports from Argentina and elsewhere.

Despite the coverage renewables are receiving, the technology seems not yet ready to play a major part in Chile´s energy market.

Just one of the coal-fired power stations being planned by Chile’s established generators would match the 400MW of renewable energy President Bachelet wants to see installed by the time she steps down.

A nuclear power plant, an option which various business and political leaders have supported in recent months although ruled out by the current government, would produce at least 1,000MW while the Aysen hydroelectric project is expected to produce closer to 3,000MW.

But in the longer term, with many energy experts contemplating the end of the oil age, taking its first cautious steps in renewable energy sounds like a sensible move.