Electricity sector in Chile
Encyclopedia
The electricity sector in Chile
relies predominantly on thermal and hydro power generation. Faced with natural gas shortages, Chile began in 2007 to build its first liquefied natural gas terminal and re-gasification plant at Quintero
near the capital city of Santiago to secure supply for its existing and upcoming gas-fired thermal plants. In addition, it has engaged in the construction of several new hydropower and coal-fired thermal plants.
Chile’s electricity sector reform, which served as a model for other countries, was carried out in the first half of the 1980s. Vertical and horizontal unbundling of generation
, transmission and distribution
and large scale privatization led to soaring private investment. The 1982 Electricity Act was amended three times in 1999, 2004 and 2005 after major electricity shortages. Further amendments are envisaged.
(0.3% of total capacity) and Magallanes
(0.6% of total capacity) systems, which serve small areas of the extreme southern part of the country. The long distances existing among the four systems make their integration difficult.
Total installed nominal capacity in April 2010 was 15.94 GW. Of the installed capacity, 64.9% is thermal, 34% hydroelectric and nearly 1% wind power
, with nuclear absent. The SING is mostly thermal and suffers from overcapacity, while the hydro-dominated SIC has been subject to rationing in dry years.
Total generation in 2008 was 56.3 TW·h, 42% of which was contributed by hydropower sources. The remaining 58% was produced by thermal sources. This figure varies significantly from one year to another, depending upon the hydrology of the particular period. The electricity production grew rapidly since the start of natural gas imports from Argentina in the late 1990s.
Besides the new hydro projects (see Renewables section below), there are several large-scale thermal projects in the development pipeline for Chile. Numerous projects are being built, although other similar plants have been delayed due to opposition from locals and uncertainty about gas supply. It is this uncertainty that has directed new attention to coal-fired facilities, of which Chile already has several plants in operation, with a combined capacity of 2,042 MW. In addition, as of April 2010, there are plans to build new plants for a total of 11,852 MW of new generation capacity.
of 13 interruptions and 14 hours for the LAC
region.
average.
, transmission and distribution
activities have been in private hands. There are 26 companies that participate in generation, although three main economic clusters control the sector: Endesa group, AES Gener and Tractevel (Colbún). The situation is similar in the distribution sector, with approximately 25 companies, in which the major companies include CGE Distribución S.A., Chilectra S.A., Chilquinta Energía S.A., and Inversiones Eléctricas del Sur S.A. (Grupo SAESA). In transmission, there are 5 players. In the Central Interconnected System (SIC), the most important player is Transelec, a pure transmission company which controls almost the entire transmission grid that serves the SIC. In the other interconnected systems, the large companies generation or the large clients are the owners of the transmission systems.
The Central Interconnected System (SIC) serves principally household consumers, while the “Large North” Interconnected System (SING) mostly serves large industrial customers, primarily mining interests in Chile’s northern regions. The largest generating company in the SING is Electroandina, owned by Tractebel and Codelco.
, on the Biobio River, being the best example as the largest power plant in Chile. The construction of this plant was long delayed by opposition from local residents and environmental activists, but it finally began operations in 2004, the year when it also got the approval from Chile’s environmental authority to be expanded to a capacity of 690 MW.
Furthermore, Argentina’s gas crisis has revitalized other hydropower projects in Chile. In 2007-8, Chilean power generator Colbun completed three hydroelectric projects, the 70 MW Quilleco plant on the Laja River
and the Chiburgo and Homito plants, with 19 MW and 65 MW generation capacity respectively. In addition, in 2007 Endesa started operating the 32 MW Palmucho plant, which is to work in conjunction with Ralco’s facility. Finally, Australia’s Pacific Hydro
and Norway’s SN Power Invest are developing the 155 MW La Higuera and the 156 MW La Confluencia hydroelectric plants on the Tinguiririca River
.
and furious fifties, it has some of the most promising wind power potential in the world.
In recent years, there has also been increasing interest in the country’s geothermal potential. In 2006, after a surveying campaign, a consortium formed by the National Petroleum Company (ENAP) and Enel requested a concession to develop geothermal resources in the El Tatio region in the North.
, transmission and distribution
in 1981. According to Cambridge economist Michael Pollitt, the reform is widely regarded as a successful example of electricity reform in a developing country and has been used as a model for other privatizations in Latin America and around the world.
