Energy policy review of Chile

270 Pages·2009·3.7 MB·English

by  OECD

CHILE
ENERGY
POLICY
REVIEW
2009
Please note that this PDF is subject to specific
restrictions that limit its use and distribution.
The terms and conditions are available online at
www.iea.org/about/copyright.asp
CHILE
ENERGY
POLICY
REVIEW
2009
Since 1990, Chile has been the fastest growing economy in Latin
America thanks to sound economic management and integration
into the global economy. Chile can also be proud of its energy policy
achievements. The pioneering privatisation and liberalisation of its
electricity sector in the 1980s was the foundation for a competitive
energy sector, which has sustained the rapid growth of the Chilean
economy over the past two decades.
Nonetheless, Chile faces the continuing challenge of finding additional
energy supplies to fuel economic growth. Chile has limited fossil
energy resources and depends on imports to meet three-quarters of its
energy needs. The country’s electricity sector has faced three periods
of significant stress over the past decade. The last episode took place
in 2007/2008, when the loss of natural gas imports from Argentina
was further exacerbated by a drought in the central system, where
hydropower normally accounts for over half of electricity generation.
Drawing on the experience of IEA member countries, the Review assesses
Chile’s major energy challenges and provides recommendations.
Six main themes emerge: the successful liberalisation of the power
sector in the 1980s; the essential role played by the state in ensuring
energy security; the re-formulation of Chile’s long-term energy
policy; the proposed reorganisation of the institutional framework;
greater independence for the system operators; and the need for a
clear framework of regulation so that long-term investment decisions
integrate social and environmental costs.
The Chile Energy Policy Review 2009 is essential reading for all who
are interested in Chilean energy issues and in learning about the
important role sound energy policy can play in developing a nation’s
economic and social welfare.
-:HSTCQE=U\XVYW: (61 2009 24 1 P1)
ISBN 978-92-64-07314-2 €100
CHILE
ENERGY
POLICY
REVIEW
2009
000011--000088 cchhiillii..iinndddd 11 2299//0099//0099 1111::2244::3300
IEA member countries:
Australia
INTERNATIONAL ENERGY AGENCY
Austria
The International Energy Agency (IEA) is an autonomous body which was established in Belgium
November 1974 within the framework of the Organisation for Economic Co-operation
Canada
and Development (OECD) to implement an international energy programme.
Czech Republic
It carries out a comprehensive programme of energy co-operation among twenty-eight
of the thirty OECD member countries. The basic aims of the IEA are:
Denmark
n To maintain and improve systems for coping with oil supply disruptions.
Finland
n To promote rational energy policies in a global context through co-operative
relations with non-member countries, industry and international organisations. France
n To operate a permanent information system on international oil markets.
Germany
n To provide data on other aspects of international energy markets.
n To improve the world’s energy supply and demand structure by developing Greece
alternative energy sources and increasing the efficiency of energy use.
Hungary
n To promote international collaboration on energy technology.
n To assist in the integration of environmental and energy Ireland
policies, including relating to climate change.
Italy
Japan
Korea (Republic of)
Luxembourg
Netherlands
New Zealand
Norway
ORGANISATION FOR
Poland ECONOMIC CO-OPERATION
AND DEVELOPMENT
Portugal
Slovak Republic The OECD is a unique forum where the governments
ofthirty democracies work together to address the
Spain economic, social and environmental challenges of
globalisation. The OECD is also at the forefront
Sweden of efforts to understand and to help governments
respond to new developments and concerns,
Switzerland such as corporate governance, the information
economy and the challenges of an ageing
Turkey population. The Organisation provides a setting
where governments can compare policy
United Kingdom experiences, seek answers to common
problems, identify good practice and
United States work to co-ordinate domestic and
international policies.
The European Commission
also participates in
the work of the IEA.
© OECD/IEA, 2009
International Energy Agency (IEA)
9 rue de la Fédération, 75739 Paris Cedex 15, France
Please note that this publication is subject to specific restrictions
that limit its use and distribution. The terms and conditions are
available online at www.iea.org/about/copyright.asp
000011--000088 cchhiillii..iinndddd 22 2299//0099//0099 1111::2244::3300
FOREWORD
Chile can be proud of its energy policy achievements. The pioneering
privatisation and liberalisation of its electricity sector in the 1980s, ahead
of almost all IEA member countries, was the foundation for a competitive
energy sector, which has sustained the rapid growth of the Chilean
economy over the past two decades. These policies have helped sharply
reduce the number of Chileans living in poverty, and lift Chile to the middle
ranking of nations in terms of GDP per capita. Following a successful rural
electrifi cation programme, almost 99% of the Chilean population now has
access to electricity.
However, in the past decade, energy security has come to the fore of the
energy agenda. In 2007 and 2008, Chile faced a double crisis of energy
supply, having lost most of its gas imports from its sole supplier, Argentina,
at a time when its hydroelectric production was severely aff ected by drought.
