Chile consumed 22,362 gigawatt-hours (GWh) of electricity in 1992 (see Figure 1). Fifty-nine percent of this is consumed by the industrial sector. The commercial, public and residential sectors together consume 30 percent of the country's electricity. Residential consumption is estimated to be twice that of commercial. Transmission and distribution losses are also significant at 14 percent.
FIGURE
1: ELECTRICITY CONSUMPTION BY SECTOR, 1993
Motors and lighting are the two largest end-uses in Chile.25
Motors consume an estimated 61 percent of Chile's electricity
while lighting takes up 18 percent.
Chile has not yet had a systematic, end-use study to determine its energy efficiency potential. Individual studies have researched segments of the economy and one study extrapolated efficiency potential from studies performed in other countries.26
Chile's industrial sector is the country's economic foundation
and copper mining is its most important segment. The country is
the world's largest producer of copper. Forty percent of its
export earnings are linked to the mining industry. Chile's
publicly-owned copper company, Codelco, produces 13 percent of
the world's copper, accounts for one quarter of Chile's exports,
and generates one-fifth to one-tenth of national revenue. Higher
copper prices in recent years have propelled the industry to
significant growth and new investment -- estimated at nearly US$5
billion over the next decade.27 Chile is one of the
few countries in the world that is increasing copper production
through investment in new infrastructure projects.
The industrial sector has the greatest potential for improving
electrical end-use efficiency. Between 1994 and 2000, this sector
plans to invest US$8 billion in new infrastructure. This
investment will include motive power and industrial controls to
operate large pumps and fans, move materials and perform work and
provides an excellent opportunity to market energy-efficient
equipment.
FIGURE 2:
ELECTRICITY END USES IN THE INDUSTRIAL SECTOR
Over the last decade, electricity use by the Chilean
industrial sector increased by more than 30 percent.28 Overall
industrial energy intensity has increased by 5 percent during the
same time period. The National Energy Commission (CNE) attributes
higher energy intensity to increased mechanization, fuel
switching and changes in the productivity of industry. The CNE
considers this increase in energy intensity to be an indication
that there is an urgent need for significant improvement in the
industrial sector's energy efficiency. The CNE concludes that a
targeted industrial efficiency policy would reduce the alarming
increase in energy intensity in industry.29
Despite a lack of end-use data for Chile, universities,
international aid agencies, and industries have conducted
numerous audits of energy saving potential in industry. These
have concluded that industry could significantly reduce energy
costs through increased energy efficiency.
Table 5 shows the potential electricity savings
in Chile's six largest industries.30 These industries
consume 80 percent of the industrial sector's electricity and
almost half of the country's total. The study estimates that with
an investment of between US$220 and $450 million, the six
industries could save 28 percent of their electricity through
increased energy efficiency. Twenty percent of these savings
would have a pay back time of less than one year while the other
80 percent would pay back over a 3 to 7 year period.
TABLE 5: POTENTIAL ENERGY EFFICIENCY IN CHILEAN INDUSTRY
| Industry | Consumption
(GWh) |
Potential
Savings (GWh) |
Potential
Savings ( percent) |
| Copper mining | 5,065 | 1,524 | 30% |
| Pulp and Paper | 1,621 | 410 | 25% |
| Iron and steel mining | 642 | 163 | 25% |
| Cement | 346 | 155 | 45% |
| Food processing | 583 | 102 | 18% |
| Others | 1,150 | 260 | 23% |
| Total | 9,407 | 2,614 | 28% |
SOURCE: "POTENCIAL DE
AHORRO DE ENERGÍA ELECTRICA:
GRAN INDUSTRIA Y MINERIA" COMISIÓN NACIONAL DE ENERGÍA,
1993.
The following are two case studies of energy efficiency potential in Chile's copper and textile industries.
The Corporación del Cobre (Codelco) is Chile's publicly-owned
copper company and the country's industrial giant. In 1990 it had
sales of US$3.2 billion, investment projects of US$330 million
and 37,000 employees. Just one Codelco mine spends US$50 million
on energy each year. Over the next 4 years, Codelco plans five
new infrastructure projects worth nearly US$2 billion.
Codelco faces a number of challenges that are relevant to energy efficiency:
Divisions within Codelco have begun to respond to these
pressures by improving the energy efficiency of the mining and
production processes. As a first step, Codelco evaluated the
energy efficiency potential in motors and transformers in its
Chuquicamata mine, the world's largest open pit copper mine. The
study found that motors consume 95 percent of the mine's
electricity. One phase of the copper mining process, the
concentrator, consumes almost half of the mine's electricity.
Installation of energy-efficient motors would reduce the mine's
annual electricity consumption by 55 GWh, saving US$3 million per
year in electricity costs.32
Large industries in Chile, including Codelco, are becoming
interested in the concept of energy services companies. IIEC and
the University of Chile have a contract with Codelco to introduce
energy efficiency criteria to the company's management. The
project will also investigate the feasibility of a division-wide
policy of life-cycle costing for all energy-using equipment.
