Daily Management Review

Has Chile Put All Its Eggs In One Basket To Turn Towards Renewable Energy?


Chile’s ambitious and innovative renewable energy attempts get shrouded in competition. On one hand, the government of Chile looks for “value for money”, on the other, delay translated in heavy cost blows, leave renewable energy projects on hold.

Chile has set forth “the most ambitious” renewable targets in the world claimed Reuters. The challenges that the South American country tackles in this path seems to be reflected in the “Cerro Dominador solar tower” which is not yet completed and is rising its head up from the Atacama desert.
Moreover, the country is getting ready to play the host of one “major United Nations climate change conference” which is scheduled to take place in the month of December, while it has also made a commitment of phasing out the use of coal by 2040 along with achieving carbon neutral status by 2050. Nevertheless, in the race to be the first one in achieving the above mentioned targets, Chile wants to “bring forward its own deadlines” lest other countries catch up.
With the cheaper solar panels introduced recently, the country has got a helping push to get twenty percent of its power sourced renewably by 2050. The main concern now is to harness, store and supply the country’s “bountiful solar and wind power” in twenty four hours round the clock. This way it can leap forth to achieve a sixty percent target of being renewable sourcing by 2035 and seventy percent by 2050. The Environment Minister, Carolina Schmidt described that Chile would become “the Saudi Arabia of clean energy”.
In 2013, a “$1.3 billion project”, namely “Cerro Dominador” was announced which is using technology to create a more stable energy supply system. One unique feature of this project, described by Reuters, is “it allows the sun’s heat to be stored to generate electricity for hours afterwards, including at night”.
The said project finally took off in 2014, while Abengoa, a company from Spain was building up the same. Talking about the project the then C.E.O, Manuel Sánchez said:
“With 112 plants like this one, Chile would be autonomous in energy matters”.
However, two years later, the company was on the brink of bankruptcy and had to sell off “Cerro Dominador” which slowed down the construction of the plant. The delay reflected in a hiked up cost. Finally funds were gathered from various banks such as “the Chilean state and U.S. private equity firm EIG Global Energy Partners”.
Eventually, after a delay from previously chalked out schedule, the plant was brought back to life sometimes last year. But now the problem is that the project is “no longer competitive, or particularly sustainable”. As cheaper solar panels came into the market, the output of “Cerro Dominador” became fifty percent useful only for the period of the “day not covered by the panels”, reflected Corfo’s ‘Solar Energy Project Coordinator’, Cristián González. In González’s words:
“Today it makes no economic sense to generate with CSP during the day, because that’s what photovoltaics are for and they are much cheaper”.
González urged for “more modest CSP plants” which would supply power only when “other sources are offline”. Moreover, the price decided in the deal seems “unfeasible” noted Energetica’s María Isabel González. While Reuters reported:
“With a striking tower that looms 250 meters (820 ft) above the bone-dry desert, Cerro Dominador’s 100MW solar plant is up and running but its CSP plant, which cost $1 billion of the original outlay, will only be fully operational in 2020”.
And the C.E.O of Cerro Dominador, Fernando González said:
“Our expectation is that future plants will be much more competitive, both for market conditions and because of technological advances”.
However, Cerro Dominador is not the only failed story of Chile’s renewable energy sourcing. Likewise, Espejo de Tarapacá, an “innovative pumped storage hydroelectric energy plant”, has also met with similar fate. Therefore, Plataforma Energía’s Commercial Director, Pablo Demarco is of the opinion that:
“They (Chilean authority) shouldn’t put all their eggs in one basket but try everything, take advantage of all kinds of technologies”.
However, the Energy Minister of Chile, Juan Carlos Jobet informed Reuters that “the government had no particular preference of renewables technology, provided it represents value for money”, wrote Reuters. While, he was also quoted saying:
“The challenge is that they are able to offer energy 24/7 at a reasonable cost”.