The government worked with industry to achieve a rapid adaptation of the
power sector to ensure the continuity of electricity supply. IEA member
countries, and other countries, can learn a great deal from the experience
of Chile.
The IEA is very pleased to have been invited to conduct this Energy Policy
Review of Chile. Given the country’s distinct characteristics, the Review
takes a comprehensive look at Chile’s energy sector, including: the
institutional framework, energy security, environmental sustainability,
energy efficiency, as well as recent developments in sub-sectors such as
fossil fuels, electricity, renewables, biomass, access to energy in rural
areas, transport, and energy research and development. Chile is not a
member of the IEA, although its application for membership to the OECD
is at an advanced stage.
An immediate challenge facing Chile is to fi nd additional energy supplies
to fuel continuing economic growth and to replace the costly diesel oil
that is now widely used in power stations that were built to run on gas
from Argentina. Coal will also play a part in energy diversifi cation, but
new investment in coal should be placed in the context of an overall
national strategy for the mitigation of greenhouse gas emissions to ensure
sustainability in the longer term. This recommendation is also relevant to
the transport sector, a challenge shared by many IEA member countries.
Chile’s National Action Plan for Climate Change, published at the end of
2008, presents a course of action for the next four years. 9
0
0
2
A,
E
D/I
C
E
O
©
000011--000088 cchhiillii..iinndddd 33 2299//0099//0099 1111::2244::3344
The IEA supports the government’s eff ort to strengthen the institutional
framework of the sector to improve policy-making instruments. Chile has
recently put in place ambitious policies for the promotion of energy effi ciency
and for developing its outstanding natural potential for renewable energy.
These measures should be taken even further. The IEA has also suggested
some measures that could further enhance competition in Chile’s gas and
electricity markets. In many respects, therefore, the Review will serve to
reinforce and encourage the government in the direction that it is already
taking.
The Chilean government’s invitation to the IEA to conduct this Review is a
refl ection of Chile’s progressive and outward-looking approach to energy
policy. This openness is very timely, given the rapid advances in energy
policy and proposals for new Ministries of Energy and Environment before
the Chilean Congress. I would like to pay particular tribute to Chile’s
current Energy Minister, Mr. Marcelo Tokman, for his leadership and
personal engagement in the Review and to the many offi cials of the Chilean
government, as well as outside commentators, who have contributed
generously with their time and ideas.
Chile is due to hold presidential and legislative elections on 11 December
2009. I hope that the country’s incoming energy policy-makers will fi nd
this report useful in framing the future energy policy of Chile. I am very
pleased that the IEA and the government of Chile have already mapped out
a programme of work for the coming two years, and I hope this presages a
continued close and fruitful working relationship.
Nobuo Tanaka
Executive Director, International Energy Agency
9
0
0
2
A,
E
D/I
C
E
O
©
000011--000088 cchhiillii..iinndddd 44 2299//0099//0099 1111::2244::3355
5
TABLE OF CONTENTS
Foreword 3
Organisation of the Review and Acknowledgements 9
Executive Summary and Key Recommendations 13
1. General Energy Policy 23
2. Security of Energy Supply 51
3. Energy and Environment 71
4. Energy Effi ciency 89
5. Fossil Fuels 111
6. Electricity 133
7. Renewables 159
8. Biomass 181
9. Access to Energy in Rural Areas 195
10. Transport 209
11. Energy Research and Development 233
Annexes
I. Energy Balances and Key Statistical Data 247
II. International Energy Agency “Shared Goals” 251
III. Abbreviations and Units 253
IV. Bibliography 261
List of Tables
1.1. Chile’s Energy Balance, 2007 (Mtoe) 27
2.1. Evolution of Price of Gas Imports from Argentina, 2000-2008 53
2.2. Capacity Currently under Construction, by Fuel Type, April 2009 (MW) 57
3.1. Priority Actions Identifi ed in the PANCC 78
5.1. Coal-Fired Power Plants, end-2007 112 09
0
2
A,
E
D/I
C
TABLE OF CONTENTS E
O
©
000011--000088 cchhiillii..iinndddd 55 2299//0099//0099 1111::2244::3355
6
5.2. Coal-Fired Power Plants under Construction, June 2009 113