In the period 1970-73, Salvador Allende
’s government had undertaken a process of nationalization of many large companies, including utilities and banks. By 1974, inflation, high fuel prices and price controls had led to large losses and lack of investment in electric utilities, which were then under public ownership. The subsequent military dictatorship decided to reorganize the sector through the introduction of economic discipline. It returned large stated owned companies, such as electricity ones, to their previous owners, an action that was followed by improving rates of return on capital. In addition, the 1985 reform of the Chilean pension fund system
, which operated through Pension Fund Management Companies (AFPs), preceded the privatization of utilities, which began in 1986. By the end of the 1990s, foreign firms had gained majority ownership of the Chilean electricity system.
During the initial restructuring of the electricity industry, Endesa
, a state-owned company dating back from 1944 with extensive generation, transmission and distribution assets throughout the country, was divided into 14 companies. Those included 6 generation companies (including Endesa and Colbun), 6 distribution companies and 2 small isolated generation and distribution companies in the South. Chilectra, privately owned since 1970, was split into 3 firms: a generation company (Gener) and two distribution companies.
The high levels of investment that have been attained since 1982 have enabled the expansion of the Central Interconnected System (SIC) from 2,713 to 6,991 MW (4.1% p.a.) and of the Northern Interconnected System (SING) from 428 up to 3,634MW between 1982 and 2004.
Major problems have resulted from the aftermath of the 2002 Argentine crisis. In Argentina, sharp economic recovery has boosted energy demand and led to power cuts. This led Argentina to unilaterally decide, in 2004, on a reduction of its gas exports to Chile, which had been subject to a 1995 treaty between the two countries. These cuts have had serious implications for Chile, leading to an expensive substitution of fuel oil for gas in the midst of a shortage of hydroelectric capacity. In addition, gas supply shortages fueled the debate for investment in expensive liquid natural gas (LNG) import facilities. Construction of the country’s first liquefied natural gas re-gasification plant, at Quintero (Region V), near the capital city of Santiago, started in 2007 under the coordination of the state oil company Enap (National Petroleum Company). The partners are British Gas, with 40% of the shares, while ENAP, ENDESA and METROGAS have 20% each. The project is built under an Engineering, Procurement and Construction Contract by the Chicago Bridge & Iron company, while BG will be the long term supplier of LNG. The plant received project finance for US$1.1 billion from a consortium of international banks and is due to start operating in July 2009.
The Chilean government, as an additional response to secure electricity supply, proposed a new bill to the National Congress in August 2007. The main objective of this bill is to minimize the negative consequences derived from a generator’s failure to meet its contracted supply obligations (i.e. due to bankruptcy). In such an event, the new law would mandate the rest of the generators to assume the obligations of the failed company. In addition, the National Energy Commission (CNE) has recently approved Resolution No.386, a new piece of legislation that will allow regulated final consumers to receive economic incentives to reduce their electricity demand.
In 2008, a special law for non conventional renewable energy was approved (Ley 20.257), which requires that, from 2010 onwards, at least a 5% of the energy produced by the medium and large generator sector be from non conventional renewable energy sources. This quota will increase at 0.5% per year since 2015, to reach a 10% requirement on 2024.
weighted averages
of US$0.115 for residential consumers and 0.107 for industrial customers.
Chile
Chile ,officially the Republic of Chile , is a country in South America occupying a long, narrow coastal strip between the Andes mountains to the east and the Pacific Ocean to the west. It borders Peru to the north, Bolivia to the northeast, Argentina to the east, and the Drake Passage in the far...
relies predominantly on thermal and hydro power generation. Faced with natural gas shortages, Chile began in 2007 to build its first liquefied natural gas terminal and re-gasification plant at Quintero
Quintero
Quintero is a Chilean city and commune in Valparaíso Province, Valparaíso Region. The commune spans an area of .-History:The name of the city comes from Alonso Quintero, the Spanish navigator who discovered the bay in 1536 when he arrived on the ship Santiaguillo.-Demographics:According to the 2002...
near the capital city of Santiago to secure supply for its existing and upcoming gas-fired thermal plants. In addition, it has engaged in the construction of several new hydropower and coal-fired thermal plants.
Chile’s electricity sector reform, which served as a model for other countries, was carried out in the first half of the 1980s. Vertical and horizontal unbundling of generation
Electricity generation
Electricity generation is the process of generating electric energy from other forms of energy.The fundamental principles of electricity generation were discovered during the 1820s and early 1830s by the British scientist Michael Faraday...
, transmission and distribution
Electricity distribution
File:Electricity grid simple- North America.svg|thumb|380px|right|Simplified diagram of AC electricity distribution from generation stations to consumers...
and large scale privatization led to soaring private investment. The 1982 Electricity Act was amended three times in 1999, 2004 and 2005 after major electricity shortages. Further amendments are envisaged.
Installed capacity
There are four separate electricity systems in Chile: the Central Interconnected System (SIC, Sistema Interconectado Central), which serves the central part of the county (75.8% of the total installed capacity and 93% of the population); the Large Northern Interconnected System (SING Sistema Interconectado del Norte Grande), which serves the desert mining regions in the North (23.3% of the total installed capacity; and the AysénSistema Eléctrico de Aysén
The Sistema Eléctrico de Aysén is an alternating current power grid serving the Aysén Region of Chile...
(0.3% of total capacity) and Magallanes
Sistema Eléctrico de Magallanes
The Sistema Eléctrico de Magallanes or SEM is a alternating current power grid serving the Magallanes and Antartica Chilena Region of Chile. All of the SEM's power generation is produced by combustion of fossil fuels in thermal power plants, some of the fuel comes from the oilfields in the Strait...
(0.6% of total capacity) systems, which serve small areas of the extreme southern part of the country. The long distances existing among the four systems make their integration difficult.
Total installed nominal capacity in April 2010 was 15.94 GW. Of the installed capacity, 64.9% is thermal, 34% hydroelectric and nearly 1% wind power
Wind power
Wind power is the conversion of wind energy into a useful form of energy, such as using wind turbines to make electricity, windmills for mechanical power, windpumps for water pumping or drainage, or sails to propel ships....
, with nuclear absent. The SING is mostly thermal and suffers from overcapacity, while the hydro-dominated SIC has been subject to rationing in dry years.
Total generation in 2008 was 56.3 TW·h, 42% of which was contributed by hydropower sources. The remaining 58% was produced by thermal sources. This figure varies significantly from one year to another, depending upon the hydrology of the particular period. The electricity production grew rapidly since the start of natural gas imports from Argentina in the late 1990s.
Besides the new hydro projects (see Renewables section below), there are several large-scale thermal projects in the development pipeline for Chile. Numerous projects are being built, although other similar plants have been delayed due to opposition from locals and uncertainty about gas supply. It is this uncertainty that has directed new attention to coal-fired facilities, of which Chile already has several plants in operation, with a combined capacity of 2,042 MW. In addition, as of April 2010, there are plans to build new plants for a total of 11,852 MW of new generation capacity.
Imports and exports
In 2003, Chile imported 2 TW·h of electricity (mainly from Argentina) while it did not have any exports.Demand
In 2007, the country consumed 55.2 TW·h of electricity. This corresponds to 3,326 kW·h per capita, which is still low by developed country standards. It grew rapidly (6% per year) until 2006, but since then it has been stagnated.Demand and supply projections
It is expected that electricity demand will increase at 5% per year in the period up to 2030. In that same period, the share of natural gas in the generation mix will increase to 46%. The installed capacity of natural-gas fired electricity generation is expected to reach 14 GW in 2030 (this will be achieved by the construction of 10 new combined-cycle gas-fired power plants), while coal-fired and hydroelectricity generation will each account for about 26% of the total electricity generation mix.Access to electricity
Total electricity coverage in Chile was as high as 99.3% in 2006. Most of the progress in rural areas, where 96.4% of the population now has access to electricity, has happened in the last 15 years, following the establishment of a National Program for Rural Electrification (REP) administered by the National Fund for Regional Development. Under this Fund, there is tripartite funding of the capital costs of rural connections: users pay 10%, companies 20% and the state provides the remaining 70%, with users expected to pay for running costs.Interruption frequency and duration
In 2002, the average number of interruptions per subscriber was 9.8, while duration of interruptions per subscriber was 11.5 hours in 2005. Both numbers are below the weighted averagesWeighted mean
The weighted mean is similar to an arithmetic mean , where instead of each of the data points contributing equally to the final average, some data points contribute more than others...
of 13 interruptions and 14 hours for the LAC
LAC
-Places:* Los Angeles County in California* La Crescenta, California, unincorporated area in Los Angeles County* California State Prison, Los Angeles County...
region.
Distribution and transmission losses
Distribution losses in 2005 were 6.52%, down from 8% a decade before and well below the 13.5% LACLAC
-Places:* Los Angeles County in California* La Crescenta, California, unincorporated area in Los Angeles County* California State Prison, Los Angeles County...
average.
Policy and regulation
The National Energy Commission (CNE), created in 1978 to advise on long term strategies, is responsible for advising the Minister of Economy on electricity policy and for setting of regulated distribution charges. The Energy Superintendence (SEC) is responsible for supervising compliance with laws, regulations and technical standards for generation, production, storage, transportation and distribution of liquid fuels, gas and electricity. In turn, the Minister of Energy formally imposes the regulated tariffs and retains control over the issuing of rationing decrees during periods of drought when there is a shortage of hydro-electric generation capacity. Further responsibilities in the electricity sector are also held by the Superintendence of Secure Values (SVS), which is in charge of taxation, as well as directly by the regions and municipalities.Generation, transmission and distribution
Since the privatization of the Chilean electricity sector in 1980, all generationElectricity generation
Electricity generation is the process of generating electric energy from other forms of energy.The fundamental principles of electricity generation were discovered during the 1820s and early 1830s by the British scientist Michael Faraday...
, transmission and distribution
Electricity distribution
File:Electricity grid simple- North America.svg|thumb|380px|right|Simplified diagram of AC electricity distribution from generation stations to consumers...
activities have been in private hands. There are 26 companies that participate in generation, although three main economic clusters control the sector: Endesa group, AES Gener and Tractevel (Colbún). The situation is similar in the distribution sector, with approximately 25 companies, in which the major companies include CGE Distribución S.A., Chilectra S.A., Chilquinta Energía S.A., and Inversiones Eléctricas del Sur S.A. (Grupo SAESA). In transmission, there are 5 players. In the Central Interconnected System (SIC), the most important player is Transelec, a pure transmission company which controls almost the entire transmission grid that serves the SIC. In the other interconnected systems, the large companies generation or the large clients are the owners of the transmission systems.
The Central Interconnected System (SIC) serves principally household consumers, while the “Large North” Interconnected System (SING) mostly serves large industrial customers, primarily mining interests in Chile’s northern regions. The largest generating company in the SING is Electroandina, owned by Tractebel and Codelco.
Renewable energy resources
In January 2006, new legislation was passed to apply the benefits included in Short Laws I & II (see Recent Developments section below for details) to renewable energy production. The new regulation provided for exemptions in transmission charges for new renewable energy sources (i.e. geothermal, wind, solar, biomass, tidal, small hydropower and cogeneration) below 20 MW of capacity. It also simplified the legal procedures for projects below 9MW. The success of this new regulation for the promotion of renewable sources is yet to be seen.Hydro
Historically, hydroelectric plants have been the largest power source in Chile. Periodical droughts caused, however, supply shortfalls and blackouts, which led the government to increase diversification in the country’s energy mix in the 1990s, mainly through the addition of natural-gas fired power plants. Nevertheless, hydropower projects continued to be carried out, with the 570 MW Endesa’s Ralco plantRalco Hydroelectric Plant
Ralco Hydroelectric Plant is a hydroelectric power station and dam in Bío-Bío Region, Chile. The plant uses water from the upper Bío-Bío River and produces 690 MW of electricity. The plant was built by ENDESA in 2004. The project has proven controversial with local indigenous Mapuche since a...
, on the Biobio River, being the best example as the largest power plant in Chile. The construction of this plant was long delayed by opposition from local residents and environmental activists, but it finally began operations in 2004, the year when it also got the approval from Chile’s environmental authority to be expanded to a capacity of 690 MW.
