Chile Forum

Could someone elaborate on the energy situation in Chile?

There was an article on Bloomberg.com back on July 5 (http://www.bloomberg.com/apps/news?pid=20601086&sid=aqvKkFM6IOMU&refer=news) that said that "Bear Stearns & Co. downgraded Chilean equities to ``market weight'' from ``market overweight,'' citing an increase in energy costs in the country and high share valuations. Reduced natural gas supply from Argentine and lower-than- average rainfall has pushed electricity spot prices to record highs, ``which may affect profitability, raise inflation, and prompt tighter monetary policy,'' strategists including Thierry Wizman wrote in a research note today. "

I would assume Chile has great potential for hydroelectric power? Is my assumption correct?

Is there a potential for wind power in Chile?

Is Chile a net importer of oil?

Thanks

1) Yes, but environmental considerations are making construction of large projects iffy. More micro hydro is definitely needed and doable as the environmental impact is minimal.

2) Yes, search The Santiago Times archives for more info. I believe somewhere up north and another location in the V Region have projects in the works.

3) Yes.


Chile will be constructing a huge LNG plant near the coast in the V Region which will be connected by pipeline to the Santiago grid.

There are constant rumors that Bolivia and Chile will make some kind of agreement but who knows?? Maybe in the next century?

On top of TranSantifiasco, IMO it will be the half-a$$ed to nonexistent energy policy that lead to this situation which will bring down the ruling party.

Little History...During Frei's presidency in 1995, Argentina promised a cheap, steady supply of natural gas to satisfy Chile's residential, industrial, and electricity-generating needs.
The cost of the gas produced by Argentina was US$ 3,5 MBTU (Millions of BTU) wich is the equivalent of 25 cubic meters of gas.

That gas was used to propel combined circle turbines, that generated electricity at a price of $cl 10 per kWh.

Almost at the same price of kWh generated by hydroelectric generators.

These combined circle turbines can be installed and operational in a term of 1 to 1 1/2 year depending how close they are from main sources Highways,etc. And offer the benefit to bring the power directly to the front door of the consumer, without loosing KWH on the transmission.

The strategy was to build these every year according to a growth of 7% in the demand of energy,Duplicating capacity in a matter of 10years.

LAter on the Argentines increased the price of gas to US$ 4,50 MBTU, and later they stopped to send gas altogether
.
Sadly , Argentina do not even have enough gas to meet their internal demands.

In response to the shortages, many Chilean businesses, particularly electricity-generating companies, have reluctantly switched to diesel fuel.
But the cost of the MBTU skyrocketed to US$ 15,20, and the price of KWH to $cl 43,40 .

Almost 4,34 times the old price.

The Sistema Interconectado Central (SIC), Central grid of energy, covering aprox 2.000 Km in the central part of the country obtains the energy in a combined formula of 77% hydroelectric ( cheap)and 33% by Thermal generation (expensive).

The port capable to receive liquified natural gas is behind schedule, and it is expected to star working in 2010, with this advantage the cost of gas imported will be around US$ 10 MBTU.

The problem for Chile is that to build hydro-electric dams takes between 5 to 8 years,
More later....