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Chile's president announces plan to fight energy crunch with both renewables and fossil fuels

SANTIAGO, Chile - President Michelle Bachelet announced Thursday she will tackle Chile's energy crunch by looking to the wind and sun as well as fossil fuels in a $650 million plan for meeting rising demand.

Among other things, she said solar panels will be installed on all public buildings over the next four years. The government will give Chile's state oil company more money to boost exploration and will build a liquefied natural gas terminal in the central-south region.

Bachelet unveiled an expansion to an LNG port in the mineral-rich north Wednesday, pointing to it as an example of clean energy that won't harm the environment or local communities. But imported gas is costly, and Chile is looking for domestic power sources.

"Chile has a tremendous opportunity to turn into a regional power if we take advantage of renewable sources," Bachelet said. "And I'm not just talking about water (hydroelectric plants), but also the potential for wind, solar, thermal, and we're going to give a push to initiatives of this type."

That could please environmentalists who have blocked coal-fired power plants and hydroelectric dams in Chile's courts. But some experts say alternative energy alone can't meet the growing needs of the economy, which is the world's leading producer of copper.

Studies say Chile must triple its current 18,000-megawatt capacity within 15 years to continue expanding its stable economy. It now depends on hydroelectric dams and imported fossil fuels for nearly all its power.

Bachelet approved dozens of coal-fired power plants and hydroelectric projects in her first term as president, in 2006-10, but she now opposes them.

Like most Chileans, she also opposes construction of the HidroAysen project, which would tame two of the world's wildest rivers and build power lines from hydroelectric plants in Patagonia to the grid that supplies the nation's capital.

Bachelet's new economic policies, including raising corporate taxes, have made some business leaders nervous amid a plunge in copper prices. But key industry executives reacted positively to Thursday's announcement.

"Dealing with our energy is one of the most relevant issues in order to encourage investment and growth in Chile," said Bernardo Larrain Matte, chairman of the Colbun energy group.

Joaquin Galindo, CEO of electricity generator, Endesa Chile, agreed with Bachelet that Chile must diversify its energy sources.

"Anything that means increasing supply is very positive," Galindo said.


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