Moderator: Luis Ortigas, Vice Minister of Energy
Vivianne Blanlot – Electricity Sector in Chile: adjustment in time of change.
The Electricity Sector in Chile, unlike the one in Peru, has gone through a very complex process over the past 15 years that began in the early nineties when there was a consolidation of reforms and a strong gas integration with Argentine leading the audience believe that the system would successfully work through imports of this input. However, between 2000 – 2001 the energy economic model in Argentine changed, which meant, as the speaker said, the “Chronicle of a Death Foretold for natural gas in Chile”. This new scenario of widespread cuts of natural gas supply from Argentine was not as unexpected since there were signs that, at any time, the natural gas supplied to Chile would stop flowing. However, between 2000 and 2004, the lack of action of the Chilean State aggravated the situation, creating a significant increase in the sector prices.
The next stage in the electricity sector in Chile meant an adjustment period until around 2010 a new scenario appeared: the socio-environmental scenario. This new stage was characterized by the emergence of social networks and the ability to mobilize citizens against investment projects in the energy sector. To date, the speaker explained that a high percentage (30% approx.) of power generation projects are stopped or cancelled, there is no minimum guaranteed supply of electric power, there is uncertainty and risk of investment in the transmission sector and in the alternative energy sources.
Among the measures adopted to deal with the energy crisis in Chile, the Advisory Commission of Electricity Industry was created, which had the role of identifying and setting out solutions to solve the energy situation in Chile. In Vivianne Blanlot’s view, even though to date there have been several changes in the electricity sector operation, the adoption of substantive agreements on energy sources, the identification of environmental deficiencies according to the citizenship priorities, and the definition of land use and of procedures for indigenous consultation are still need.
Her presentation may be taken as a lesson in one way or another. Some problems were caused (or were not prevented timely) by the absence of institutional mechanisms for planning in the energy sector.
César Butrón – Development of Generation and Transmission Project: Current Situation, Medium-Term Challenges and Planning
César Butrón indicated that so far our national interconnected system is 60% hydraulic and 40% thermal. He stated that Camisea Project, with their benefits, has also brought contingences, for causing a concentration of power generation in the center of the country (where gas arrives) leading to a surplus of efficient generation capacity in this area and a reserve deficit in the southern and northern parts of the National Interconnected Electric System (SEIN). The speaker explained that this situation leads to “exporting” energy from the center to both sides of the country overloading transmission lines, which explains the use of thermal power stations in the North and South of SEIN, and the increase the generation cost in the system.
As a result, César Butrón showed that we have a low reliability system, since not having a transmission line so sudden may cause the total collapse or blackouts in other areas. To avoid these setbacks, the government has planned to double electric power transmission capacity to reduce the problem of congestion and contingences. On the other hand, PROINVERSIÓN has also tendered the construction of cold reserve power plants in both sides of the country ensuring 960 MW of electric power, and improving the system situation.
However, the speaker indicated that we still have tasks ahead of us, such as solving the uncertainty regarding gas supply in some projects located in Chilca, but primarily giving enough incentives for a new efficient generation, especially if targeted. Otherwise, the system will have to continue working on reserve levels below the desired, with risks that this involves.
Mark Grenning – Energy Supply and Mining Projects: Río Tinto’s perspective
Mark Grenning, principal advisor of Río Tinto Mine, stated that the key for economic development and poverty reduction in developing countries is to have access to an affordable and reliable energy. In this regard, one of the main objectives of the country should be facilitating the operational performance of the energy sector through improvements, developing solid institutional structures that support the global strategy of the government in the energy sector and the market performance; facilitating the suppliers’ investment in the private sector, reducing gradually the high incidence of energy subsidies and fixing prices based on costs, whenever possible.
The speaker commented that it is mistake to believe that mining companies will end up turning into electricity companies or in sources of a safe energy supply. The challenge is to make sure the company does not end up displacing the government as main responsible for the energy supply, or that the government sees the company as an excuse for not encouraging the creation of new infrastructure. Also, to prevent electric power generation of the mining company for being re-directed at any moment to compensate failures in other parts of the system, among other situations. As for how the energy should be supplied by a mining company, he showed that there is not a general solution and this issue should be analyzed case by case.
Alex Keisser – ENERSUR. Electric Sector’s Problems..
Alex Keisser focused his presentation on the need to get closer to an ideal balance in the electric sector, which is composed of three vertices of a triangle: high security in the electric power supply, less cost and reduced social and environmental impact. Likewise, he expressed the importance of diversifying the energy matrix and strengthening the power transmission capacity from the center part of the system to the north and south parts.
On the other hand, Keisser described the problems in generating at hydroelectric power plants, through gas, carbon, peaker combined cycle (gas or diesel open cycle) and through the use of renewable energy resources (RER).
Ignacio Blanco, General Manager of Edelnor and Country Manager of Endesa, explained the need to assert the electric power distribution sector, which under complex conditions is in charge of collecting two thirds of revenue in the electric sector. In this regard, the challenges in the distribution sector are determined by the need to continue expanding the distribution networks in the rural area, provide a high-quality service and not to focus on the price. Also, he emphasized the need to modernize the electronic system considering new technologies based on the experiences from around the World.
Hans Flury – – Legal Director of Southern Peru Copper Corporation and ex-President of National Society of Mining, Oil and Energy expressed his concern about:
(i) Application of ILO Convention No.169. There is no State presence in determined sectors of the country, complicating its task of getting the population to understand the impacts of developing electric projects. In this regard, although the development of the electric sector could mean progress, it can also cause social conflict.
(ii) EIA Approval Processes and Permits and Authorizations Processes required for developing projects. He stated that they are not normally coordinated or their deadlines are not well managed.
(iii) Congestion resulting from the lack of an efficient electric system. The concentration of electric generation in the center forces to promote generation in other areas of the country, and diversify the supply, fully understand the use of other forms of electric generation.
(iv) Possibility of rationing that would cause confrontations between the State and Companies. In case of mining companies, this situation affects production, and hence, timely compliance of obligations, taking away competitiveness respect to other companies in the sector and in the world.
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