There are approximately 4,500 companies in Chile's textile
industry, representing 18 percent of Chile's 25,000 companies.
Like most Chilean industries, textile manufacturers use out-dated
and inefficient technology. The fabrication of fiber, thread and
material is the most energy-intensive process in the textile
industry, accounting for an average 15 percent of total
production costs. A study of the potential for energy savings in
the textile industry suggests that minimal energy efficiency
investments could realize significant energy savings and a return
on investment within one year.33 Principal
opportunities for energy savings exist in the generation of steam
vapor. Insulation of valves and tubes, reduction of the
evaporation from cleaning machines and the introduction of
controls would greatly enhance the efficiency of the
manufacturing process.
Chile's construction industry experienced a boom in the early
1990s driven by residential high-rise and commercial buildings.
The boom slowed in 1994 as construction of residential buildings
declined, although new commercial buildings continue to spring up
around Santiago.34 The industry expects the building
sector to continue to enjoy strong growth.
Construction activity varies from region to region. Small- and
medium-sized cities outside the Santiago area are growing
rapidly. The city of Temuco, for example, is one of the fastest
growing cities in all of Latin America.
Together, the commercial, residential and public sectors account for 30 percent of electricity consumption in Chile.
FIGURE 3: ESTIMATED END USE ELECTRICITY
CONSUMPTION
IN THE RESIDENTIAL AND COMMERCIAL SECTORS
SOURCE: VALDES-ARRIETA, 1993.35
Lighting is an important end-use in both residential and
commercial buildings, representing 30 percent and 50 percent of
total consumption respectively. Refrigeration is also a
significant residential end-use.36
Residential and commercial customers pay as much as US$0.11
per kWh for electricity. In a country with a climate like that of
northern California, these rates make investments in energy
efficiency very compelling. Chile's climate varies widely from
the north to the south. However, Santiago's climate is similar to
that of San Francisco. The south is generally 5 to 10 degrees
colder than Santiago and the north is 5 to 10 degrees warmer.
Studies suggest that two-thirds of energy losses in the building
sector are through poor building design and inefficient
appliances. Investment in insulation in Santiago's buildings
would pay for itself after one winter season. In the colder
climate of Punta Arenas in the far south, such an investment
would take only two weeks to pay back.37
The barriers to energy efficiency in Chile are similar to those in other developing countries, namely:
Energy-efficient technologies are not yet integrated into
building design. However, the construction industry has begun to
include heating, ventilating and air conditioning (HVAC) systems
in urban residential and commercial buildings. This building
innovation has created significant opportunities for building
energy management systems. Until only a few years ago, new
thermostat systems in Chile were quite primitive. The growing
sophistication of the architecture and construction industries
and the presence of large multinational companies like Honeywell
and Johnson Controls have expanded the market for energy
management systems and the variety of products available.
Significant advertising and marketing efforts by companies
like Philips have also increased the installation of some
energy-efficient technologies, such as compact fluorescent lamps,
in apartment and office buildings.
The widespread use of energy-efficient products would
significantly reduce the life-cycle cost of operating buildings
in Chile and increase the comfort of building occupants.
Building codes that govern energy performance do not exist in
Chile. However, the success of Chile's municipal housing design
project may compel the Ministry of Housing to develop an energy
performance code. In the meantime, a team of Chilean building
design experts and policy makers is convening a panel with
counterparts from Brazil, Argentina, Peru and Uruguay to form a
regional building code.
Current building ordinances categorize buildings based on
their purpose (single family, high-rise apartments, row houses,
etc.) and on the "quality" of materials used in
construction. It is not clear how the Housing Ministry arrived at
these categorizations but it is certain that energy efficiency
was not a factor. For example, houses designed with aluminum
windows are considered higher quality than a house with wood
windows, even though wood windows are usually more
energy-efficient than aluminum. Chile's municipal energy
efficiency programs and current efforts to develop regional
building codes may force a reevaluation of these ordinances.
There have so far been very few energy efficiency projects in
the commercial and residential sectors. The most successful
project to date improved the level of insulation in new houses
and buildings. The following is a description of that project.
Most houses and buildings in Chile are not insulated. To help
change this situation, the University of Chile joined with
insulation manufacturers and an architect to encourage the
installation of insulation in new homes and buildings. The
project was situated in La Florida, a municipality near Santiago.
As part of the project, the municipality of La Florida reduced
building permit fees for architects and builders who specified
thermal insulation for new buildings. The municipality prorated
the reduction in fees based on the thermal efficiency factor of
the design (G Factor). Between 1991 and 1993, the project
resulted in the insulation of 1,491 buildings, mostly private
homes, with a total area of 100,000 square meters (1,000,000
square feet).38 The project's success has motivated at
least three other regions in Chile to adapt the model for
implementation in their own municipalities.