Furthermore, Argentina’s gas crisis has revitalized other hydropower projects in Chile. In 2007-8, Chilean power generator Colbun completed three hydroelectric projects, the 70 MW Quilleco plant on the Laja River
Laja River
There are two notable rivers called Laja River :* Laja River in Guanajuato, central Mexico* Laja River in Chile...
and the Chiburgo and Homito plants, with 19 MW and 65 MW generation capacity respectively. In addition, in 2007 Endesa started operating the 32 MW Palmucho plant, which is to work in conjunction with Ralco’s facility. Finally, Australia’s Pacific Hydro
Pacific Hydro
Pacific Hydro is an Australian company that specialises in electricity generation using renewable energy. Its focus is on hydroelectricity and windpower. It was a public company listed on the Australian Stock Exchange until July 2005. It was subject to a successful takeover offer by a subsidiary of...
and Norway’s SN Power Invest are developing the 155 MW La Higuera and the 156 MW La Confluencia hydroelectric plants on the Tinguiririca River
Tinguiririca River
Tinguiririca River is a river of Chile located in the O'Higgins Region. It rises in the Andes, at the confluence of the rivers Las Damas and Del Azufre. From its source, it flows northwest for about 56 km to the vicinity of the city of San Fernando. In this portion of its course, the river receives...
.
Other
Besides hydro, no other renewable source has a significant contribution to the Chilean energy mix. In the year 2008, wind power amounted to 0.05% of the total electricity generation, and is projected to grow rapidly in coming years. Wireless Energy Chile (WEC) has announced plans to develop three, 5-MW wind power stations in the country, while Endesa plans to develop a 10 MW wind plant. In addition, SN Power is installing the 46 MW Totoral wind farm power project, scheduled to begin operating in October 2009. Along with GDF-SUEZ who will complete the 38MW Monte Redondo wind farm in 2009. Because southern Chile receives prevailing westerlies of the roaring fortiesRoaring Forties
The Roaring Forties is the name given to strong westerly winds found in the Southern Hemisphere, generally between the latitudes of 40 and 49 degrees. Air displaced from the Equator towards the South Pole, which travels close to the surface between the latitudes of 30 and 60 degrees south, combines...
and furious fifties, it has some of the most promising wind power potential in the world.
In recent years, there has also been increasing interest in the country’s geothermal potential. In 2006, after a surveying campaign, a consortium formed by the National Petroleum Company (ENAP) and Enel requested a concession to develop geothermal resources in the El Tatio region in the North.
Electricity sector reform of 1982
Chile represents the world’s longest running comprehensive electricity reform in the post-World War II period. The reform was led by the 1982 Electricity Act, which is still the most important law regulating the organization of the electricity sector in the country. The reform was designed based on the UK’s model and started with vertical and horizontal unbundling of generationElectricity generation
Electricity generation is the process of generating electric energy from other forms of energy.The fundamental principles of electricity generation were discovered during the 1820s and early 1830s by the British scientist Michael Faraday...
, transmission and distribution
Electricity distribution
File:Electricity grid simple- North America.svg|thumb|380px|right|Simplified diagram of AC electricity distribution from generation stations to consumers...
in 1981. According to Cambridge economist Michael Pollitt, the reform is widely regarded as a successful example of electricity reform in a developing country and has been used as a model for other privatizations in Latin America and around the world.
In the period 1970-73, Salvador Allende
Salvador Allende
Salvador Allende Gossens was a Chilean physician and politician who is generally considered the first democratically elected Marxist to become president of a country in Latin America....
’s government had undertaken a process of nationalization of many large companies, including utilities and banks. By 1974, inflation, high fuel prices and price controls had led to large losses and lack of investment in electric utilities, which were then under public ownership. The subsequent military dictatorship decided to reorganize the sector through the introduction of economic discipline. It returned large stated owned companies, such as electricity ones, to their previous owners, an action that was followed by improving rates of return on capital. In addition, the 1985 reform of the Chilean pension fund system
Chile pension system
The Chile Pension system refers to old-age, disability and survivor pensions for workers in Chile. The pension system was changed by José Piñera, during Augusto Pinochets military government on November 4, 1980 from a PAYGO-system to a fully funded capitalization system run by private sector...
, which operated through Pension Fund Management Companies (AFPs), preceded the privatization of utilities, which began in 1986. By the end of the 1990s, foreign firms had gained majority ownership of the Chilean electricity system.
