Chile Power Report Q1 2014
Our View: Chile is one of the most attractive markets in Latin America, with political stability, natural resources and healthy economic growth all adding to its appeal. But in terms of energy, Chile’s geography and considerable distances between urban areas and potential sources of power create challenges in the electricity market. Hydroelectricity accounts for around a third of production, but it is a sector shrouded in regulatory uncertainty and lengthy appeals processes. This quarter sees talk of new hydro projects, but that doesn’t mean that these proposals will become a reality any time soon. In the thermal sector, gas-fired projects are gaining ground, and these will appeal because of their reliability when compared to renewable sources of power. That said, renewable energy will continue to play an increasing role in the electricity mix, with solar and wind power projects particularly popular.
Domestic demand for energy in Chile is growing, and as electricity generation struggles to keep up with the pace of demand, energy shortages are feared, and price hikes are already emerging. Chile needs to diversify its electricity-generating mix to ensure that supply meets the growing demands of the population and its energy-intensive mining industry, but efforts to boost electricity production from other sources, such as coal at the Punta Alcalde power plant, are held back by lengthy approval and appeals processes.
Purchase this Report