Chile Needs To Add 10,000 MW New Capacity Over 10 Years -Pinera

By Anthony Esposito

Of DOW JONES NEWSWIRES

SANTIAGO -(Dow Jones)- As Chile's energy needs grow, the Andean nation will need to incorporate more than 10,000 megawatts of new capacity over the next 10 years, President Sebastian Pinera said Thursday.

While Chile imports more than 72% of its energy needs, including oil, natural gas and coal, the nation aims to diversify its energy sources and develop alternative renewable energy sources.

"We have to diversify our energy matrix in order to increase the security of our energy supply and to reduce dependence," Pinera said.

Chile's government is aiming to have 20% of its energy sources come from nonconventional sources, such as solar, wind, geothermal or mini-hydro, by 2020.

"We've embarked on an ambitious project of promoting alternative renewable energy. Chile was a poor country in last century's fuel sources, which were primarily based on oil, but it's an extremely rich country in the energies of the future," Pinera said.

Due to the country's particular geographic and seismic characteristics, it is an ideal place for developing geothermal, solar, hydro and wind energy.

Hydroelectricity already makes up a substantial portion of the nation's energy sources.

As of December 2009, the central SIC grid, which provides power to over 90% of the country's population, had an installed capacity of 11,352 megawatts, with 47% of that coming from hydroelectric generators, 52.3% from coal-fired plants and 0.7% from wind farms.

The government estimates that there is potential to develop some 20,000 megawatts in small- and medium-size hydroelectric plants.

However, investment in both "small and large" hydroelectric projects needs to be developed, Pinera said.

In an apparent nod to the embattled HidroAysen hydroelectric project, Pinera added, "we need to know how to take advantage of the large [hydroelectric] projects that nature allows us to develop."

HidroAysen, a 2,750-megawatt hydropower joint venture between Chilean power generators Empresa Nacional de Electricidad SA (EOC, ENDESA.SN) and Colbun SA (COLBUN.SN) is being criticized by opponents because of plans to lay a transmission line that would span nearly 2,000 kilometers through pristine land. The project involves at least $3.2 billion in investment.

Meanwhile, after Argentina cut off its natural gas exports to Chile starting in the mid-2000s and a 2008 drought severely reduced hydroelectric production, the nation decided to build two liquefied natural gas, or LNG, regasification terminals.

The $530 million GNL Mejillones terminal, a joint venture between Chilean state copper-mining company Corporacion Nacional del Cobre and France's Suez (SZE.FR) kicked off commercial operations Thursday.

GNL Mejillones, which is connected to the northern SING grid where the majority of Chile's copper industry is located, has a nominal capacity of 5.5 million cubic meters of natural gas a day, or the equivalent of 1,100 megawatts once converted.

-By Anthony Esposito, Dow Jones Newswires; 56-2-715-8929; anthony.esposito@dowjones.com