Renewable Energies in Chile. Wind, Solar, and Hydro Potential from Arica to Chiloé. Final text version 02/21/14

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1 Renewable Energies in Chile Wind, Solar, and Hydro Potential from Arica to Chiloé Final text version 02/21/14

2 RENEWABLE ENERGIES IN CHILE WIND, SOLAR, AND HYDRO POTENTIAL FROM ARICA TO CHILOÉ Published by: Expansion Strategy for Grid Connected Renewable Energy (MINENERGIA / GIZ) Ministry of Energy Avenida Libertador Bernardo O Higgins 1449 Edificio Santiago Downtown II, piso 13 Santiago, Chile Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH Federico Froebel 1776, Providencia Santiago, Chile Author: Christian Santana O., Consultant Co-authors: Mark Falvey, Geophysics Department of the University of Chile Marcelo Ibarra L., Geophysics Department of the University of Chile Monserrat García H., Consultant Design and layout: Hernán Romero D. ISBN: Santiago de Chile, 2014

3 RENEWABLE ENERGIES IN CHILE WIND, SOLAR, AND HYDRO POTENTIAL FROM ARICA TO CHILOÉ

4 Notice This publication has been prepared for the Expansion Strategy for Grid Connected Renewable Energy Project implemented by the Ministry of Energy and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH as part of the cooperation between the governments of Chile and Germany. The Project is financed through the International Climate Initiative (IKI) of the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB) of Germany. However, the authors conclusions and opinions do not necessarily reflect the position of the Government of Chile and/or GIZ. In addition, in no case does any reference to a company, product, brand, and manufacturer or otherwise entail a recommendation by the Government of Chile or GIZ. The partial or full reproduction of this document is permitted provided that the source is mentioned.

5 7.- Summary of the renewable energies potential evaluated This document contains an estimation of the potentials of wind, solar PV, solar CSP and natural-riverbed hydro power, mainly for applications aimed at their integration to the domestic electricity market, that is, projects with a significant installed capacity, except for hydro plants, where the lower limit was set at 100 kw. Projects aimed at self-consumption and PV projects in urban areas have not been considered. The study includes the areas covered by the SING and the SIC as of 2012, including the possibility of connection of distant projects which are about 100 km away from the transmission lines existing until that year. That includes the whole of the national territory from the Region of Arica and Parinacota to Isla Grande de Chiloé. The methodology used is based upon the results of the numerical modeling of meteorological and hydrological processes, to which land restrictions have been applied, which, in combination, enable the identification of the areas of the territory which may easily accommodate technologies for the conversion of the energy sources evaluated. In the definition of the parameters related to the land restrictions and the technologies characteristics, publicly available information on RE investment projects which are currently operational, under development or evaluation in the country has been considered. The following table summarizes the land restrictions applied in the evaluation. Table 1: Land restrictions used in the evaluation of the RE potential. Factors Wind Solar - PV Solar - CSP Hydro With tracking: < 0.3 With 7.5 hour storage: Fixed: < 0.24 < 0,5 Plant factor Lower than 0.3 Height (meters above sea level) > 3,000 Reg. XV to II > 2,000 for the rest Slope >15 Lower than > 10 oriented in the North direction > 4 for the rest > Wind frequency equal or above 15 m/sec % - Distance to urban centers < 1,000 m < 500 m < 500 m - Distance to populated areas < 500 m < 500 m < 500 m - Distance to rivers, streams, and bodies of water Protected areas < 300 m < 300 m < 300 m - SNASPE, nature sanctuaries, and sites under the Ramsar Convention SNASPE, nature sanctuaries, and sites under the Ramsar Convention SNASPE, nature sanctuaries, and sites under the Ramsar Convention National parks and sites under the Ramsar Convention Coastline < 100 m < 100 m < 100 m Railways, road system, and trails in Chile < 60 m < 60 m < 60 m < 60 m Farming areas in regions XV Existence of areas with Existence of areas with - to IV those characteristics those characteristics - Areas reserved for wind Existence of a reserved Existence of a reserved - projects by MBN area area - Installable capacity density Continuous area that meets the minimum capacity or factors 10 to 30 ha/mw (depending on the area) 5 ha/mw 4 ha/mw - 50 MW 15 ha (3 MW) 200 ha (50 MW) - 5

