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The Future of Energy in Chile

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The Future of Energy in Chile Special bUSiness CHILE Issue THE VOICE OF THE CHILEAN-AMERICAN CHAMBER OF COMMERCE N°274, AUGUST 2011 The Future of Energy in Chile RENEWABLE ENERGY REGULATIONS ENERGY MATRIX Harnessing New Challenges for Towards a Sustainable Nature’s Power Electricity Regulation Energy Mix Hablo sin 15.990 preocuparme de la cuenta Conexión Directa (PTT) ilimitada Nacional e Internacional. 1000 minutos en llamadas entre celulares Nextel. 100 minutos de llamadas a red móvil y fija. 800 646 415 CONTENTS 6 LIFE IS ON THE WIRE The US multinational 3M has developed an innovative heat- LIFE IN THE SLOW LANE resistant wire that could help 38 Chilean companies transport electricity more efficiently. Energize Now After returning from the 8 HARNESSING NAture’S 32 SEEKING IEA peace of Mongolia to find POWER MEMBERSHIP Chile in chaos, Santiago Special Issue Chile’s geography offers huge Chile is on track to join Eneldo says Chileans The Future of Energy potential for non-conventional the International Energy need to channel their in Chile renewable energy, but additional Agency but first it needs energy constructively. Chile is rich in natural incentives are needed for more to nearly quadruple its resources that can be projects to be developed. oil stocks. harnessed to diversify energy sources, but TOWARDS A what price are 14 SUSTAINABLE ENERGY THE CHILE PARADOX Chileans willing to pay MIX 34 for cleaner, more Chile’s future growth will secure energy Chile needs low-cost, reliable depend on its ability to energy supplies to improve its supplies? balance strong government competitiveness, but opinions policies with liberalized differ on which energy markets, writes guest © 2011 AMCHAM CHILE sources should be used. columnist David Rothkopf. Reproduction in whole or in part is 14 strictly forbidden without permission from the publisher. Opinions expressed in NEW CHALLENGES ENERGIZING US-CHILE Towards a Sustainable bUSiness CHILE are those of the authors 22 36 and do not necessarily reflect those of FOR ELECTRICITY RELATIONS Energy Mix AmCham or bUSiness CHILE. We accept no REGULATION Chile will need to nearly responsibility for the accuracy of the articles The US Ambassador to and any unforeseen errors. bUSiness CHILE Chile’s 30-year old electricity Chile, Alejandro Wolff, talks triple its energy supplies is published monthly, 10 months a year regulation framework needs and mailed free of charge to AmCham to bUSiness CHILE about in the next 20 years but members. Letters are welcome. They should to be updated to ensure a bilateral energy agreements where will this energy be accompanied by the author's name secure, competitive and and important multilateral and daytime telephone and sent to come from? None of [email protected] For reasons of growing electricity supply for initiatives in the region. space limitation, AmCham reserves the the future. the options are without right to edit letters published. drawbacks, but the choice Advertising inquiries should be addressed to AmCham's Sales Department: Paulina could determine Chile’s Dellafiori: E-mail: cristina.ordenes@ future prosperity. amchamchile.cl; Phone:2909741. Fax 2120515 Av. Presidente Kennedy 5735, Torre Poniente, Of.201, Las Condes, Santiago de Chile; E-mail: [email protected]; EDITORIAL BOARD 2011 www.amchamchile.cl; www.businesschile.cl CHAIR, Kathleen Barclay, Asesorías KCB; VICE CHAIR, Karen Poniachik, British American Tobacco Chile; VICE CHAIR, Manuel José Vial, Grupo Vial Abogados; PAST CHAIR, Michael Combes, Marco Chilena; GENERAL EDITOR, Julian Dowling, AmCham Chile; ASSISTANT EDITOR, Daniela Valda, AmCham Chile. ProdUCTION K & D Comunicaciones Ltda. MEMBERS Olga Kliwadenko, General Manager, 11 de Septiembre 1945 - Of. 213, Providencia. Jaime Bazán, AmCham Chile; Ruth Bradley, The Economist; John Byrne, Boyden Consultores Chile; Richard Diego, Phone: 481-6940 / 481-6941, Royal Bank of Canada; John P. Dill, Project Management; Francisco Garcés, Banco de Chile; Claudio Hohmann, D&S; Cell: (09) 874-0619; Javier irarrázaval, The Walt Disney Company Chile; Charles Kimber, Celulosa Arauco y Constitución; Olga Kliwadenko, e-mail: [email protected]; K&D Comunicaciones; Gideon Long, BBC; Vincent McCord, Asesorías e Inversiones CarCon; James Newbold, Tanager [email protected];www.kyd.cl Investments; Patricia O'Shea, AmCham Chile; Roberto Ossandón, Ossandón Abogados; Rodrigo Silva, Silva & Asociados; Printed in Quebecor World Chile, Mitch Larsen, U.S. Embassy; Paulina Dellafiori, AmCham Chile. bUSiness CHILE August 2011 3 AMCHAM GLOBAL SPONSORS 2011 4 August 2011 bUSiness CHILE Editorial Generating Clean Energy Business Energy supply is a key strategic consideration for come from NCRE sources - mainly wind, biomass and Chile as it is for other countries. But developed countries solar - by 2020. consume up to four times more energy per capita than There are some barriers to these projects in Chile Chile and at much lower costs. To keep up with projected including the difficulty of connecting to the transmission economic growth, it is estimated that Chile will