During the initial restructuring of the electricity industry, Endesa
Endesa (Chile)
Endesa Chile is the largest electric utility company in Chile. It was created as a subsidiary of the state-owned CORFO in 1 December 1943 and was privatized in 1989. As of April 2009, it is owned by Enersis with a 60% stake, which in turn is 61% owned by Endesa International SA, a wholly owned...
, a state-owned company dating back from 1944 with extensive generation, transmission and distribution assets throughout the country, was divided into 14 companies. Those included 6 generation companies (including Endesa and Colbun), 6 distribution companies and 2 small isolated generation and distribution companies in the South. Chilectra, privately owned since 1970, was split into 3 firms: a generation company (Gener) and two distribution companies.
The high levels of investment that have been attained since 1982 have enabled the expansion of the Central Interconnected System (SIC) from 2,713 to 6,991 MW (4.1% p.a.) and of the Northern Interconnected System (SING) from 428 up to 3,634MW between 1982 and 2004.
Recent developments
There have been various attempts to modify the 1982 Electricity Act (Ley General de Servicios Eléctricos) with the purpose of adjusting to developments in the sector over the last 20 years. The first successful attempt happened in 1999, which led to electricity rationing after the drought of 1998-99, the worst one in 40 years, causing blackouts from November 1998 to April 1999 (with a total of 500 GW·h of electricity not being supplied). However, the most important modifications date from 2004, with Law 19,940, known as Ley Corta I (Short Law), and 2005, with Law 20,018 , known as Ley Corta II (Short Law II), which sought to address some of the most pressing shortcomings of the current system. However, according to Cambridge economist Michael Pollitt, a more comprehensive legislation is still needed.Major problems have resulted from the aftermath of the 2002 Argentine crisis. In Argentina, sharp economic recovery has boosted energy demand and led to power cuts. This led Argentina to unilaterally decide, in 2004, on a reduction of its gas exports to Chile, which had been subject to a 1995 treaty between the two countries. These cuts have had serious implications for Chile, leading to an expensive substitution of fuel oil for gas in the midst of a shortage of hydroelectric capacity. In addition, gas supply shortages fueled the debate for investment in expensive liquid natural gas (LNG) import facilities. Construction of the country’s first liquefied natural gas re-gasification plant, at Quintero (Region V), near the capital city of Santiago, started in 2007 under the coordination of the state oil company Enap (National Petroleum Company). The partners are British Gas, with 40% of the shares, while ENAP, ENDESA and METROGAS have 20% each. The project is built under an Engineering, Procurement and Construction Contract by the Chicago Bridge & Iron company, while BG will be the long term supplier of LNG. The plant received project finance for US$1.1 billion from a consortium of international banks and is due to start operating in July 2009.
The Chilean government, as an additional response to secure electricity supply, proposed a new bill to the National Congress in August 2007. The main objective of this bill is to minimize the negative consequences derived from a generator’s failure to meet its contracted supply obligations (i.e. due to bankruptcy). In such an event, the new law would mandate the rest of the generators to assume the obligations of the failed company. In addition, the National Energy Commission (CNE) has recently approved Resolution No.386, a new piece of legislation that will allow regulated final consumers to receive economic incentives to reduce their electricity demand.
In 2008, a special law for non conventional renewable energy was approved (Ley 20.257), which requires that, from 2010 onwards, at least a 5% of the energy produced by the medium and large generator sector be from non conventional renewable energy sources. This quota will increase at 0.5% per year since 2015, to reach a 10% requirement on 2024.
Tariffs
In 2005, the average residential tariff was US$0.109/(kW·h), while the average industrial tariff was US$0.0805/(kW·h). These tariffs are very close to the LACLAC
-Places:* Los Angeles County in California* La Crescenta, California, unincorporated area in Los Angeles County* California State Prison, Los Angeles County...
weighted averages
Weighted mean
The weighted mean is similar to an arithmetic mean , where instead of each of the data points contributing equally to the final average, some data points contribute more than others...
of US$0.115 for residential consumers and 0.107 for industrial customers.
