VZCZCXYZ0009
PP RUEHWEB

DE RUEHSG #0641/01 1911525
ZNR UUUUU ZZH
P 101525Z JUL 09
FM AMEMBASSY SANTIAGO
TO RUEHC/SECSTATE WASHDC PRIORITY 5190
RHMCSUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
INFO RUCNMER/MERCOSUR COLLECTIVE PRIORITY
RUEHQT/AMEMBASSY QUITO 2482

UNCLAS SANTIAGO 000641 
 
STATE FOR WHA/BSC, WHA/EPSC, AND EEB/ESC/IEC 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON ENRG KNNP SENV TRGY PGOV CI
SUBJECT:  CHILE'S ENERGY HIGHLIGHTS - JUNE 2009 
 
REF:  (A) SANTIAGO 535; (B) SANTIAGO 496; (C) SANTIAGO 349 
 
¶1. (SBU) SUMMARY:  This cable provides highlights of activity in the 
Chilean energy sector during June 2009.  Chile and the U.S. signed a 
Memorandum of Understanding (MOU) to collaborate on alternative 
clean power development, a new renewable energy center (REC), and 
solar power plants, all in Chile.  The GOC invited U.S. Energy 
Secretary Chu to Chile in October 2009.  During a visit to Paris, 
Chile's Energy Minister met with the International Energy Agency 
(IEA), French energy officials, and signed two agreements to 
collaborate on developing renewable energy in Chile.  Chile 
inaugurated its first liquid natural gas (LNG) regasification 
terminal in Quintero along with a $24 million gas pipeline.  A U.S. 
company is planning to invest $1.5 billion in 500MW of geothermal 
projects in Chile over the next ten years.  Over 1100 MW of wind 
projects were announced by multiple companies.  The GOC plans to 
invest $10 million in a consortium to study producing biofuels from 
algae.  Water available for hydroelectric generation may be down as 
much as 20 percent.  Electricity profits are up, but 2010 demand is 
predicted to be less than expected.  Chile's national petroleum 
company went from A to BBB in Standard and Poor's (S&P) risk rating. 
 END SUMMARY. 
 
DOE AND CHILE SIGN CLEAN ENERGY MOU 
----------------------------------- 
 
¶2. (U) Chile's Minister of Energy, Marcelo Tokman, and U.S. Deputy 
Secretary of Energy, Daniel Poneman, signed an MOU on Energy 
Cooperation in Washington, DC, on June 23. In addition to working 
together to promote the development of solar, wind, geothermal, and 
ocean wave power, the two countries will collaborate on a new REC in 
Chile.  The U.S. Department of Energy's National Renewable Energy 
Lab (NREL) will also help develop bid solicitations for two solar 
plants in northern Chile, and assist in bid evaluations and project 
implementation. 
 
¶3. (SBU) On June 30, Chile's National Energy Commission (CNE) 
forwarded a letter from Minister Tokman to Energy Secretary Chu 
inviting him to participate in events to promote Renewable Energy 
Week in Antofagasta, Chile, October 5-9, 2009. 
 
FRANCE TO SUPPORT NEW RENEWABLE ENERGY CENTER 
--------------------------------------------- 
 
¶4. (U) As part of President Bachelet's visit to France at the end of 
May, Minister Tokman held meetings with power officials and IEA 
president, Nobuo Tanaka, who is expected to travel to Chile in 
October to present the results of an in-depth IEA review of Chile's 
energy sector.  Separately, France and Chile signed two agreements 
to develop Chile's renewable energy sector through France's 
renewable power and environment agency (ADEME).  During his visit, 
Tokman told a business group that investments in Chile's power 
sector could reach $27.5 billion by 2013. 
 
CHILE'S FIRST LNG REGASIFICATION PLANT 
-------------------------------------- 
 
¶5. (U) Chile inaugurated its first LNG receiving and regasification 
terminal in Quintero (V Region, north of Santiago).  The plant has 
the capacity to convert up to 2.5 million tons/year of LNG at a rate 
of 10 million cubic meters (cu m) of natural gas per day.  It will 
supply gas to the country's two principal cities, Santiago and 
Valparaiso.  The terminal is owned by Chilean companies ENAP, Endesa 
Chile, Metrogas and BG Group. 
 