need to system and obtaining stable long-term energy prices, but nearly triple its annual power output to some 160,000 with more incentives and clear rules these projects can gigawatt hours by 2030. become more competitive. So where will this energy come from? Currently, 75% US and European government policies and subsidies of Chile’s total primary energy matrix is imported in the aimed at renewable energy and energy efficiency have form of oil, coal and LNG, and this figure is unlikely to lowered technology costs in the last decade and created change much in the near future. Chile’s power generation new business opportunities. The US energy matrix is 70 capacity is currently divided roughly evenly between times the size of Chile’s in terms of installed generation hydropower and fossil fuels, but it could become more capacity and a huge industry of clean technology suppliers diversified by incorporating more non-conventional has been created. Locating these suppliers and figuring renewable energy (NCRE) including wind, solar, biomass out what they can offer Chile is part of the Council’s goal. and geothermal sources. Another of its aims is to work with US universities and Of course it is not AmCham’s duty to define Chile’s companies to make Chile’s energy infrastructure better future energy matrix, decide whether certain regulations prepared for future natural disasters including earthquakes are better than others, or say which projects are in and tsunamis. compliance with environmental norms. But we do believe American universities lead the world in clean energy it is important to keep all options open and that the United research and Chile’s decision makers should take States has much to contribute to this debate. advantage of this knowledge-base. In addition, many During his visit to Chile in March, President Obama universities have strong links to Chile and offer scholarships together with President Piñera announced the creation or exchange agreements for Chilean professionals to learn of the US-Chile Energy Business Council that will identify about the latest technologies including nuclear energy. If business and investment opportunities for Chilean and US Chile does eventually develop this source of energy, it will companies in the area of clean energy. The US and Chilean need many trained professionals and that takes time. governments are working to launch this public-private In order to meet its growing energy needs and initiative in Chile by the end of the year and AmCham is increase its economic competitiveness, Chile needs all proud to assist in these efforts. the information available to make the best decision. We, Chile’s long and diverse geography, abundant natural at AmCham, are confident that the Council will contribute resources, level of technological development and to this objective while facilitating business opportunities incentives for innovation mean it has the potential to that help solve Chile’s important energy challenges. become a leader in non-conventional renewable energy. The number of these projects is growing each year and the government’s target is for 20% of total generation to Javier Irarrázaval, AmCham President BOARD OF DIRECTORS EXECUTIVE COMMITTEE PRESIDENT GENERAL MANAGER Enrique Ostalé, D&S Alfredo Ergas, Enersis Javier Irarrázaval, The Walt Disney Company Jaime Bazán, AmCham Chile VICE CHAIR FINANCE AND ADR COMMITTEE Chile Karen Poniachik, British American Tobacco DIRECTORS Chile Mauricio Ramos, VTR Global Com VICEPRESINDENT; CHAIR CORPORATE AFFAIRS AND VICE CHAIR EDITORIAL COMMITEE VICE CHAIR CORPORATE AFFAIRS AND SUSTAINABILITY SUSTAINABILITY COMMITEE Fernando Concha, Citigroup Andean – COMMITEE Charles Kimber, Celulosa Arauco y Caribbean and Central America Region Luis H. Siles, IBM de Chile Constitución S. A. CHAIR FINANCE AND ADR COMMITTEE Kathleen Barclay, Asesorías KCB Carolina Valdivieso, Kimberly Clark CHAIR EDITORIAL COMMITEE TREASURER; Gonzalo Iglesias, Coca-Cola de Chile S.A. CHAIR LABOR AND HUMAN CAPITAL COMMITTEE Felipe Cerón, AES Gener VICE CHAIR LABOR AND HUMAN CAPITAL COMMITTEE AmCham Mision Statement ADVISORY COUNCIL “Promote free trade and business between SECRETARY; CHAIR LEGAL COMMITEE Mitch Larsen, Embajada de los E.E.U.U. EX OFFICIO Chile and the United States" Michael Grasty, Grasty Quintana Majlis & Cía. Rubén Covarrubias, Rector, Universidad Mayor CHAIR TRADE & INTERNATIONAL BUSINESS COMMITTEE PAST PRESIDENT Luis Marcelo Moncau, Microsoft Chile Ricardo García, Special Advisor Americas/ Metlife bUSiness CHILE August 2011 5 INNOVATION Life is on the Wire A lightweight, heat-resistant aluminum wire developed by the US multinational giant 3M for NASA could soon be help ing Chilean energy companies transport electricity more safely and efficiently. By Julian Dowling or a long, narrow country like As a result, it is able to withstand Chile, transporting electricity temperatures up to about 210°C, from where it is generated – compared to 75°C for traditional cable. mainly in the far south or on the The core, made up of 5,000 microfibers F coast – to where it is needed of aluminum oxide, is wrapped in a hard in Santiago is a challenge.
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