Obstacles to wind energy development in Chile

Apart from the lack of policy support, grid infrastructure is one of the main limiting factors for wind power development in Chile. In addition, electrical engineers and other renewable energy professionals are urgently required to evaluate and develop the country’s renewable energy potential, and to provide expertise on grid integration issues.

About 65% of Chile’s electricity is currently generated ins thermal plants burning imported fossil fuels, mostly natural gas and coal, while 34% is generated from domestic hydropower. It is expected that in the coming decade, the country’s power consumption will increase by 6-8% per year.

Unlike many of its South American neighbors, Chile has limited indigenous fossil energy resources. This dependence on imported fossil fuels has created periods of electricity shortage over the past decade, for example when Argentina started reducing its natural gas supply to Chile in 2004. Chile is also vulnerable to long dry spells during the summer such as the droughts in 2007, 2008 and 2010.

As a result, energy prices in Chile have nearly tripled in the last five years. Fortunately, Chile is blessed with other renewable energy resources, including wind power, solar power and geothermal energy, but to date they represent less than 1% of the energy mix.

Chile has good wind resources from the northern deserts to the extreme south, including the south-central zone which is home to around 80% of the country’s population and two thirds of its industry. Chile’s wind energy potential is estimated at around 40 GW. The areas of greatest potential have been identified by the Ministry of Energy and the Department of Geophysics at the University of Chile in
Santiago and include the coastal zones of Atacama, Coquimbo in north Chile, and Maule in the center; as well as Calama and the high plateau zones in the region of Antofagasta, and around the headlands along the entire coast of the north and central zones.

In 1982 Chile pioneered the privatization of the electricity market. As a consequence, investment decisions are based on the marginal cost of electricity production of the available technology portfolio, with a reduced short term energy price as the main objective. Unfortunately, this policy has, against expectations, led to very high electricity prices and an insecure power supply.

Wind farm plants in Chile

Chile currently has 561 MW of non-hydro renewable energy capacity, which is 3.7% of the country’s total installed capacity, and of this, 171.6 MW is wind power. The first 2 MW wind farm (Alto Baguales) was installed in Chile in 2001, in Aysén, in the far south, and for a number of years this was the only wind farm operating in the country.

In 2007, the Canela 1 wind farm was constructed by Endesa Eco (Endesa Chile’s renewable energy subsidiary) in the coastal region near Coquimbo, 300 km north of Santiago de Chile, with 18.2 MW of capacity using Vestas 1.65 MW wind turbines. This project was expanded in 2009 by a further 60 MW (Canela II) with Acciona 1.5 MW wind turbines.

Also in 2009, a number of other large scale wind farms were installed in Chile, including Chile’s largest wind farm to date, the 46 MW El Totoral project, which is operated by Norvind, a subsidiary of Norwegian power company SN Power. This wind farm is also located in Coquimbo, and it uses 2 MW Vestas wind turbines.

Another project which came online in 2009 was the Monte Redondo 1 wind farm in the Ovalle municipality, 300 km north of Santiago with a capacity of 38 MW, using 2 MW Vestas wind turbines. This project is owned by a subsidiary of French GDF Suez.

The 3.6 MW Lebu wind farm in the Arauco province was also installed and grid connected in 2009, by Chilean developer Cristalerías Toro.

Large power consumers invest in own wind farms

In 2010, two smaller wind power projects came online, both providing power directly to industrial installations. The first was the 2.3 MW Cabo Negro wind farm, which was installed in the region of Magallanes in Southern Chile by the Canadian methanol producer Methanex in order to boost power production at its methanol plants, reducing its exposure to increasing natural gas prices.

The second was the 1.5 MW wind farm for the Canadian mining company Breakwater Resources to provide power for its El Toqui zinc mine. The El Toqui wind farm uses 275 kW Vergnet wind turbines and is operated by UK developer Seawind.

Other examples of self-supply wind farms include the gold mining company Barrick, which is constructing a 36 MW wind farm (Punta Colorada), and Australia’s Pacific Hydro, which is planning to build wind farms for the mining operations of BHP Billiton in northern Chile. Furthermore, Codelco (the main state-owned mining company and the world’s largest copper producer), has started the tendering process for the construction of its Calama wind power project.

The policy framework for wind energy in Chile

Chile does not have a specific policy to encourage wind power development, and renewable energy projects must compete in the market with conventional power generation.

For the past 30 years, energy policy in Chile has been founded on the principles of free market competition between private companies, regulation of natural monopolies and a limited role of the state.

In 2008, the Chilean government introduced a Renewable Energy Law (law 10.257), which obliges power companies who sell directly to final customers to source 5% of their power from renewable energy sources for new contracts. This percentage will increase gradually to 2024, and noncompliance will lead to penalties.

In 2009, the Chilean government created the Centre for Renewable Energy (CER) to support the development of a renewable energy industry in the country. The CER is expected to take a leading role in promoting renewable energy technologies and to serve as a bridge between research entities and private companies. Its activities focus on accelerating investment in non-hydro renewable energy and becoming a knowledge and technology transfer hub.

According to the Chilean Energy Ministry, around 2,000 MW worth of wind power projects have been submitted into the environmental impact assessment system, with most of them expected to start operations between 2012 and 2014, assuming that the technical and financial conditions are met to complete these wind energy projects as scheduled.