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DE RUEHSG #0349/01 1051959
ZNR UUUUU ZZH
O 151959Z APR 09
FM AMEMBASSY SANTIAGO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4791
RHMCSUU/DEPT OF ENERGY WASHINGTON DC IMMEDIATE
INFO RUCNMER/MERCOSUR COLLECTIVE IMMEDIATE
RUEHPE/AMEMBASSY LIMA 6128
RUEHLP/AMEMBASSY LA PAZ APR BRASILIA 0852
RUEHMN/AMEMBASSY MONTEVIDEO 4355
RUEHAC/AMEMBASSY ASUNCION 3923
RUEHCV/AMEMBASSY CARACAS 2046

UNCLAS SANTIAGO 000349 
 
STATE FOR WHA/BSC, WHA/EPSC AND EEB/ESC/IEC 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ENRG KNNP SENV TRGY PGOV CI
SUBJECT:  CHILE'S ENERGY HIGHLIGHTS MARCH 2009 
 
REF:  SANTIAGO 243 
 
¶1. (SBU) SUMMARY:  This cable provides highlights of activity in the 
Chilean energy sector during March 2009.  Energy Minister Tokman 
discussed potential collaboration on renewable energy with Vice 
President Biden's delegation.  Expert teams from the International 
Energy Agency (IEA) and the Asia Pacific Economic Cooperation forum 
(APEC) visited Chile.  Chile's water authorities are forecasting 
sufficient water supplies for both hydroelectric generation and 
irrigation.  An Irish renewable power company will invest $1 billion 
to build wind farms in Chile.  A U.S. company acquired a concession 
containing at least 275,000 tons of bituminous coal.  Chile's 
National Energy Commission (CNE) launched an international call for 
bids to buy the rights to reductions in carbon dioxide.  Electricity 
demand increased by 1.7 percent in March, compared to the same month 
in 2008.  Business Monitor International (BMI), forecasts that Chile 
will account for 5.52 percent of Latin America regional power 
generation by 2013. End summary. 
 
Energy Minister Requests MOU for Summit 
--------------------------------------- 
 
¶2. (SBU) Energy Minister Marcelo Tokman met with Vice President 
Biden's delegation on the margins of Chilean President Michelle 
Bachelet's March 29 bilateral meeting with the Vice President. 
Tokman proposed signing an MOU during the Summit of the Americas 
formalizing U.S.-Chile collaboration on a solar pilot plant and/or 
renewable energy center (reftel) to facilitate technology transfer 
and funding for the projects.  Tokman envisions these pilot projects 
as models for the region.  He argued that energy technology 
transfers are the best way to convince developing countries to 
reduce greenhouse gas emissions. 
 
¶3. (SBU) Tokman also said Chile would welcome the opportunity to 
enter into agreements with U.S. institutions, particularly the 
National Renewable Energy Lab and University of California-Berkeley 
labs, which could be done under the Chile-California Partnership. 
He noted that if such an agreement is completed before April 24, it 
could be announced at the upcoming Chile-California solar seminar in 
San Francisco on that date.  Both sides agreed to study ways to 
advance energy collaboration in advance of the Summit.  The Embassy 
understands the Vice President will be in contact with Secretary Chu 
to discuss Chile's interest in energy cooperation. 
 
APEC Energy Efficiency Peer Review of Chile 
------------------------------------------- 
 
¶4. (U) Chile and New Zealand are the first countries to submit to 
the APEC energy efficiency peer review process.  An international 
panel of eight experts visited Chile from March 16-20.  During the 
visit, the team interviewed officials responsible for public policy 
development and energy efficiency programs, scientists, energy 
companies, and industry representatives.  The results of the study 
will be presented during the 37th meeting of the APEC Energy Working 
Group in Santiago, April 2009. 
 
