The Andean state has set itself an ambitious goal: namely to achieve climate neutrality by 2050 in line with the country’s contribution to the Paris Agreement. A fundamental energy transition will be necessary in order to transform Chile’s power generation system, as the energy sector currently accounts for around 75 per cent of the country’s greenhouse gas emissions.
Chile is emerging as South America’s pioneer in the fields of renewable energy and climate protection. Conditions in the country are optimal in this regard. For example, the Atacama Desert in the northern part of the country experiences some of the most intensive solar radiation in the world and therefore offers ideal conditions for producing solar energy. Chile’s 4,000 kilometre-long coastline offers plenty of fresh air, which makes it perfect for wind farms. In addition, large amounts of geothermal energy lie dormant under hundreds of volcanoes in the country. According to a study conducted by Chile’s Ministry of Energy in cooperation with the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Chile is capable of producing more than 5,000 terawatt-hours of electricity from renewable sources each year. That is significantly more than the average electricity consumption in the country, which currently amounts to approximately 75 terawatt-hours per year. Chile is increasingly exploiting this energy production potential: Whereas solar energy, small-scale hydropower, biomass energy and wind power accounted for only six per cent of the country’s energy mix in 2014, that figure has since increased to around 25 per cent. Plans call for electricity from renewable sources to account for more than half of total electricity production in Chile by 2035.
On behalf of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU), GIZ has been supporting Chile with the transformation of its energy sector since 2008.
The world’s cheapest solar power
GIZ has already achieved a number of successes together with its Chilean partners. For example, GIZ advisory services have helped to increase the maximum capacity of solar power plants from less than seven megawatts in 2014 to more than 5,650 megawatts in 2021. The maximum capacity of Chile’s wind farms has also risen substantially during this period, from 736 megawatts to more than 3,950 megawatts.
The Chilean government’s declared aim is to ensure a stable and low-cost supply of electricity. Here, all types of energy must compete in terms of price, and there are no subsidies of any kind. The fact that renewables have consistently come out on top in the competitive market recently is mainly due to the ideal meteorological conditions in the country. A clear regulatory framework and low costs for the technologies used for the energy transition also play a role here. In September 2021, Chile set a new record with an average price of less than 2.4 US cents per kilowatt-hour for electricity from solar and wind power facilities.
Converting coal-fired power stations into energy storage units
The phase-out of coal-fired power generation is an important component of the strategy for achieving climate neutrality by 2050. In January 2018, the Chilean Government announced plans to shut down all coal-fired power stations by 2040 at the latest. At the moment, the country still obtains around 40 per cent of its energy from coal-fired power plants, a figure similar to Germany’s. On behalf of BMU, GIZ is providing advice to the Chilean Government on finding alternative uses for decommissioned power plants and retaining the associated jobs. One approach is to convert retired coal-fired plants into zero-emission heat storage units (‘Carnot batteries’). These function much like a battery: low-cost solar power or surplus energy from wind plants is used to heat salt, which then retains the energy released in this manner. Other options are also being examined – such as converting power plants into seawater desalination plants or operating the plants with gas, hydrogen or biomass.
Chile’s solar tower: Green electricity for 380,000 households
Concentrated solar power also plays a crucial role in Chile’s energy transition. ‘Cerro Dominador’ – Latin America’s first concentrated solar energy plant – went online in the Atacama Desert in 2021. Energy storage is a key issue here as well, as 10,600 reflectors concentrate sunlight onto the top of a 250-metre tower, where the energy is used to heat molten salt. The special thing about this set-up is that, here too, energy is stored temporarily in thermal batteries as molten salt and then converted into steam via heat exchangers, thereby driving a turbine that can generate up to 110 megawatts of electricity – 24 hours a day. This facility can supply as many as 380,000 households with green electricity, which reduces CO2 emissions by around 870,000 tonnes annually. Plans call for additional ‘solar towers’ to be built in future as Chile continues on its path to climate neutrality.
Green hydrogen also plays a role in Chile’s energy mix – especially in areas where direct electrification with electricity from renewable sources is not possible. More than 50 projects involving green hydrogen are currently being developed. Read more about this topic here.
Last update: Ocotober 2021