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The Economic Benefits of Renewable Energy Far Outweigh the Costs for Chile

Amanda Maxwell

Posted October 30, 2013 in Living Sustainably, Solving Global Warming

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The future of renewable energy looks bright in Latin America.  Almost every week news stories report on new renewable energy projects in countries throughout South and Central America. The Inter-American Development Bank  reported earlier this year that the region’s electric potential from geothermal, wind, ocean, biomass and solar resources is 22 times greater than the expected electricity demand in 2050.

Few countries have seen as much of a renewable energy boom in recent years as Chile. When I last traveled to Santiago in September for the Chilean International Renewable Energy Congress, I was surprised at how the number of attendees had grown since last year, as well as the variety of companies, countries and sectors they represented. According to the Center for Renewable Energy (CER), the installed capacity of renewables projects connect to the grid was 1,067 MW, with an additional 703 MW in construction and 8,881 MW approved but not yet under construction. To put this in perspective, Chile’s main grid, which provides electricity to about 93 percent of the population, has an installed capacity of about 13,000 MW. In addition, the government just passed a new bill requiring 20 percent of national energy generation to come from renewable sources by 2025. So far this year renewables have generated 5.68 percent of the national total, according to the CER.

This is a particularly important year for the Chilean renewables industry, as the future of Chile’s energy sector has become the focus of debate among presidential candidates ahead of upcoming mid-November elections. Now, a new study gives these candidates some additional aspects of the industry to consider, as it shows that strong renewables development is not just good for energy companies in Chile, it also brings economic and social benefits to its citizens.

The Economic Benefits of Non-Conventional Renewable Energy in Chile”* was conducted by international and Chilean experts at PricewaterhouseCoopers and commissioned by NRDC and the Chilean Renewable Energy Association. The study concludes that a future with greater renewables deployment would add $1.6 billion more to the Chilean economy and 7,769 more jobs than a baseline scenario over the next 15 years. This is an unprecedented assessment of the variety of impacts that energy resources have beyond those usually analyzed in Chile– namely, the direct financial costs.

The authors have compared the cumulative impacts that two scenarios—the “base case” and the “renewables scenario”—would have on several key social and macroeconomic indicators from 2013-2028. The base case used the projections in the government’s widely accepted “Transmission System Expansion Plan 2012-2013” as its foundation, while the renewables scenario projected that renewables would contribute 20 percent of Chile’s energy generation by 2020.

The study’s key findings underscore the idea that a strong renewables sector in Chile could have implications far beyond the energy sector. Here are some of the highlights:

  • GDP: the renewables scenario would add about U.S. $2.3 billion** more to Chile’s GDP during 2013-2028 than the base case, and could create more productive supply chains in the country.
  • System costs: under the most realistic assumptions, the renewables scenario produced a net benefit of $251 million during 2013-2028. Under conservative assumptions, the renewables scenario would save $2 billion in fuel costs during that same period.
  • Employment: the renewables scenario would produce 3,444 more direct jobs and 4,325 indirect jobs to the economy than the base case, for a total of 7,769 more jobs.
  • Greenhouse gas emissions: the renewables scenario would avoid 83 million tons of CO2 emissions between 2013 and 2028. That amount is roughly equal to the emissions of 32.9 million cars in one year, or 10 times the number of cars in Chile today.
  • Local emissions (fine particulate matter, or PM2.5): from 2020-2028 the base case would generate 15 percent more PM2.5 than the renewables scenario in Chile’s central grid alone.
  • Water: the renewables scenario would use 11 percent less water in the electricity sector compared with the base case, saving 120 million cubic meters of water through 2028. That is the water consumption of 60,000 people in one year.

It is also critical to note that the authors of the study believe these numbers to be very conservative, meaning that the actual impacts of the renewables scenario could be significantly bigger. The study’s results have implications across a variety of important sectors, such as agriculture, transportation, environment and public health.

Chile’s new renewables law is a great start. As presidential candidates campaign before the November 17 election, they should keep in mind that policies that promote more renewable energy can have far-reaching economic and social benefits, and will help secure Chile’s place in Latin America as a leader in clean energy development.

*The term non-conventional renewable energy is used in Chile to exclude hydroelectric plants with an installed capacity above 20MW from the category. For the sake of this blog, I will use “renewable energy” to refer to non-conventional renewable energy.  

**All amounts are in U.S. dollars.

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Comments

Sanjeev VyasOct 31 2013 04:21 AM

The seriousness of alternate energy development is that "Presidential Election" is fought with Solar power as an agenda!! probably this would be the first time anywhere in the world.
I am sure Chili is also reviewing other technologies to keep solar cost low.

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Switchboard is the staff blog of the Natural Resources Defense Council, the nation’s most effective environmental group. For more about our work, including in-depth policy documents, action alerts and ways you can contribute, visit NRDC.org.

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