Chile, the testing ground for the energy transition

First of all nature was particularly generous, then human intervention played a decisive role: this combination has led Chile to become one of the most pioneering countries on the journey through the energy transition. There is no lack of clean energy resources. In the north of the country the Atacama Desert boasts some of the world’ highest insolation levels, making it ideal for photovoltaic energy. In the south, the strong winds are harnessed to produce wind power. Furthermore, in many parts of the country watercourses offer good conditions for hydroelectric power and there is also potential for geothermal energy. But in order to ensure that these natural resources are transformed into a genuine boom in the production of renewables, patient and determined work has been key. Therefore, when the Chilean government decided to invest substantially in the country’s renewable energy resources, aiming to create an energy system that is 100% sustainable with the goal of closing all coal-fired powers stations by 2040, the role of people, and in particular our Group, became fundamental. Renewables across the board Enel was, in fact, unrivalled in its ability to seize the opportunity offered by the Chilean government when it sought companies to invest in renewable energies. For a Group like ours, which is constantly gathering momentum as it accelerates on the journey towards the generation of the future, this opportunity was one to be grasped immediately. “We already hold a leadership position in the country concerning renewable energies, with a vast portfolio that we are constantly expanding and improving,” explains James Lee Stancampiano, Enel’s Head of Global Power Generation Argentina and Chile. “Our portfolio of active plants, with 7.2 GW of installed capacity, is extensive and diversified. We have around 1.3 GW under construction and by 2023 we will have 2.4 GW in terms of renewable projects in operation. More than 4,000 people are involved in the construction of our plants in the country, generating energy from four different technologies: solar, wind, geothermal and hydroelectric. Nothing like this is happening in any other country in which we are present.” This notable development of renewable generation is matched by commercial activities that are similarly well developed. In the last three years we have signed more than 300 Power Purchase Agreements (PPAs) for the sale of more than 150 TWh of electricity, 75% of which is certified renewable energy. This shows that clients are becoming increasingly sensitive to issues of environmental sustainability, and for this reason they are our best allies in the energy transition. In 2016 we set up the first certification scheme in Chile that guarantees clients the supply of electricity obtained 100% from clean sources. The records set in Chile Chile also has a special role because, as Stancampiano explains, it has always been an important testing ground for us. Here we created our first large-scale industrial solar plant (Diego de Almagro), we installed the first bifacial photovoltaic panel, we built Latin America’s first geothermal plant (Cerro Pabellón), we carried out our first experiments in the field of wave energy and, for the very first time, powered a large astronomical observatory (La Silla) with clean energy.” Chile continues to be a test bed for innovation. The country is also committed to the development of green hydrogen, which is extracted from water through electrolysis powered by renewable energy, and has launched a national strategy that aims to install around 25 GW of this technology by 2030. In the Magallanes region in Patagonia, for almost three years Enel has been developing the first green hydrogen power plant in Latin America. It is equipped with a 3.4 MW wind turbine and a 1.25 MW electrolyzer. This is in collaboration with Andes Mining & Energy (AME) and other international companies (such as Siemens, ENAP and Porsche). The plant, which will enter into operation in 2022, will further increase the pace of the energy transition and will be a model that we will export to other countries. The other large and fundamental tool for the spread of renewable energy sources is energy storage: we are also developing a strategy in this area and in the coming years it will result in a total of approximately 1.2 GW of battery power. A just transition At the same time, Enel in Chile is helping to advance the other cornerstone of decarbonization – the abandonment of coal as a fuel – at a particularly fast pace. We have closed two of our coal-fired plants: Tarapacá in 2019 and Bocamina I in 2020, three years ahead of schedule. The third, Bocamina II, is due to be closed in May 2022, 18 years ahead of schedule. With this, Enel will become the first company in Chile to quit coal. This process is being conducted in line with the principles of the just transition, because, as Stancampiano emphasizes, “we aim to leave no one behind.” That starts with the people who worked or work at the plants that have reached the end of their activities: as part of an agreement with the union organizations, they have been offered the chance to pursue personalized reskilling pathways for redeployment in another part of the organization, mainly in the sector of renewables. At the moment, more than two thirds of those concerned have accepted this opportunity, while the remainder have chosen to take advantage of early retirement with beneficial conditions. A similar pathway has been created for our contractors, who have been regularly offered meetings and refresher workshops concerning the demand for new forms and methods of production. In this way we are contributing to the technological development of the country and the growth of small and medium-sized enterprises. Creating shared value For our Group “leaving no one behind” means above all giving the utmost consideration to the needs of the local communities. From an economic point of view, Chile is one of the most developed countries in Latin America and was the first South American country to join the OECD, the Organization for Economic Co-operation and Development (in 2010). On the other hand, like other countries in the region, substantial social and economic disparities persist. 20% of the population lives below the Multidimensional Poverty Index: a condition that weighs particularly heavily on indigenous groups and rural areas. For this reason Enel manages all of its projects – both those for construction of renewable plants and those for the decommissioning of thermoelectric plants – in line with the UN’s Sustainable Development Goals (SDGs) and the model of Creating Shared Value (CSV), which combines the production of value for the company with the specific interests of the population. From this perspective our renewable plants contribute to bringing sustainable and reliable electricity to a large part of the population that does not have sufficient access to it. So far, almost 300 households with no access to energy have benefited from our electrification in rural areas, out of the more than 500 which are planned by 2023. Moreover, the work at the power plants and construction sites is flanked by projects (254 in all) carried out in partnership with 130 local communities (45 of which are native populations). Most of these projects are focused on local development and consist of boosting the traditional local economy based on fishing and agriculture, fostering added value for their products while making their processes more efficient and sustainable through specific training. Leading the Energy Transition We are also supporting energy efficiency through the digitalization of the grids, and in the big cities we are extending the electrification of final consumption. Our approach, which is based on sustainability and the circular economy, is helping Chile to reach the environmental targets set out in the Paris Agreements, and it has also earned the Group some important accolades: Enel Chile is in first place in the leading rankings for the sector, such as DJSI Chile, MILA and Emerging Markets. In all of our activities we support gender equality and continuous dialogue with all stakeholders. We are all working together to achieve a single common goal: to protect Chile’s ecosystems and make the best use of the extraordinary natural resources of this magnificent country.

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Chile, the testing ground for the energy transition

Chile, the testing ground for the energy transition

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