Recently, Claudio Huepe, Minister of Energy, stated that the closure of coal-fired plants scheduled for 2040, “is an excessive date and it is possible to bring it much closer”. In fact, the incumbent announced that a plan is being worked on to end coal by 2030.
Is it possible for Chile to meet this new goal? Eduardo Andrade, Executive Secretary of ACEN (Chilean Association of Energy Traders), reveals his vision regarding this deadline proposed by the government, in the following interview.
By Marina Parisi, Energy Magazine
Santiago de Chile.- Is it feasible to close all coal plants by 2030?
It is an ambitious and challenging goal. It involves solving challenges of different kinds, some of them very technical. For example, maintaining network inertia, which is provided by large rotating machines, some of which are precisely the ones that should be taken out of service.
In economic terms, what challenges does this government deadline pose?
The generation plants (thermoelectric) that are going to be withdrawn have relatively low variable costs. If they are replaced by units with higher variable costs, this could lead to an increase in the marginal costs of the system.
What other economic cost does decarbonization bring?
Eliminating coal means replacing it with other sources that must meet certain parameters, so as not to reduce the system’s resilience. Until now, the most accepted alternative is the massive incorporation of storage systems or batteries.
The latter could collide with the objective of keeping electricity rates at bay, since battery systems have a high cost.
In your opinion, is the withdrawal of thermoelectric plants being forced?
More than setting a date for the withdrawal of coal-fired or thermoelectric power plants, we believe that it is convenient to provide the conditions to allow the entry of other means of generation or storage, thus rendering thermoelectric plants obsolete.
Forcing its withdrawal without the electrical system being prepared only limits its capacity to respond to extreme events, such as those the country is experiencing today, on the verge of electrical rationing. Withdrawing plants, the only thing it achieves is to reduce supply and increase prices. Therefore, increasing supply with lower prices should be the way to go.
Should the government convene all the actors to design a plan and advance decarbonization together?
It is the responsibility of the government to generate the necessary signals to achieve the objective that is proposed. Moreover, to meet the decarbonization goal by 2030, decisive action by the State is required.
It would be highly complex to bring together actors with very conflicting interests and jointly design a roadmap, which not only has important technical components, but also relevant economic and financial implications.
The government can consult the opinion of market players, in order to improve its strategy. But it is the State that must take the steps to reach the goal.
Is it enough to leave the end of coal to the will of the private sector?
Electricity generation in Chile has developed successfully, under a set of established rules. These have allowed, for example, the incorporation of significant volumes of non-conventional renewable energies (wind and photovoltaic, mainly), without the need to resort to subsidies. This is unlike what has happened in most countries in the world.
To put an end to thermoelectricity, understood as the decarbonization process (thermoelectricity encompasses different types of fuels: coal, gas, diesel, biomass, hydrogen), this guide must be followed. In other words, establish the conditions under which it is no longer profitable to continue operating this type of unit.
How dependent is Chile on coal generation?
About 30% of the energy generated last April came from coal-fired or thermoelectric plants. Added to this is the recent announcement of postponing the closure of the Bocamina Power Plant (thermoelectric complex located in Coronel, Bío Bío Region), as a result of the critical situation that the electrical system is going through.
These two scenarios reflect very well the dependence that our energy matrix has on coal.
Is it possible that our matrix survives only with hydroelectricity and NCRE?
Hydroelectricity, which in the last century represented more than 70% of the country’s electricity generation, today is only equivalent to 23% of installed capacity. The figure is similar in terms of energy generated.
Given the effects of global climate change, it is very difficult for the hydroelectric energy generated to increase. Quite the contrary, it will decrease.
All of the above indicates that other elements will be necessary, such as storage systems (batteries), or the incorporation of thermoelectric generation from hydrogen and its derivatives. This is the only way to ensure an adequate supply.
In any case, the 2030 goal points only to the decarbonization of the network, which implies that those units that work with gas and diesel will continue to operate. These will help maintain system security.