Chile’s renewable energy potential promises multiple benefits for the country, according to latest IEA country review

SANTIAGO – Chile has emerged as a world-class destination for solar and wind energy developers, according to the International Energy Agency’s latest review of the country’s energy policies.

Chile’s energy sector is evolving dynamically in recent years and significant institutional and policy reforms as well as major infrastructure projects have been carried out. The country’s National Energy Policy 2050 was adopted in 2015, following an exceptionally inclusive public consultation. The electricity sector, in particular, has developed quickly.

The IEA’s report found that new legislation has encouraged investment in generating capacity across the electricity sector. The enhanced role of the state in effective energy planning has helped boost project development, especially in electricity transmission. The country now also has an interconnected national electricity system.

“By exploiting its vast renewable energy potential, Chile can help reduce electricity prices and dependence on fuel imports – without subsidies,” said Paul Simons, the IEA Deputy Executive Director, who presented the report’s findings on Tuesday. “Renewables and energy efficiency can also help limit carbon emissions and air pollution.”

Chile’s prospects for exploiting its vast potential for solar and wind energy are bright, thanks to considerable declines in technology costs, but also by enabling policies, such as technology-neutral tenders for electricity supply. “These tenders are both driving investment in green, affordable electricity and increasing competition,” said Mr Simons. “It’s looking like a win-win.”

The IEA report finds that to better integrate these variable energy sources successfully will require additional investments in grids, storage and flexible capacity, as well as a smart-system design. The government should now ensure that electricity market design and infrastructure facilitate the value-maximising integration of solar and wind power. The IEA also suggests additional incentives for innovation and competition in the electricity distribution sector.

Beyond electricity, the report encourages the government to strengthen energy efficiency policy.  Chile should make more use of mandatory energy performance standards for products, equipment, vehicles and buildings. This would help increase energy security and also limit air pollution and CO₂ emissions in a cost-effective way. Efforts on transport, in particular, would improve oil security, an area where more needs to be done.

Firewood is an important energy source in Chile, especially in the south, but its use is causing severe air pollution and, as a consequence, problems for human health. The IEA strongly urges the government to adopt more ambitious policies and measures to encourage the use of sustainable dry wood and alternative heating technologies.