Chile has been one of Latin American’s fastest-growing economies over the past decade. As it continues to grow, it is expected that Chile’s energy demand will increase from roughly 75 TWh today, to over 100 TWh by 2020. The country will have to add over 8 GW of new generation capacity by 2020 in order to meet the expected expansion in demand.
Chile has struggled to exploit its abundant supply of natural resources or encourage adequate development of the power sector in order to satisfy the rate of economic growth. This is predominantly due to the lack of connection between the power system grids and lack of critical investments. As a result, the country is facing high energy prices as well as an absence of energy supply and security.
The country has an abundance of natural resources ideal for harnessing renewable energy sources, including vast deserts for solar power, forests and rivers in the south for biomass and hydropower, and winds across the country for potential wind generation. The country also has 6,400 km of coastline where tidal and wave power could potentially be harnessed. In 2014, the Chilean Government facilitated the establishment of MERIC (Chile’s Marine Energy Research and Innovation Centre) for further research and development of marine projects off the Chilean coast.
There is currently a total of 7,055 MW of installed hydropower capacity in Chile. The majority is concentrated in the Maule and Bío Bío regions, where the plants export production to Santiago. The National Energy Strategy (ENE) has targets for 45-48 per cent of electricity generation to be sourced from hydropower by 2024. The strategy also estimates that Chile’s hydro energy potential could easily exceed 12.5 GW.
Chile also aims to promote the sustainable development of hydropower including through new environmental legislation and land-use planning in river basins. In 2016, the ministry of energy launched an online platform, 'Hidroelectricidad Sustentable', to publish information from the study of hydropower potential of several river basins in central-southern Chile. Overall, in order to further encourage the deployment of renewable energy sources in Chile, substantial investments are required in the transmission system.
Chile’s electricity transmission system is divided into four sections. The SING (Sistema Interconectado del Norte Grande) is the northern grid, and accounts for roughly 20 per cent of national generation. The SIC (Sistema Interconectado Central) is the central region’s grid, which accounts for 68.5 per cent of national generation and serves 93 per cent of Chile’s population. The remaining two systems in southern Chile – the Aysén grid and the Magallanes grid – contribute 0.3 and 0.8 per cent respectively. In efforts to connect the grids together, and with isolated renewable energy projects, an interconnection between the SING and SIC lines will be finalised in 2017, providing a larger market for the high concentration of solar energy in the north to the most populated central regions around Santiago.
The Chilean Government has implemented the 100 Mini Hydro Plan in order to develop 100 additional small-scale hydropower plants each with a total installed capacity of under 20 MW by 2018. The projects will be predominantly distributed between Metropolitana and Aysén in order to meet energy demand in areas outside of the country’s main transmission networks. As mini-hydro developers must often build their own transmission lines, lack of sufficient transmission infrastructure remains a significant challenge in Chile.
New projects commissioned in 2016 include the 60 MW El Paso run-of-river facility in the Colchagua province, which will provide electricity to the central SIC grid. Another notable project in planning is the 300 MW Espejo de Tarapacá pumped storage plant. The hybrid project proposes to combine hydropower and solar power. The pumped storage system will use the Pacific Ocean as a lower reservoir, and the natural depressions in the overlying plateaus as an upper storage reservoir. The project is still in the process of reaching financial close.
This country profile is featured in the 2017 Hydropower Status Report. You can download the full report here.
This profile was last updated in May 2017.