IEA Reviews Chile's Energy Sector 
--------------------------------- 
 
¶5. (U) Under an agreement with CNE, the IEA is conducting an 
in-depth review of Chile's energy sector and policies.  The IEA team 
of international energy experts was in Santiago March 30-April 1 to 
meet with a wide array of public officials and private sector 
representatives.  The results of the study, which began in December 
2008, will be shared informally with the GOC in June and formally 
presented by the IEA's executive director in October 2009. 
 
Water Forecasts Sufficient for Hydroelectric Power 
--------------------------------------------- ----- 
 
¶6. (U) The Chilean Ministry of Public Works General Water Authority 
(DGA) released a report showing sufficient water for both 
hydroelectric generation and irrigation.  Average water levels at 
larger reservoirs are 12 percent higher than at this time last year, 
but below historic levels. 
 
Irish Firm Plans $1 billion Wind Investment 
------------------------------------------- 
 
¶7. (U) Mainstream Renewable Power will invest $1 billion over the 
next five years to build wind farms in the country as part of an 
alliance formed with Chile's Andes Energy.  The project is expected 
to supply power to more than 300,000 homes.  The first wind farm 
will be built near Valparaiso and is expected to be operational by 
next year. 
 
U.S. Company Acquires Coal Concession 
------------------------------------- 
 
¶8. (U) Nevada-based Southern Energy Company, a publicly traded 
resource exploration enterprise, agreed to pay the equivalent of 
US$8,000,000 for the Lota Bay coal concession.  Over the 145 years 
of coal mining operations in Lota, situated on the Gulf de Arauco, 
tons of coal were spilled in the bay.  Net results of a 2006 
drilling test show 275,000 proven tons of recoverable bituminous 
coal with probable reserves of another 90,000 tons.  The company 
plans to dredge up the coal, process it in an adjacent site, and 
sell it to nearby thermal electric plants. 
 
CNE to Sell Carbon Dioxide Reductions 
------------------------------------- 
 
¶9. (U) On March 29, CNE, launched an international call for bids to 
buy the rights to reductions in carbon dioxide.  The program is 
being handled through CNE's Country Program for Energy Efficiency 
(PPEE) with technical assistance from the Inter-American Development 
Bank (IDB).  This new project capitalizes on PPEE's program to 
distribute compact fluorescent light bulbs to promote energy 
savings.  Energy Minister Tokman said, "this call is unique in its 
kind in Latin America and the Caribbean and aims to fund part of the 
replacement of light bulbs, to quantify the electricity savings from 
this project, and [provide] accurate knowledge of the reduction of 
greenhouse gas emissions associated with the replacement program." 
He added that, "this project will prevent the emission of 258,000 
tons of CO2, equivalent to the carbon emissions of 75 thousand 
Chileans."  The deadline for receipt of tenders is May 4. 
 
Electricity Demand, Generation Capacity Increasing 
--------------------------------------------- ----- 
 
¶10. (U) Press reports indicate that electricity demand increased by 
1.7 percent in March, compared to the same month in 2008. This 
increase, the highest since September 2008, represents the reversal 
of a five month downward trend in electricity demand. 
 
¶11. (U) The March "Chile Power Report" from Business Monitor 
International (BMI), forecasts that Chile will account for 5.52 
percent of Latin America regional power generation by 2013.  BMI 
forecasts Latin America's power generation will grow to 1,417 
terawatt hours (TWh) by 2013, representing an increase of 30.2 
percent.  According to BMI, in 2007, oil was the dominant fuel used 
in Chile, accounting for 55.8 percent of primary energy demand 
(PED), followed by hydroelectric at 18.7 percent, gas at 13.9 
percent, and coal at 11.6 percent. 
 
¶12. (U) Chile's GDP per capita and electricity consumption per 
capita are forecast to increase steadily, by 43 percent and 18 
percent respectively, between 2007 and 2013.  During the same time 
period, power consumption is expected to increase from an estimated 
57.4TWh to 72.4TWh.  From 2007 to 2018, BMI predicts an increase in 
Chilean electricity generation of 57.7 percent, which is mid-range 
for the Latin America region.