Subsidies
Electricity subsidies in Chile aim to temper the impact of rising electricity tariffs on the poorest sectors of the population. In June 2005, Law 20,040 established an electricity subsidy for poor Chilean families. As mandated by the law, the subsidy will be triggered when electricity tariffs for residential, urban or rural users face an increase equal to or above 5% during a period equal to or below six months. This measure was first applied between June 2005 and March 2006, when it targeted 40% of the total population (about 1,250,000 families). The subsidy was triggered a second time from February to March 2007, when it benefited 32,000 clients in the Second and Third Regions of the country. More recently, the government has announced a new application of the subsidy to benefit an estimated 1,000,000 households between December 2007 and March 2008. The total amount of the subsidy (US$33 million) will triple the resources committed in previous campaigns and is a response to rising electricity prices caused by the increasing use of diesel as a substitute for natural gas and the low precipitations of 2007, which have hindered hydropower generation.Investment and financing
Investment requirements in electricity generation, transmission and distribution over the period to 2030 are estimated to be between US$38–49 billion.Summary of private participation in the electricity sector
As a result of the 1982 reform of the electricity sector, 100% of generation, transmission and distribution activities in Chile are in the hands of private companies. Endesa group (5223 MW ; 32,8%), AES Gener (2642 MW 16,6%), Colbún (2591 MW, 16,3%) and Suez Energy (1856 MW ; 11,6%) control the largest part generation sector, in which a total of 26 companies participate. The distribution sector, with about 25 companies, is also dominated by four main groups: CGE Distribución S.A., Chilectra S.A., Chilquinta Energía S.A., and Inversiones Eléctricas del Sur S.A.(Grupo SAESA). As for transmission, Transelec is the largest owner of the transmission grid, followed by CGE transmisión.CONAMA (National Commission for the Environment) was created in 1994 and acts as coordinator of the Government’s environmental actions. CONAMA is chaired by a Minister and is integrated by several different Ministries (e.g. Economy, Public Works, Telecommunications, Agriculture, Health, etc.) In July 2007, faced with the need for early installation of new back-up capacity in the National Interconnected System (SIC), the Energy Ministry urged CONAMA to grant maximum priority to the environmental assessment of the projects related with the installation of emergency turbines.Greenhouse gas emissionsOLADE (Organización Latinoamericana de Energía) estimated that CO2 emissions from electricity production in 2003 were 13.82 million tons of CO2, which represents 25% of total emissions for the energy sector. It is estimated that, by 2030, emissions from electricity generation will account for the largest share of emissions from the energy sector, 39% (some 74 million tons) of the total.CDM projects in electricityCurrently (September 2007), there are eight energy-related registered CDM projects in Chile, with expected total emissions reductions of about 2 million tons of CO2e per year. The breakdown of the projects is as follows:
Source: UNFCCC World BankCurrently, the World BankWorld Bank The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty... is funding a Project for Infrastructure Development in Chile. A US$50.26 million loan was approved in 2004 with the objective of increasing the effective and productive use of sustainable infrastructure services by poor rural communities from selected territories in the regions of Coquimbo Coquimbo Region The IV Coquimbo Region is one of Chile's 15 first order administrative divisions. It is some 400 km north of the capital, Santiago.The capital and largest city is La Serena, other important cities include the seaport Coquimbo and the agricultural centre... , Maule Maule Region The VII Maule Region is one of Chile's 15 first order administrative divisions. Its capital is Talca. The region takes its name from the Maule River which, running westward from the Andes, bisects the region and spans a basin of about 20,600 km2... , Biobío, Araucanía Araucanía Region The IX Araucanía Region is one of Chile's 15 first order administrative divisions and comprises two provinces: Malleco in the north and Cautín in the south.... and Los Lagos Los Lagos Region Los Lagos Region is one of Chile's 15 regions, which are first order administrative divisions, and comprises four provinces: Chiloé, Llanquihue, Osorno and Palena. The region contains the country's second largest island, Chiloé, and the second largest lake, Llanquihue.Its capital is Puerto Montt;... . The project, to be completed in 2010, seeks, among other goals, to improve quality of conventional electricity services and to promote off-grid and renewable energy solutions, such as generators, solar panels and wind turbines. Inter-American Development Bank (IDB)The Inter-American Development BankInter-American Development Bank The Inter-American Development Bank is the largest source of development financing for Latin America and the Caribbean... has provided funding for three active electricity-related projects in Chile.
See also
Further reading
External links
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