MercoPress. South Atlantic News Agency

Chile fragile energy situation and new dams controversy

Ed. Note: This opinion piece, which first appeared in the Chilean daily La Tercera, gives the background to Chile's looming energy problems and then proceeds to pitch the line that is touted by Chile's media and business establishment: “build dams in Chile's water-rich Patagonia area to solve the energy problem; build the HidroAysen project.” 'HidroAysen' is joint venture involving Spanish-Italian electricity giant Endesa and Chilean energy company Colbún.

The project plans to build five dams to generate some 2,750 MW of electricity – roughly equivalent to 20% of Chile's current overall generating capacity. The dams slated for the region's two largest rivers – the Baker and the Pascua – have an estimated price tag of 2.5 billion US dollars. That figure does not include an additional 1.5 billion needed to build a 1,200 mile transmission line between Region XI, an area also known as Aysén, and central Chile, where the electricity would be consumed. Serrano argues that HidroAysen represents a good option for Chile's energy development, making no mention of much more sustainable alternatives such as wind, solar and tidal energy sources.) There is sufficient evidence to state that Chile will confront a difficult energy situation this year, beginning with the historic levels that oil prices have reached and the fragility shown by other energy sources. Many will think that Chile can do little when it comes to oil since the country is a net importer and does not intervene in international markets. It has always been this way. Nevertheless, the measures being taken by energy producers involve supporting the next 12 to 18 months' energy supply by installing turbines that operate with diesel, projects with a total capacity of 600 megawatts (MW). This is precisely the most expensive way to generate electricity when one considers the extremely elevated price of crude oil. This should make us meditate on the Chilean State's lack of planning in this matter. It's obvious that in the past Chile bet on Argentine natural gas and lost. Argentina has severe internal gas supply problems, as demonstrated by the recent power outage that affected more than 400,000 people in Buenos Aires. Regardless of this, in Chile, the government continues looking to trans-Andean gas with marked expectations. What we are truly lacking is leadership, not energy. What we need at this time is a government that will establish an energy policy with a clear direction, a policy in which decisions are made (as difficult as they may be) and decisive deadlines are set. In the absence of a forward-looking energy policy, the country is filling up with coal-burning power plants; the principle energy projects currently being developed or executed are based on this resource. These projects will provide a total of 6,000 MW of generating capacity for the next 10 years, using a fuel that is abundant worldwide, but that is highly corrosive and polluting. Meanwhile, large consumers of coal like China and Spain are moving away from the resource and taking chances on other energy sources, like liquid natural gas (LNG). In Spain, for example, the energy producer Unión Fenosa has recently installed 2,400 MW based on LNG and, additionally, has projected replacing all its old coal-burning plants with combined gas cycle units. Chile, on the other hand, is making a show of its lack of strategic vision. It is concentrating on combustibles that are extremely polluting (read: diesel and coal) instead of looking for cleaner and cheaper energy sources, like nuclear energy. In Russia, France and Finland, the cost of generating electricity using nuclear energy is less than 20 US dollars per MW hour, compared to 250 dollars using diesel. If the predictions from the Chilean Meteorological Office prove true, this year will be drier than 2007 due to the La Niña phenomenon. This means that traditional locations for hydroelectric electricity generation will experience serious difficulties this winter. Now is when one can clearly see the great value that the electricity producing dams in Aysén will have. This is because, historically, the Baker and Pascua Rivers have been more plentiful than other rivers when droughts have occurred. But instead of sending clear signals regarding the benefits of the Aysén hydroelectric project, the government is dragging its feet and not making decisions, all the while knowing that, along with nuclear energy, this is the cleanest and cheapest type of energy of all. Opinion by José Miguel Serrano, Economist and Energy Consultant The Santiago Times