¶6. (U) Some liquid gas companies in Chile have criticized the 
government for requiring companies to use natural gas, e.g., the 
General Manager of Lipigas complained that the GOC's environmental 
agenda should not interfere with the market and companies should be 
permitted to choose natural gas, liquid gas or diesel. 
 
ELECTROGAS INAUGURATES $24 MILLION GAS PIPELINE 
--------------------------------------------- -- 
 
¶7. (U) Electrogas officially inaugurated a pipeline connecting the 
coastal town of Quintero with the inland town of Quillota, the site 
of two thermoelectric plants (San Isidro and Nehuenco).  The 
pipeline has a transport capacity of 15 million cu m/day. 
 
U.S. GEOGLOBAL ENERGY TO INVEST $1.5 BILLION IN GEOTHERMAL 
--------------------------------------------- --------- 
 
¶8. (U) U.S. Geoglobal Energy (GGE) in Chile announced plans to 
develop 500MW of installed geothermal capacity, involving 
investments of U.S. $1.5 billion, in Chile over the next ten years. 
GGE plans to begin by developing a $250 million, 75MW geothermal 
project in Tolhuaca (Region IX); construction will start in 2011 and 
create about 400 jobs. 
 
$235 MILLION WIND FARM - FIFTY 2MW TURBINES 
------------------------------------------- 
 
¶9. (U) Element Power, a Chilean firm, has submitted an environmental 
impact statement for a $235 million wind farm to be installed in 
southern Chile, the Gulf of Arauco.  This facility would have a 
capacity of 100MW and would be connected to Chile's central (SIC) 
grid via a new substation. 
 
SEVEN WIND FARMS PLANNED - TOTAL CAPACITY OF 850MW 
--------------------------------------------- ----- 
 
¶10. (U) Thailand-based Resource Group International (RGI) announced 
it is partnering with a Chilean subsidiary of ANPL to construct 
seven wind farms with capacities from 60 to 150 MW located on 
Chile's northern (SING) and SIC grids. 
 
CODELCO PLANS WIND FARM WITH 250MW CAPCITY 
------------------------------------------ 
 
¶11. (U) Chile's national copper company, CODELCO, presented an 
environmental impact assessment for a $700 million wind farm project 
in Calama with 125 wind generators, totaling 250 MW.  It includes 2 
sub-stations and transmission lines to connect to CODELCO facilities 
and the SING and is expected to generate 766,500 MWh annually (on 
average). 
 
GOC INVESTING $10 MILLION IN ALGAE STUDIES 
------------------------------------------ 
 
¶12. (U) To promote the development of Chile's biofuels industry, 
Energy Minister Tokman announced plans to invest $10 million in a 
consortium to study producing biofuels from algae.  According to 
Tokman, Energy Secretary Chu told him the U.S. could promote this 
initiative through the REC. 
 
DAM WATER LEVELS DOWN BY ROUGHLY 20 PERCENT 
------------------------------------------- 
 
¶13. (U) According to Chile's national water authority, Direccion 
General de Aguas, water levels were down by roughly 20% in May 
compared to the same month last year.  All dams except for Pangue, 
on the Bio-Bio River, show declines from 2008 levels. 
 
ELECTRICITY DEMAND UP, BUT 2009 FORECAST DOWN 
--------------------------------------------- 
 
¶14. (U) Minister Tokman announced that power demand on Chile's SIC 
grid increased 1.8% in May compared to the same month last year due 
to modest increases in industrial activity.  However, total demand 
this year has fallen 0.3% compared to 2008 and CNE reduced 2009 
demand growth projections from 4.7% to 2.1%. 
 
ELECTRICITY PROFITS OVER 150% 
----------------------------- 
 
¶15. (U) Profits for the Chilean electricity group, Compania General 
de Electricidad (CGE) increased by 158.5% year-on-year to $88.1 
million in the first quarter of 2009 due to increased exploitation 
revenues (up 9.8%), operating revenues (up 12.4%), and service 
sector profits (up 103%).  [Note:  CGE is one of Chile's leading 
electricity distributors, along with Endesa Spain's Chilectra; its 
holdings also include electricity generators and gas suppliers Gasco 
and Metrogas.  End note.] 
 
STANDARD & POOR'S: ENAP FROM A TO BBB 
------------------------------------- 
 
¶16. (U) The risk classification of Chile's national petroleum 
company, ENAP, went from A to BBB this month.  S&P cited ENAP's high 
level of debt and poor liquidity to justify the downgrade. 
URBAN