If you read my blog for the fun travel photos (you know who you are :) ) please feel free to skip this rather nerdy post and go straight to My 7 Links.

If you’re interested in the laws that regulate and incentivize renewable and non-conventional energy in Chile, read on!

I’ve recently landed in Chile to work on a solar energy project, and one of my tasks is to learn about the legislation that guides this emerging industry. On March 20, 2008, President Michelle Bachelet signed Law 20.257 to encourage the development of renewable energy in Chile.

Photo of wind turbines in Coyhaique by Amanda Maxwell, Latin America Advocate for the Natural Resources Defense Council. Amanda's blog ( http://switchboard.nrdc.org/blogs/amaxwell/ ) is an incredible resource for anyone researching renewable energy in Latin America.

I translated the first page of the law from Spanish to English. The full text (in Spanish) is here: Ley_ERNC_LEY-20257.

Quick disclaimer: I am not a lawyer, and it’s been almost six years since I took a Spanish class, and the following translation is based on my initial read of the law. However, I think that translating it has been a useful exercise, and I’d like to share it with anyone that’s interested.  The indented boxes below are notes to explain some technical terms in the text.

—

Introduction of Modifications to the General Law of Electrical Services, with Respect to the Generation of Electrical Energy from Sources of Energy that are Renewable and Non-Conventional

April 1, 2008

This law obligates the companies that generate electricity, with a capacity of more than 200 MW, to make sure that 10% of the energy sold comes from renewable and unconventional sources or from hydroelectric plants with less than 40,000 KW. This energy must be produced or procured, starting from January 1, 2010.

This law will apply to the generators that supply energy to the  Sistema Interconectado Central (SIC) and the Sistema Interconectado del Norte Grande (SING).

“Power generation in Chile is organized around four grid systems: 1) Sistema Interconectado del Norte Grande (SING), the northern grid, which accounts for about 19% of national generation; 2) the Central Interconnected System (SIC), the central region’s grid, which accounts for 68.5% of national generation and serves 93% of Chile’s population; 3) the Aysén Grid in southern Chile (0.3% of total generation); and 4) the Magallanes Grid, also in southern Chile (0.8% of total generation).” (Source: Global Energy Network Institute)

Chile's SIC Electrical Grid. The SING is in Chile's northernmost regions, which are not shown on this map. Source: GENI

This law signals that the percentage required of the electricity companies will increase gradually: 5% from 2010-2014, then +0.5% each year stating in 2015, until it reaches 10% in 2024.

The generators that fail to comply with this obligation will have to pay a charge of 0.4 UTM per megawatt hour (MWh) that does not meet the standard, and this will increase to 0.6 UTM in the cases of companies that continually fail to comply with the requirement.

UTM stands for Unidad Tributaria Mensual. According to Wikipedia it is a unit used in Chile for taxes and fines, which is updated based on inflation. It was created on December 31, 1944. Initially it was used by the Chilean tax authorities for fines and payscales, but since then its use has been extended to the payment of fines, debts, customs duties, and more. A chart showing its value every month for every year on record is here.

It is further provided that such charges arising from the breach of a distribution intended to end users (of the distributors whose suppliers have complied with the requirement) will help to establish a system of incentives that encourages competition in the electricity market.

The law indicates that the label “renewable and non-conventional energy (ERNC)” will correspond to small hydroelectric centers (with a capacity of less than 20 MW), and to projects that utilize energy from biomass, hydraulics, geothermal, solar, wind, tidal, and others.

The law goes on to describe modifications to specific articles, and I decided against translating that part.  The full text (in Spanish) is here: Ley_ERNC_LEY-20257.

—

President Sebastian Piñera just nominated a new Minister of Energy, Fernando Echeverría. In his new role. Echeverría plans to double the production of energy in the next ten years to meet Chile’s skyrocketing energy demand, lower the costs of energy, and strongly increase the participation of ERNC in the electrical grid. Read more here in La Tercera.

—

Excerpt from Obama to Piñera: Make Renewable Energy and Energy Efficiency the Base Case Scenario for Building Chile’s Energy Future. By Doug Sims, NRDC. March 17, 2011.

The conventional thinking about energy in Chile is that new coal, gigantic dams and nuclear are the only possible base case scenario given expected increasing demand requirements over the next 20 years.  This way of thinking pushes renewables, or “non-conventional renewable energy” (defined under Chilean law to include wind, solar, geothermal and other renewables but to exclude large dams over 20MW) to the margins – right now the goal for renewables is a pretty anemic 10% of annual generation by 2024.

But this is exactly the wrong way to think about Chile’s energy future given its world class renewable resources, its potential to reduce energy demand and intensity through efficiency measures and the declining cost curves and improving performance of renewable technologies, solar in particular.  In addition to a solar resource that exceeds that of the American Southwest, Chile is particularly fortunate to have excellent geothermal and sustainable biomass resources.  These non-conventional renewable energy technologies are mature and can provide cost effective power at reliability levels (known as “capacity factors”) comparable to coal, gas, hydro and nuclear.

—

Useful resources for further research on Renewable Energy in Chile:

• Amanda Maxwell’s blog
• Chile Renovables
• Comisíon Nacional de Energía
• Energía en Chile
• Global Energy Network Institute