Chile: A Potential Goldmine of Efficiency and Renewables

In Chile, Rocky Mountain Institute Chairman and Chief Scientist Amory Lovins sees a country with vast efficiency and renewable energy potential.

Amory and I visited Chile the last two weeks of November. During the trip, Amory addressed members of the national Senate, toured the future Patagonia National Park, and met with citizens, academics, politicians and business leaders, describing potential energy futures for the country.

Chile is a goldmine of unbought efficiency and has the finest portfolio of renewable energy opportunities Amory has ever seen—arguably the best in the world.

“Working in over 50 countries, I’ve never seen anything like Chile’s combination of quality and diversity in its renewable energy potential,” Amory explained. “Combine that with its extraordinarily high electricity prices, technical competence, market orientation and entrepreneurship, and you could have a world-leading success story.”

The Atacama Desert receives more annual solar radiation than any other place on Earth, most of the country is sunny and the Roaring Forties bluster in from the Pacific to allow highly productive windfarms. Chile has 620 volcanoes, representing approximately 10 percent of the global total and offering strong geothermal resource potential. Its coast stretches 2,653 miles along the Pacific, making it a prime candidate for offshore wind, wave and tidal energy. And with firewood still an important energy resource, Chile is rich in biomass wastes from farming and forestry.

Amory was even more surprised than he expected by what we found in Chile. The electricity system is roughly half hydro-dependent, but reservoir levels fluctuate so much in El Niño/La Niña years that the system carries an extremely large reserve of coal, diesel and liquefied natural gas. Yet Chile has virtually no domestic fossil fuel resources. The combination of the volatile hydroelectric supply; the lack of domestic gas, coal and oil resources; extremely concentrated ownership; and absence of a truly independent system operator results in extraordinarily high national electricity prices.

But Chile’s opportunities are as great as its challenges.

Chile has cut its energy intensity—the amount of energy needed to create a unit of GDP—only a few percent in several decades, the sort of saving many other OECD countries achieve every year or two. Until Amory suggested otherwise, many Chilean policymakers had little perception the country could substantially reduce energy intensity.

Chile’s renewable resources offer a huge opportunity for those positioned to implement diverse, distributed energy projects—and profound risk to the operators of centralized thermal plants who could soon be facing radical bypass on both the supply and demand sides.

We visited Chile at the invitation of a group of engineers. Upon arrival in Santiago, Amory delivered his presentation to members of the Senate about Reinventing Fire’s implications for the Chilean economy, focusing on the electricity sector. We also met with the Minister of Energy, Rodrigo Álvarez, who asked Amory to provide his policy recommendations to ministry leaders.

From left, William Phillips, executive director of the Chilean Energy Efficiency Agency; Sergio del Campo Fayet, Chilean subsecretary of energy; Amory Lovins, chairman and chief scientist of RMI; Rodrigo Álvarez, Chilean minister of energy; and Clay Stranger, special aide to Amory Lovins.

At the invitation of our hosts we then traveled south to Patagonia and visited the future Patagonia National Park in Valle Chacabuco, a breathtaking conservation effort spearheaded by Doug and Kris Tompkins. Valle Chacabuco is an expanse of critical ecosystem, home to pumas, guanacos, Andean condors and the endangered huemul deer. The Patagonian landscape is stunning, with glaciers flanking volcanoes and fjords cutting deeply into the continental shelf.

While in Patagonia, Sen. Antonio Horvath convened a town hall meeting in a small hotel in Coihaique, capital of the Aysén Region. The senator asked Amory to speak directly to his constituents about a secure, resilient and abundant energy future for Patagonia. The audience was clearly committed to practical solutions for the future of Patagonian energy. The banquet hall remained full of engaged citizens, and the questions and dialog lasted until almost midnight.

The Chilean people were gracious hosts, and after a short period of adjustment to dinners that began at 11 p.m., we were grateful guests. The trip opened doors for potential collaboration between RMI’s experts and a group of Chileans positioned to make a big impact on their nation’s energy future. Since Chile relies uniquely on free-market policies and has enjoyed the greatest economic success in Latin America, it is a bellwether for the region and is increasingly influential globally.