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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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Chile Investigates Geothermal Power

Aside from cost constraints, perhaps the biggest hurdle facing nations seeking to embrace renewable energy is its unpredictability.

Re solar, the sun goes down.

Plant your biofuels patch and drought could wipe out an entire crop.

And the wind is variable.

Two seemingly constant natural cycles are tidal power and geothermal energy – if either decline, then major potential environmental changes could dwarf all other considerations.

Chile is investigating its geothermal options as an expensive but long-term bet to diversify its energy sources.

Santiago’s Diario Financiero reported that earlier this month Chilean Energy Minister Rodrigo Alvarez Zenteno told his audience at the New Energy Forum that the Chilean government is inviting investment in renewable energy projects that Chile will develop as part of a five year, $950 million project aimed at modernizing Chile's energy infrastructure.

According to Alvarez, Chile is seeking investments in renewable energy projects to install 9,000 megawatts of renewable energy source by 2020 and to increase its generation capacity 200 percent in the following decades, as Chile has the potential to generate 50,000 megawatts in solar energy and between 6,000 and 112,000 megawatts from geothermal energy in the near future.

Current front runner in Chile’s efforts to develop its geothermal potential? Israel’s Ormat Industries Ltd., a subsidiary of Ormat Technologies Inc.

Chile's Committee on Geothermal Energy Analysis has recommended to Minister of Energy Rodrigo Alvarez that Ormat Industries Ltd. should be awarded five exploration geothermal concessions via its Chilean subsidiary, Ormat Andina SA., as part of a tender for 20 new areas of geothermal energy exploration in the Aroma, Quinohuen, Marimar, San Jose II and Sollipulli concessions.

Chile has closed the door on using nuclear energy to meet its needs. Earlier this week in Paris Alvarez told his audience, "If Chile wants to achieve development, it needs more energy. And that energy, as President Sebastian Pinera has stated, needs to be safer, cleaner, and more economical. We will not build, we will not plan and we will not define anything relative to nuclear energy policy in Chile during this government."

Chile is seeking foreign investment to fund Santiago’s $972 million plan to install 9 gigawatts of new electrical generating capacity by 2020, with the plan heavily emphasizing an expansion of the country’s renewable energy capacity. Alvarez remarked, that Santiago’s energy projects offered an "extraordinary investment opportunity," adding that "there is immense space for investment in renewables like wind and solar in Chile".

Israel’s Ormat is certainly happy with its contracts. Ormat Andina SA CEO Dita Bronicki commented, "To be awarded with five-out-of-five exploration concessions reinforces Ormat's position as a leader in the geothermal industry as well as demonstrating our experience as a vertically integrated technology provider with a strong commitment to the development of green-field geothermal projects throughout the world. While we know not all exploration sites result in commercial projects, we are happy to increase our potential development in Chile.  These concessions add to Ormat's diverse portfolio of interests and developments in Latin America and worldwide, which include activities as owner and operator of power plants in Nicaragua, Guatemala, Kenya and the U.S."
Chile’s interest in renewable energy comes amidst energy shortfalls from traditional sources. Faced with extremely low water levels in the country's reservoirs, which impacts the nation’s ability to generate for hydroelectric power, Chilean authorities are considering rationing energy to industrial clients along the Sistema Interconectado Central power grid.

Currently, nearly half of the Sistema Interconectado Central installed power grid’s capacity, which provides energy to over 90 percent of Chile's population from the northern city of Taltal to the southern island of Chiloe, comes from hydroelectric power electricity generation.

Hydroelectric power accounts for about a third of Chile’s energy, while fossil fuels make up nearly two-thirds. Argentina was Chile’s sole supplier of natural gas but gradually ended deliveries in 2007-08 to meet soaring domestic demand.

We leave the last word to Minister Alvarez, who noted of Chile’s energy policy, “We face an immense challenge.” Geothermal power production is obviously going to be a rising element in Chile’s future energy diversity matrix, if for no other reasons than it’s indigenous and constant.  If the earth’s core cools down, than officials in Santiago will have more immediate concerns than alternative energy questions such as why the wind isn’t blowing.

By. John C.K. Daly of Oilprice.com




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