Promoting the Development of Solar Projects in Chile

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Promoting the Development of Solar Projects in Chile Promoting the Development of Solar Projects in Chile Marcelo Tokman th Friday April 24 , San Francisco, CA Minister of Energy 2009 National Energy Commission Chilean Context Energy Policy: New Guidelines Crisis Transforming the energy crisis into an opportunity Origin Measures Outcomes Towards a New Policy Challenges Strategy Non Conventional Renewables Solar Power National Energy Commission Context Final energy consumption has grown significantly in Chile Primary Energy Consumption (2007) End-Consumption of Energy 300,000 250,000 200,000 150,000 100,000 OIL DERIVATIVES 50,000 ELECTRICITY NATURAL GAS 259.152 TCal BIOMASS OTHERS COAL 0 Since 1990 shows a growth of 4.7% per year The evolution of energy demand has closely followed GDP GDP Total Energy Consumption Growth Indices (1979 = 100) Evolution of Primary Energy Consumption with respect to GDP, NEC 2007 & Central Bank But in recent years is beginning to display a decoupling More than 83% of final consumption is concentrated in three economic sectors 90,000 Oil Derivatives Biomass 80,000 Electricity Gas Others 70,000 60,000 50,000 40,000 Tera calories 30,000 20,000 10,000 0 Transport Industry Mining Commerce & Residential Energy Sector Public End-consumption of Energy, by sector, NEC 2007 Consumption is concentrated in the following sectors: Transport (35%), Commercial, Public and Residential (25%) and Industrial (23%). Chile has two main electric systems Electric Installed Capacity (2008) Regulated clients SING 10% 3.573 MW 27% Non-regulated clients 90% Regulated clients 55% 9.603 MW 72% Non-regulated clients 45% SIC 33,5 MW Regulated clients 100% 0,3% 64,7 MW Regulated clients 100% 0,5% Total Capacity: 13.275 MW Projections indicate that without energy efficiency the consumption in 20 years will grow more than three times 1,000,000 800,000 Other Aviation kerosene Coke and tar 600,000 Natural Gas Gasoline Liquid gas 400,000 Firewood Coal 200,000 Electricity Oil fuels Diesel Forecasts of End-Consumption by Fuel Type , PROGEA -UCH 2008 End-consumption of energy is projected to grow by an average of 5.4% every year until 2030 We have a high and growing external dependence Importation Production Biomass Hydro electricity Coal Primary Production and Importation (1990 – 2007), NEC Natural Gas Crude Oil Primary Consumption 2007, NEC In the primary balance of Chile, the level of imports is equivalent to 68% of consumption Dependence exposesus to pricevola 73.3% ofprimaryconsumption corresponds to fossilfuels Primary Consumption 2007 & Evolution ofin &Evolution Primary Consumption 2007 Jan Apr July Oct Jan Apr July Oct Jan Apr July ternational pricesforhydrocarbons, NEC Oct Jan Apr tility, particularlyforfossilfuels July Oct Jan Apr July Oct Jan Apr July Crude oil Oct Jan Coal Gas Natural Apr July Oct This dependence exposes us to risks for all uses including the electricity sector SIC-SING Installed Capacity (Dec 2008) & Gas Restrictions from Argentina (% of normal requirements), NEC Gas represents 36% of the installed capacity and there is only one supplier In the electricity sector, the fluctuation of pluviometry is another source of risk Effective Hydroelectric Potencial Historical Series (GWh) 30.000 25.000 20.000 15.000 10.000 5.000 0 HYDROLOGICAL YEAR SIC Installed Capacity (Dec-2008) & Historical series of effective Hydroelectric Potential (GWh), NEC Hydro generation represents 52.3% of the installed capacity of the SIC, which serves 94% of the population Vulnerability increases when investments do not meet the requirements Ralco 640 MW Evolution of installed capacity (SIC+SING), historic data of CDEC updated to 2006, NEC Several years in the last decade that the projects did not reach significant levels The investments are necessary, but competing for land use Hydroelectric power plants Biomass power plants Thermal power plants Electric lines Substations Fuel storage Oil pipelines Gas pipelines Indigenous development areas Indigenous communities SNASPE Denomination of origin Benthic management Wetlands Saturated and/or latent Example of Competition for Land, OTERRA 2008 zones There are many uses for the land The investments have impacts on the environment Gg (1000 ton) Year Energy Industrial processes Agriculture FCUS Balance Waste Emissions of CO2 equivalents in Chile (1984-2003), CONAMA 2003 Chile generates 0.3% of global CO2 emissions. However, some studies project a 130% increase by 2050 as a result of coal-fired power plants Environmental influences on energy development Coral reefs and mangroves seriously threatened by warmer SST. Mangroves will probably disappear from low-lying coastlines in the worst scenario of a rise in sea level. Amazon: Loss of 43% of 60 tree species by end of 21st century; eastern part will become savannah. Cerrado: 2ºC increase in temperatures will cause a loss of 24% of 138 species of trees. Reduction in land for coffee cultivation. Increase in aridity and scarcity of water resources. Marked increase in extinction of mammals, birds, butterflies, frogs and