FIGURE
4: END USE ELECTRICITY CONSUMPTION IN THE PUBLIC/MUNICIPAL SECTOR
SOURCE: VALDES-ARRIETA
Chile's municipalities have led the country in implementation
of several energy efficiency projects, including the
above-mentioned insulation project and the following highly
successful streetlighting retrofit project.
Chile's municipal streetlighting project was developed by the
National Energy Commission (CNE) to raise awareness of energy and
electricity costs among municipalities.
The pilot project took place in the northern city of
Antofagasta. The municipality replaced over 7,000 streetlights in
the city with energy efficient streetlights at a cost of
US$675,000. The CNE forecast monthly savings of US$25,000 from
reduced electricity consumption but this forecast did not
consider reduced maintenance costs. The new lights required no
maintenance for two years. Instead of taking 27 months to pay
back the initial investment, the Antofagasta project took only 17
months.
In addition, the project had the following economic and environmental benefits:
FIGURE
5: STREETLIGHTING PROJECT SUMMARY
As of January 1994, 150 municipalities around the country were implementing similar streetlighting projects. At the national level, these projects could yield several additional benefits:
Country-wide replication of this project could save US$11
million in annual electricity costs (amortized over 6 years),
equal to the cost of a 33.5 MW central generating facility.
Although it is not the focus of this study, market
opportunities for energy efficiency exist beyond electricity.
Chile is highly dependent on non-renewable resources and imports
90 percent of its petroleum, mostly for transportation.
Santiago's automobile fleet is growing rapidly, exacerbating
the city's air pollution and congestion problems, despite the
fact that public transportation provides 50 percent of daily
trips in the city. Transportation and its related problems are a
policy priority in the capital region and among other growing
cities. Policy makers have already required all new vehicles to
be equipped with catalytic converters. Non-catalytic automobiles
are restricted from circulation in the Santiago metropolitan area
on certain days of the week during winter and spring. Policy
makers are also beginning to restrict the number of buses that
can operate in Santiago's downtown. Private bus owners must now
bid on downtown bus routes in order to operate along them.
Policy makers, transportation professionals and citizens of
the city agree that more political and technical measures must be
implemented in order to avert further deterioration of Santiago's
transport system. There are several factors that contribute to a
potential market for economically-viable alternative
transportation technologies:
In the long term, possible opportunities for investment in alternative transport technologies are:
US firms with proven transport innovations that combat
congestion and air contamination face an open market and welcome
political support in Santiago and other large Chilean cities.
IIEC's Latin American office in Santiago is the best initial
contact for transport firms interested in the Chilean market over
the medium- to long-term.
The northern region of Chile offers favorable conditions for
the use of solar energy, including solar hot water heating for
homes and hospitals and generation of electricity for industry.
Chilean consumers use several times more fuelwood than other
developing countries, primarily for water heating and cooking.
Installation of solar cookers and hot water heaters could
significantly reduce the environmental and economic costs of
fuelwood consumption. According to the National Energy
Commission, the cost of installed hot water heaters is roughly
US$500 per square meter and that of solar cookers is US$100 per
square meter.
Santiago requires new wood stoves to comply with Oregon State and US Environmental Protection Agency regulations. As a result, all wood stoves sold in Santiago are high-efficiency models. There is currently only one manufacturer of high-efficiency wood stoves supplying this market. The stoves are expensive and sold in a niche market catering to higher income residents of the city. There is room for foreign suppliers in this market.
25. Felipe Valdes Arrieta,
"Saving Energy in Chile: An Assessment of Electricity Use
and Potential Efficiency Improvements", IIEC and NRDC, May
1993.
26. Ibid.
27. "Proyecciones Empresariales, Económicas e
Internacionales 1995", Estratégia Diario, Santiago,
December 1994.
28. "Potencial de Ahorro de Energía Electrica:
Gran Industria y Mineria, Comisión Nacional de Energía, 1993,
p.16.
29. Comisión Nacional de Energía, 1993, pp. 14-17.
30. "Potencial de Ahorro de Energía Electrica:
Gran Industria y Mineria", Comisión Nacional de Energía,
Santiago, Chile, 1993.
31. Final Report, "Workshop on Trade, Environment
and Sustainable Development in the Americas", Ottawa,
Canada, October 1994.
32. "Energy Efficiency Applied to a Copper Mining
Company", Leibbrandt and Lowick-Russell, Codelco, 1994.
33. "Programa de Uso Eficiente de la Energía en
La Industria Textil", Comisión Nacional de Energía, GTZ,
Santiago, Chile, Septiembre 1992.
34. Indicadores Mensuales: Edificación, Instituto
Nacional de Estadisticas, Julio 1994, pp.21-23.
35. These are very rough estimates and are not based
on utility sales data.
36. Valdes Arrieta, May 1993.
37. Personal communication, Gabriel Rodriguez,
Universidad de Chile, IDIEM, Sept. 1994.
38. "Tecnología y Gestión para Mejorar Las
Condiciones de Habitabilidad Térmica en Las Edificaciones",
José Pedro Campos Rivas, MINVU, November 1994, p.1.
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