I´ve very quickly reached the halfway point of my time in Chile, and while I´ve been mostly focused on spending time with family and seeing the sites, my third goal was to learn and write about the state of environmental problems and policy in Chile. Since my last blog post, I´ve visited my grandparents´hometowns of Valparaiso and Viña del Mar, spent a relaxing weekend at the beach, and embarked on a 2 week exploration of the southern lakes region – I´m writing this post from Valdivia. But I´ll save my summaries of these beautiful places for a later post. For now, I´d like to share what I´ve learned about the history of energy resources in Chile from my own research, conversations with locals, and meetings with government officials and industry leaders.

To understand the history of energy development in Chile, we have to go back to the late 1800s, when most South American countries had already become independent, and when Chile, Peru, and Bolivia were fighting against each other in the War of the Pacific. Lasting from April 1879 to October 1883, this war resulted in a Chilean victory, changing Chile´s national borders to pretty much how they are today (with one small territory later given back to Peru). The disputed area was the very northern part of modern day Chile, stretching from Antofagasta up to Arica. When Chile won the war and gained this territory, it moved Peru´s border further north and cut off Bolivia´s access to the ocean.

The borders of Bolivia, Peru, and Chile after the War of the Pacific. Pink areas in Chile show the territory that was disputed.
But during this war, Chile also found itself in a side deal with Argentina that cleared up a long history of border disputes in Patagonia, and significantly influenced its energy independence. It was in Chile´s best interest back then to control all of the land at the tip of the continent, bordering the Strait of Magellan, which was a very important marine passageway. However, Chile´s president at the time, Aníbal Pinto, was worried that Argentina would get involved in the War of the Pacific on Bolivia and Peru´s side, so agreed to give Argentina a slice of the southern tip of Patagonia. The two countries signed the Boundary Treaty of 1881 that established the borders that are in most part consistent with the ones we see today.

Because it was such an unexplored region and the treaty wasn´t super clear, this wasn´t the end of border disputes between Chile and Argentina, but the treaty of 1881 gave Argentina ownership of land that was rich with petroleum, leaving Chile with very little petroleum. At that moment in history, Chile was more concerned about winning the north, which was rich in guano which was a key resources used for fertilizer, than controlling the entire southern tip of Patagonia. However, when the Haber Bosch process of artificial nitrogen was invented in Germany in 1909, guano resources became all but obsolete. Petroleum, whether we like it or not, became an extremely important energy resource, and a country´s domestic petroleum resources became an important factor in wealth and political relations on a global scale. Argentina´s share of Patagonia, added to its other petroleum basins, gave it a leg up. Chile, on the other hand, was left with very few petroleum resources. It had similar bad luck with other fossil fuels like coal and natural gas. Today, 70% of Chile´s energy comes from fossil fuels, 70% of which are imported from other countries.

When we look at installed energy capacity in Chile, fossil fuels still make up 57%. Another 29% comes from hydropower, with the remaining 14% from renewables, mostly biomass and wind. Chile relies heavily on hydropower because it is so mountainous and there is a LOT of natural watersheds here, especially in the south…I´ve seen some firsthand. But while hydropower is a lot cleaner than fossil fuels, it often causes a lot of other environmental problems. Building a dam completely changes life for people and animals downstream, and this has already caused a lot of problems in Chile, affecting local populations, wildlife, ecosystem health, and even the ecotourism industry.

A waterfall near Pucon, Chile. Chile has lots of hydropower capacity, but dam construction has created major environmental and social problems.
With only a small fraction of Chile´s current energy mix coming from sustainable renewable sources, there´s a lot of progress to be made. Luckily there´s a ton of potential solar capacity in the north, by the Atacama Desert, and some potential wind capacity in the north and central regions. In my last blog post, I talked about the idea of Chile´s geography as a limiting natural factor, and this is completely applicable to its energy system as well. As a long, skinny country, Chile has access to a little bit of everything, like eating at a tapas bar – a bit of desert here, some rain and thick forests there, a milder central region good for agriculture, and a few glaciers scattered around. We saw this in the story about petroleum in Argentina, and because of its varied terrain and ecosystems, Chile also has some capacity for wind and solar. The problem is making sure that there are always enough resources to go around, and that they are either in the right place for people to access them, or can be easily distributed. Even though Chile is a relatively small country, with a population of 18 million, nearly a third of them live in Santiago. There are some energy sources near Santiago, but a good portion of the energy potential, especially renewable energy potential, is nowhere close to Santiago – bringing up the problem of transporting the energy. Chile is made up of four different electrical grids, which are very hard to link. So the next step for Chile, then, might be to focus on building solar infrastructure in the north and figuring out how to transport it to the populated central region.

One company has already figured out how to do this. I met with the founders of Valhalla, a private energy project that plans to build a huge solar array in the Atacama Desert, which has the highest solar radiation in the world. The problem is not only that the Atacama Desert is far away from Santiago. There is also an intermittency problem – the sun shines during the day, and most of the electricity demand is at nighttime, when everyone comes home from work. But Valhalla has thought of a solution to this too, coming up with a special kind of battery to store the energy until people are ready to use it: water. By linking the solar array to a pumped storage plant on the northern coast, Valhalla will send half of the produced solar energy straight to consumers, while the other half will provide the energy to pump ocean water up a hill to an elevated basin during the day. At night, they will let the water roll back down the hill, generating added electricity for consumers during peak hours. With this model, Valhalla says they will produce the ¨cheapest unsubsidized solar energy in the world.¨ In addition, the northern and central electrical grids are currently in the process of getting connected, so some of the energy produced by Valhalla´s project will be able to serve Santiago. Valhalla has already gone through the government permitting process, and now is just waiting to secure the remaining finances before starting construction. It´s also important to note that they went through a long process to work in partnership with the local community next to their planned pumped storage plant to ensure economic and cultural benefits for the fishing village.

It´s true that Chile has a lot of room for improvement when it comes to renewable energy use and generation, but Valhalla´s project shows that there are already smart people here working on real solutions. In talking with family and friends here, I´ve also seen the cultural appetite for change. People recognize that Chile has the potential to greatly increase its renewable energy load, and that energy demand in Chile will only continue to increase with population growth and concentration in the central region. And I´ve already observed people taking the initiative to practice sustainability and use renewables on a local scale. Just today, I visited a floating restaurant in Valdivia that is completely self sufficient, producing its own electricity with solar panels and using plants onboard to filter water. Next to it, several solar boat taxis were waiting to take people on a river tour of the city.

It´s been a blast to learn about energy and the environment in a country that´s close to my heart, and one that´s had a particularly interesting history shaped by its geography and natural resources. Tomorrow I head to the island of Chiloe, where my ancestors first came 500 years ago when they arrived in Chile, and where I hope to learn about the fishing industry. Then I head to Puerto Varas, an original German settlement that is now a thriving city, before heading back to Santiago. In my next blog post, you´ll see a more complete summary of my time in the southern lakes region.