MR. DIRECTOR

The Superintendency of Electricity and Fuels (SEC) reported that in the last year there was a 34% increase in the number of hours without electricity faced by Chileans, from 5.13 hours to 6.86 hours. The origin of this increase is due to supply interruptions in the distribution and transmission segments, mainly for climatic reasons. The Superintendent points out that in Chile we are in hours without supply, while in OECD countries they are measuring this in minutes.

How does this converse with the country’s stated challenge to limit this to one hour maximum by 2050 (Energy 2050 – Chile’s Energy Policy, 2017)? The central question is how willing we are to pay more for electricity supply, increasing investments in quality of service, making our regulations more demanding, and necessarily increasing end-consumer tariffs. An obvious solution to reduce interruptions in Santiago is the undergrounding of networks, but this implies significant increases in investment (between three and six times the cost of an overhead line).

What level of prices are we willing to pay for basic services? This is an essentially political and governmental decision, which is linked to the vision of the level of social prosperity. It is associated with the decisions that governments make in terms of regulatory requirements, such as quality of service. In this context, the target defined for 2050 is arbitrary, and rather defines a wish and a political objective.

Fortunately, technological developments such as storage are bringing solutions that will lead to significant improvements in the quality of electricity supply, although they are not currently an economical solution.

Hugh Rudnick

MR. DIRECTOR

President Sebastián Piñera, at the launch of COP25, set a major challenge for the country: to achieve carbon neutrality by 2050.

In February, I stated that the focus of the decarbonization discussion is no longer on electric renewables, which are coming on their own. The challenge is how to decarbonize the entire energy matrix, with other energy-using sectors: industry, mining, construction, transportation, agriculture, fishing and aquaculture, etc. The real challenge is how we move these sectors to zero fossil fuel.

Andrea Rudnick, of the COP25 Presidential Advisory Committee, is more accurate. He reminds us that “one third of the energy sector’s emissions correspond to the transport sector, and the latter has not started this electric revolution. To achieve carbon neutrality, we need transport to move forward with clear signals. I don’t see those signals, because this sector is highly politically charged. It is a difficult, highly fragmented sector.

Chile was very proud of its progress in the electricity sector, leading the world ranking in renewable energy. Bloomberg’s 2018 report highlighted that. In addition to this, the decision was reached with the generating companies to abandon coal and gradually clean up our electricity matrix, in the hope that this will be enough to achieve carbon neutrality by 2050.

But I reiterate my previous message: this good news does not come alone; wind and solar electric power must be supported by other technologies, via complementary services. Decarbonization is not free; our electricity system will require greater flexibility, which must face new backup costs and investments. The challenges of decarbonization are even greater for transportation and industry.