6 Based on the results there is available potential, that is, a portion of the area under study that did not have operational projects as of December 31, 2012 and meets minimum criteria for energy production (expressed as plant factor), which criteria are defined for each technology evaluated. At least for wind, PV and hydro, those criteria indirectly reflect a judgment regarding the economic performance that the projects should probably have in order for them to be competitive. The results of future evaluations will probably differ from the current ones due to new developments of the energy conversion technologies, future land restrictions which could be different from those used in this analysis, or expanded knowledge of the behavior of renewable energies in Chile. Considering the significant size of the portfolio of publicly known wind projects (submitted to SEIA until late 2012), a discrimination has been made between the wind potential which is available in areas not covered by said portfolio and that which is associated with projects included in it. The latter has been evaluated according to the characteristics reported to SEIA by the projects owners. In the evaluation of solar and hydro power potentials, publicly known projects have not been discriminated, whether because the size of the estimated potential renders their differentiation irrelevant (solar power), or because it is methodologically difficult to make such discrimination (hydro). The results obtained point at a very significant potential: 40,452 MW for wind power, 1,640,128 MW for solar - PV, 552,871 MW for solar - CSP, and 12,472 MW for hydro power. In Norte Grande region, areas with potential for more than one energy source have been identified, including cases where certain areas are part of the wind, solar - PV and solar CSP potentials. Assuming the incompatibility of developing more than one type of project on the same territory, the total potential has been evaluated without overlap between the renewable energies. The aim of this is to have an estimation of the potential for the whole of the energy sources analyzed without double counting areas with high potential. The areas covered by the available wind potential and by the portfolio of publicly known wind projects have been considered restrictive for the development of solar - CSP, and, in turn, the earlier together with those related to the CSP potential have been considered restrictive for the development of solar - PV. Table 44 and Figure 74 summarize the results obtained form that analysis. Figure 75 shows the location of the areas with available wind, solar CSP, and solar - PV potential (without overlap), as well as the hydro plants identified according to their size range. This Figure includes all of the wind projects submitted to SEIA until December 31, 2012, irrespectively of their plant factor estimated value. 6

7 Table 2: Available RE potential without overlap between energy sources, including the portfolio of wind projects with an estimated plant factor (PF) of 0.3 or above. Available Potential Wind Region or Area CSP PV with tracking Projects Total Hydro Wind (1 axis) Portfolio MW PF MW PF MW PF MW PF MW PF MW Arica and Parinacota 6, , ,958 Tarapacá 136, , ,182 Antofagasta (excluding Taltal) 390, , , ,276,988 Taltal (interior area) 11, ,578 Atacama 15, , ,933 Coquimbo 3, ,406 Valparaíso Metropolitan area of Santiago L. B. O'Higgins Maule 2, ,127 Biobío 3, , ,152 La Araucanía 1, , ,169 Los Ríos 2, , ,524 Los Lagos (excluding Chiloé) 1, , ,795 Isla Grande de Chiloé , ,169 Total 548, ,263, , , , ,864,809 Figure 1: Available RE potential without overlap by administrative area, including the portfolio of wind projects with an estimated PF of 0.3 or above. Figure 2: Available RE potential without overlap. 7

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9 As shown by the results obtained, in Chile there are areas where renewable energies have privileged conditions and their great potential outstrips by far the country s electricity demand growth expected for the next decades. Tapping into a significant portion of said potential poses interesting challenges, like the expansion of the transmission systems and managing the variability of renewable generation. Save for the coastal area of the Coquimbo region and the central valley between the regions of Biobío and Araucanía, the areas with the greatest wind potential and the greatest concentration of potential hydro plants are relatively far from the main transmission system of the SIC. However, given the great wind potential and its high levels of production, and the possibility that transmission lines may serve groups of several hydro plants, the amount of investment required for the development of transmission infrastructure to feed the energy into the main system will probably not hinder the economic feasibility of a significant development of such projects in those areas. It does, however, pose logistics and regulatory challenges, among others. The same applies to the expansion of the main transmission systems due to the concentration of the solar and wind potential in the Norte Grande region, of the wind potential in the coastal area of Zona Sur, and the hydro potential in the foothill and mountain range area of Zona Sur. This is especially true, if we consider that the joint development of areas with different production regimes should be beneficial at least because it will contribute to the sufficiency of electrical systems. By way of example, the year-on-year variability of wind production in single areas has been estimated in +/- 20%, which could be reduced to +/- 6% if we consider the integration of different wind regimes into the SIC, and to only +/- 2% if we could also integrate other wind regimes present in the Antofagasta region, which will depend on the possible interconnection between the SIC and SING and their characteristics. As for solar production, the year-on-year variability has been estimated in +/- 2%. These values contrast with the hydro variability, estimated in +/- 30% for some of the basins evaluated, and between +14% and -22% for all the basins as a whole. Therefore, even when there is extensive national experience in the management of seasonal and year-on-year hydrological variability, the daily and hourly variability inherent to the wind and solar - PV production poses new challenges to the management of electrical systems and has given rise to different opinions about the impact that this could have on the security and operating costs of the electrical systems. The approach used for tackling the aforesaid challenges will determine development timeframes and the portion of the RE potential that can be harnessed. Finally, it should be noted that this evaluation does not intend to represent the economic potential of the evaluated energy sources, and it should not be understood that other areas 9

10 not identified here are not suitable for the development of technically and economically feasible projects. Apart from the uncertainty inherent to any indirect evaluation using modeling tools like the evaluation conducted here, this analysis did not take into account the competence that may exist for using the land for other economic activities and the impact that this may have on the feasibility of RE projects. Furthermore, it did not either consider the energy prices observed from the beginning of this decade up to now, or price developments in the different areas covered by the electrical systems, or other business considerations associated with the different business models under which the projects may be developed which aspects may entail the feasibility of projects with a lower energy production than the minimum level defined in this evaluation for the selected technologies. 10