‘There’s no energy cheaper than what’s not consumed’

Energy efficiency and emissions-reduction tailwinds are building in Chile’s business sector, emanating from state policy and the economic sphere.

The country has energy efficiency and climate change legislation in place and an energy efficiency plan is awaiting finalization. 

A second major driver is the recent unfreezing of electricity rates for regulated users and the looming prospect of higher public service charges for large industrial clients, together fueling interest in solutions geared to mitigating impacts on business operating costs.

Calls to action were made by multiple stakeholders during an energy efficiency conference in capital Santiago, where providers outlined a portfolio of efficiency solutions.

“The technologies are ready, the policies are ready; we need to learn from each other,” said Brian Motherway, head of the energy transition division of the International Energy Agency (IEA), during the event hosted by Chilean public-private development and innovation organization Fundación Chile, energy efficiency association Anesco Chile, Chile’s energy sustainability agency and the energy ministry.

This was echoed by Susana Jiménez, VP of the country’s trade and production confederation CPC and former energy minister, citing the importance of concrete actions. 

Delegates heard that a country-level task was to ramp up awareness of the energy efficiency solutions available and their financial and environmental benefits.

Chile is a regional energy efficiency trailblazer and, in terms of energy management rule implementation for large companies, was ahead of the EU.

Ignacio Santelices, sustainability manager at Fundación Chile, told BNamericas: “Energy efficiency is a key tool to advance in the energy transition and also to address the situation of high prices, since there’s no energy cheaper than what’s not consumed.

“To make further progress, it's essential for the private sector to consider energy efficiency as an opportunity to enhance the productivity of their processes, and we need a mature market of suppliers.”

A headline target in the energy efficiency law is an overall reduction in energy intensity of at least 10% by 2030 compared with 2019. For large consumers with energy management capacity, an average intensity reduction of at least 4% is mandated. Officials estimate that accumulated savings of over US$15bn and a 28.6Mt reduction in carbon emissions is achievable by 2030.

Anesco is working on the frontline, offering – via its members – a comprehensive set of tools.

Large consumers with energy management capacity are required by law to draw up and implement energy management plans, which constitutes a chief challenge for them today, Anesco president Roxana Silva told BNamericas on the sidelines of the event, where energy efficiency segment providers and potential clients networked.

Chile is home to around 300 large energy consumers deemed to have energy management capacity.

In terms of financing energy management systems and capital goods, Anesco members operate under the energy service company, or ESCO, model.

“Therefore, project implementation is paid for from savings achieved,” Silva said. “It’s a win-win for both and it assures us that the projects bear fruit for the companies and for us.”

Chilean ESCOs chiefly use green loans, as well as their own capital, to deploy projects. 

Anesco works across the energy efficiency value chain, from initial auditing to solution deployment, maintenance and monitoring and training.

“For us, it's important to be present at every stage of the whole energy efficiency cycle,” Silva said. “That’s because what we've been doing as an association for several years now is presenting comprehensive projects.”

In terms of trends, Silva said the operating environment was spurring interest, alluding to upward pressure on electricity overheads. 

“The market is moving quite quickly given the situation we have at the country level. Therefore, companies have realized they have to be concerned about their consumption,” said Silva.

A wide spectrum of solutions are in the shop window, including operational optimization apps, heat pumps, shared electric vehicle charging platforms, LED illumination systems, LNG fueling for heavy transport, high-efficiency pumps and motors, and (in the pilot phase) natural gas-green hydrogen blending.

In terms of electricity overheads, the government is mulling measures to finance an increase in the reach of a temporary end-user subsidy for vulnerable households. The proposal outlines where the US$300-350mn for the subsidy expansion would come from: a temporary increase in the carbon tax (currently US$5/t on fixed emitters), increased tax revenues from higher electricity bills and a temporary increase in the public service charge paid by large industrial consumers.  

Both households and SMEs are facing double-digit bill rises as rate increases in the regulated segment kick in.

Other takeaways

For the mining sector, a big challenge is shifting away from diesel as a fuel for powering vehicle fleets, said Marcos Cid, energy manager at miner Teck Resources Chile. The two options being explored are electricity and green hydrogen.

For the agricultural industry, Juan Carlos Sepúlveda, director of fruit industry association Fedefruta, said water and electric power were closely linked.

The industry needs to invest in renewables and become more efficient, he said.

Agrivoltaics – installing elevated solar panels on farmland – is considered to have great potential in Chile, especially since these systems can reduce evaporation of irrigation water and provide revenue during fallow seasons.