reptiles by 2050. Severe decrease in water availability and hydroelectric generation resulting from glacier reduction. Destruction of the ozone and skin cancer. Severe land degradation and desertification. Coast of Rio de la Plata threatened by the swell during storms and rising sea levels. Increase in vulnerability to extreme meteorological phenomena. Impacts of Climate Change on the Electricity Sector, AR4- IPCC (2007) Climate change will mean lower precipitation, less snow and more frequent “El Niño / La Niña” phenomena with impacts particularly in the central-south of Chile Crisis The crisis arises from a combination of risks that materialized Cuts in natural gas deliveries Drought Pluviometric anomaly, Santiago region-Concepción Period: January-December Standardized Units Increase in costs Failure of important power plants Nehuenco (11 months) Unit U-16 (2 months) Gasatacama Combined Cycle 2 (12 months, partial) Jan-00 Sep-00 May-01 Jan-02 Sep-02 May-03 Jan-04 Sep-04 May-05 Jan-06 Sep-06 May-07 Jan-08 Sep-08 May-00 Jan-01 Sep-01 May-02 Jan-03 Sep-03 May-04 Jan-05 Sep-05 May-06 Jan-07 Sep-07 May-08 To confront the crisis was needed to take a package of measures Stabilization of fuel prices through the injection of US$ 1.26 billion into Fuel Price Stabilization Fund Temporary reduction of specific tax on gasoline Electricity subsidy for the most vulnerable 40% of the population 2009 National Light Bulb Replacement Program Subsidies for poor families The month of April was included in peak hour measurement Rationing decree (reduction in voltage - hydro reserves) Energy saving campaigns Extension of daylight savings time Flexibilization of water use for power generation Installation of back-up turbines and engines Conversion of combined cycles gas turbine to permit their operation with diesel Investment in diesel logistics Financial offers from generators Law to insure supply in case of bankruptcy and Law to permit recovery of taxes on power companies The results were exceptional There were no interruptions in the electric supply. There were no interruptions in the gas supply to residential and commercial clients. Increases in domestic prices due to international fluctuations were mitigated. Low-income families received support in order to cope with higher prices. Was obtained to replace the natural gas and hydropower for diesel Small Reservoir Wind Coal Gas Other Diesel Marginal Cost (US$/MWh) hydro 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 SIC generation sources, 2006-2009. Source CDEC-SIC, Systep • 100% of the natural gas generation capacity was adapted to operate with diesel • Generation capacity was increased through the installation of backup turbines Was reduced energy sales Monthly Energy Sales SIC – Actual & Projected (GWh) 4500 0% 4000 -2% 3500 DeviationMonthly % -4% 3000 Cumulative Variation 2500 March 2008-February 2009 -6% -10% 2000 -8% 1500 -10% 1000 -12% 500 Monthly Energy Sales (GWh) Energy Monthly 0 -14% Jul-2008 Dec-2008 Dec-2007 Oct-2008 Oct-2007 Feb-2009 Jun-2008 Feb-2008 Apr-2008 Sep-2008 Nov-2008 Nov-2007 Auo-2008 Jan-2009 Jan-2008 Mar-2008 May-2008 Actual Projected Dev % Energy Policy: Just worrying about energy in New Guidelines periods of crisis, is the perfect recipe for a new crisis Transforming the energy crisis into an opportunity We require an energy policy with long-term vision, to ensure sufficient, safe, competitive, sustainable and equitable energy. National Energy Commission www.cne.cl Towards a New Energy Policy Current Challenges 1. Having sufficient energy available to meet the requirements of a growing country 2. Limiting demand to what is strictly necessary 3. Diversifying the energy mix to avoid supply and price risks 4. Maintaining competitiveness in the face of energy price increases 5. Making energy development compatible with local development and environmental conservation 6. Minimizing the risks and impacts of climate change 7. Taking advantage of international opportunities (technological advances, CDM, public policies, integration, etc.) 8. Ensuring an equitable supply for the entire population 9. Being prepared to deal with critical supply and price situations 10. Putting the necessary institutions and regulatory framework in place to respond to new challenges Emissions of CO2 Total CO2 Emissions Emissions per capita 12 10.3 28,003 30000 10 25000 8 20000 12,874 6 15000 4.28 3.64 tCO2/capita 4 10000 5000 59.84 2 CO2 emissions (Mt of CO2) emissions CO2 0 World OECD Chile 0 World OECD Chile What explains the low per capita emissions of Chile? Emissions of CO2 Emissions =xEmissions TPES TPES x GDP Population TPES Population GDP Population World 4.28 2.39 1.80 0.20 8.8 OECD 10.93 2.32 4.70 0.18 26.4 Chile 3.64 2.01 1.81 0.17 11.0 Clean energy More energy Less economically mix efficient developed Source: Key World Statistics 2008, International Energy Agency Emissions of CO2 Emissions =xEmissions TPES TPES x GDP Population TPES Population GDP Population World 4.28 2.39 1.80 0.20 8.8 OECD 10.93 2.32 4.70 0.18 26.4 Chile 3.64 2.01 1.81 0.17 11.0 Economic growth will lead to an increase in emissions.
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