Chile’s energy transition appeared to leap forward recently as the Chamber of Deputies approved a bill for the immediate closure of all coal-fired thermoelectric plants older than 30 years and a total ban on building or operating coal-fired plants by 2025. A considerably more ambitious goal than the current plan of 2040.
Our sources in the sector are sceptical, an executive of a renewable energy company summarised, “It is simply not possible to replace coal with other sources of energy in 4-5 years.”
“It is simply not possible to replace coal with other sources of energy in 4-5 years.”
Executive of a renewable energy company, Chile
A board member of a large solar generation company commented, “Although we would welcome accelerating the change in the country’s energy sources, this plan is not technically feasible.”
A director of a renewable energy group points out, “This project did not originate in the energy commission, but in the environment commission, which could partly explain its technical deficiencies.” He continues, “The closure date for coal-fired plants could be brought forward from to 2030 but not 2025. The project will not be approved [in the Senate] without serious modification.”
“The project will not be approved [in the Senate] without serious modification.”
Director of renewable energy group, Chile
A parliamentarian we consulted explains the political context, “There is growing concern in the environment commission about the rate of the decontamination plans.” He eventually concedes, “The project is a statement of intent for the electorate, it is unlikely that it will become law without being modified in the Senate.”
For the president of a Chilean hydroelectric generation company, the intent is good but the plan is counterproductive. “It is not possible to replace coal in such a short time, not even by switching to natural gas. The proposal is not favourable for any generating company as it threatens the security of supply and presents severe economic costs (cites a Government estimate of 1% of GDP).
An energy executive warns, “The most serious aspect of the project is the negative impression sent to investors and businesses that Congress, particularly the Chamber of Deputies, have no technical support. Even if the bill does not pass the Senate, these initiatives increase the industry’s mistrust of the legislature, uncertainty spreads and investors begin to wonder what other unexpected projects may surprise them.”
Chile’s renewable energy initiatives have been noteworthy but unfeasible plans are counterproductive. As a result of this announcement, there has been a loss of credibility rather than a rally of support.