Santiago 2015 Blog: Opportunities and Challenges in Chile's Energy Sector

By
Luisa Leme

Minister Pacheco gave updates on the government’s energy policies, and panelists discussed the opportunities in the sector. 

Speakers:

  • Máximo Pacheco, Minister of Energy of Chile
  • Luis Felipe Cerón, CEO, AES Gener S.A.
  • Luca D'Agnese, Head of Latin America Region, Enel
  • Carlos Vargas, Managing Director and head of Emerging Markets, Mizuho Securities USA
  • Hamilton Moss de Souza, Vice President of Energy, CAF (moderator)
  • Susan Segal, President and CEO, Americas Society/Council of the Americas

Chile’s Minister of Energy Máximo Pacheco started his presentation on the country’s energy agenda by addressing skepticism about it, which he described as a well-defined program with specific goals and deadlines. Pacheco further defended the Chilean economy against local pessimism, explaining that when “the economy and its foundation are solid, the debate tends to relate more to perception than structural problems.” He said that a government can manage such expectations by giving positive signals, and said Chileans could be encouraged about opportunities ahead.

The minister then discussed the progress of the seven goals in the national energy plan, one of which was reducing energy costs, which dropped by 16 percent in the first six months of 2015 when compared with the same period in 2014. Changes in the bidding process for new energy projects also generated prices that were 17 percent lower than contracts signed in the previous year.

Pacheco then talked about increasing infrastructure to improve energy distribution—from 25 to 41 projects in construction across the country—and how the government has incentivized renewable energy investment so that renewables make up 20 percent of the country's matrix by 2025, a goal of the administration.

The private sector recognized the government’s efforts in the subsequent panel discussion. AES Gener’s Luis Felipe Cerón commended government support for new projects and saw investment in renewables as an interesting opportunity lining up in Chile. He also highlighted the benefits of energy lines connecting the country with Argentina and other markets in the region.

Enel’s Luca D’Agnese affirmed that the changes are generating results, but added that Chile’s challenge will be to reconcile growing demand and production with clean energy production. He said cities like Santiago can set goals to reduce contamination and that the country is close to an energy transition.

In regards to funding this transition, panelists concurred that the government's environmental standards, which also take into account local communities' concerns, can be a challenge. Mizuho Securities’ Carlos Vargas said that Chile does not pose major concerns for foreign investors generally but that with long-term projects, finding a predictable income source is an important factor to close the transition gap and build the required infrastructure.

Watch Máximo Pacheco's presentation and the panel discussion: