Coal Phase-out in Chile

Since the 1990’s, Chilean economic growth has led to a steady increase in the country's energy requirements. To guarantee sufficient energy supply and following the Argentinian natural gas shortage crisis in 2005, new coal-powered thermal plants were constructed. However, the effects on the climate can be seen today: the entire Chilean energy sector is responsible for 78% of the country's emissions, 32% of which is accounted for by electricity generation. 40% of Chile's electricity generation is still based on coal. There are 25 (before 28) coal-fired power plant units with a total installed capacity of 5,195MW, operated by three multinational and one national company. Moreover, 86% of the coal is imported.

 

As future prospect, however, Chile has the potential to offer more than 1,800 GW in renewable energy. The ambitions to decarbonize are underlined by an intended complete coal-exit. A coal commission to develop recommended actions for the government and evaluate various exit strategies was founded in 2018. On June 11th, 2018 the first meeting of the Chilean Coal Commission took place with 25 representatives from companies and institutions. Until January 2019, a total of nine meetings of the Coal Commission were held. On June 4th, 2019 Chilean President Sebastian Piñera announced the start of the phase-out with the decommissioning of eight coal-fired power plants by 2024. Official protocols have been signed with each of the four coal-fired power plant operators, in which the companies agree to decarbonize and declare their willingness to invest in renewable energies at the same time.

These concrete commitments were extended at the COP25 (Madrid) by adding two more coal plant units to the first phase-out period. In May 2020, the advanced closure of another two coal-fired power plants was announced. A total of twelve plants with 1,731 MW are now scheduled for decommissioning by 2024, which will reduce the country's installed coal-fired capacity by one third. As of March 2020, 334 MW have already been decommissioned. The subsequent shutdowns after 2024 are to be defined depending on the development of Chile's electricity demand and the speed at which renewable energies are added and integrated into the Chilean power grid. By 2040 at the latest, all Chilean coal-fired power plants are to be shut down.

Topics covered by the Round Table on Coal Phase-out and/or Reconversion of Coal Units

The necessary restructuring of power generation has wide-ranging implications in several areas. On the one hand, the integration of more variable renewable energies like wind and solar into the power grid must be ensured. The stability of the Chilean electricity system (linear grid with island character) and the low age of some existing coal-fired power plants (64% of the power plants are less than 10 years old) were identified as particularly sensitive issues. On the other hand, the economic dependence of communities where coal-fired power plants operate and people work in coal mines are a decisive issue when economic alternatives are lacking. A conversation with the civic society is also required in order to gain and maintain social acceptance for wind parks and photovoltaic plants. Hence, support of the communities for a "Just Transition" is of particular importance, as well as the finding of technical-economic alternatives for the use of the infrastructure of decommissioned coal-fired power plants. One example is the possible conversion of a coal plant into an energy storage system for renewable energies (so-called "Carnot-Battery"), a project which is currently being discussed by GIZ (together with the German Aerospace Centre DLR) and the operators.

To facilitate the political steps taken in Chile, the GIZ was represented in the coal commission and has created a recognised factual basis for the coal phase-out through basic studies within the framework of the BMU-funded programme 4e (Project “Decarbonization of the Chilean energy sector”).

In a High-Level (Virtual) Steering Committee on January 29, the Chilean Minister Jobet and State Secretary Feicht agreed to establish two working groups, “Carbon Neutral Innovations” and “Carbon phase-out, renewables phase-in”. In the latter the BMWi and the Chilean Ministry of Energy work together on ways how a successful and just transition process from fossil to renewable energy system can be pursued.

Further Reads

1st Bilateral Meeting

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1st Steering Committee

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Just transition, but how?

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Carbon Neutrality and NDCs (Chilean Ministry of Energy)

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