5.3. ENAP Market Share, 2007 116
5.4. Quarterly Balance of Chile’s Fuel Price Stabilisation Fund - FEPC (USD millions) 118
5.5. Quarterly Balance of Chile’s Oil Price Stabilisation Fund - FEPP (USD millions) 119
5.6. Gas Pipeline Networks, 2005 123
5.7. Shares of Coal in Electricity Generation in OECD and Latin America 128
6.1. Installed Capacity by Type of Plant and Energy Source, end-2008 (MW) 136
8.1. Prices of Wood, Kerosene and LPG, May 2009 188
8.2. Comparison of Stoves and Boilers 189
9.1. Current and Planned NCRE Projects under the PER 202
10.1. Transport Contribution to Total Final Energy Consumption
and Greenhouse Gas Emissions 210
10.2. Evolution of Basic Socioeconomic and Travel Characteristics
in Santiago Metropolitan Region 213
10.3. Chile’s Principal Cities, Demographics and Socioeconomics 220
11.1. List of Energy R&D Projects by Sub-sector and Funding, 2008 238
List of Figures
1.1. Total Primary Energy Supply, 1973-2007 29
1.2. Electricity Generation by Source, 1973-2007 31
1.3. Key Energy Policy Institutions of Chile in the Current Framework 32
1.4. Proposed Sector Organisation in the Energy Bill 39
3.1. Projected Capacity Additions in the SIC and SING to 2020, April 2009 73
3.2. Chile CO Emissions by Sector, 1973-2007 74
2
3.3. Chile CO Emissions by Fuel, 1973-2007 75
2
3.4. Chile’s CDM Projects (Total Pipeline) by Project Type, June 2009 77
4.1. Total Primary Energy Supply per GDP (PPP) in Selected Countries, 2007 89
4.2. Chile’s Total Final Consumption by Sector, 1973-2007 90
4.3. Energy Intensity in the Industrial and Mining Sector, 1990-2007 91
4.4. Energy Intensity in the Transport Sector, 1990-2007 92
4.5. Energy Intensity in the Residential Sector, 1990-2007 93
4.6. Energy Demand Projection to 2020 with Energy Effi ciency Measures 93
5.1. Shares of Crude Oil Imports by Country of Origin, 2002 and 2008 115
5.2. Proportionate Difference between Retail and Import Parity Prices, 2006-2009 120
5.3. Production and Imports of Natural Gas, 1990-2008 (bcm) 121
5.4. Consumption of Natural Gas by Sector, 2006-2008 (bcm) 122
5.5. Prices of Natural Gas and LPG in Santiago for Equivalent Energy Supply (USD) 125
6.1. Installed Capacity and Peak Demand in the SING, 1997-2008 (MW) 137 9
0
0
2
A,
E
D/I
C
TABLE OF CONTENTS E
O
©
000011--000088 cchhiillii..iinndddd 66 2299//0099//0099 1111::2244::3355
7
6.2. Generation by Fuel Type in the SING, 1997-2008 (GWh) 138
6.3. Installed Capacity and Peak Demand in the SIC, 1997-2008 (MW) 139
6.4. Generation by Fuel/Technology in the SIC, 1997-2008 (GWh) 140
6.5. Generation by Fuel/Technology, 1973-2007 (TWh) 141
6.6. Projected Evolution of Installed Capacity in the SIC and SING, 2005 and 2020 141
6.7. System Marginal Cost in the SIC, 1997-2008 (USD/MWh) 144
6.8. Restrictions on Argentine Gas Exports, 2004-2008
(% reduction on normal requirements) 145
6.9. Monomic Node Prices in the SIC and SING, 1982-2009 (USD/MWh) 147
6.10. Average Residential Tariffs, Excluding Taxes, 2006 (USD/kWh) 152
8.1. Wood Energy Balance by Region, 2008 184
8.2. Biomass Demand by Sector, 2007 187
9.1. Rate of Rural Electrifi cation and Number of Households
without Access to Electricity, 1982-2008 196
9.2. Rate of Rural Electrifi cation in Chile’s 15 Regions, 2008 197
9.3. Government Subsidies for Rural Electrifi cation (FNDR-ER)
and Rural Access Rate, 1995-2008 200
10.1. Transport Final Energy Consumption by Sub-sector, 2007 210
10.2. M ode Share (Work Day) and Share of Households with No Motor Vehicle
in Primary Chilean Cities 219
10.3. M ode Share for All Trips in Santiago. Variation by Season
and Weekday/Weekend, 2004-2006 221
11.1. Chile’s National Innovation System 234
11.2. Energy R&D Funding by Project Type, 1998-2008 237
List of Boxes
4.1. The IEA 25 Energy Effi ciency Recommendations 102
7.1. Typical Barriers Faced by NCRE 165
7.2. Principles for Effective Renewable Energy Policies According to the IEA 178
8.1. Laws Governing the Use of Forests in Chile 182
8.2. The National Firewood Certifi cation System (SNCL) 186
10.1. Public Transport Dynamism in Santiago 213
11.1. Technology Transfer needs for a Climate Change Policy 242
List of Maps
1 Map of Chile 20
2 Chile’s XV Administrative Regions 21
3 Chile’s Electricity Grid 22 09
0
2
A,
E
D/I
C
TABLE OF CONTENTS E
O
©
000011--000088 cchhiillii..iinndddd 77 2299//0099//0099 1111::2244::3355
9
0
0
2
A,
E
D/I
C
E
O
©
000011--000088 cchhiillii..iinndddd 88 2299//0099//0099 1111::2244::3355