The Chilean government has unveiled its new energy plan strategy, which focuses on the 2015-2019 period but also sets long term targets. The strategy aims to reduce the marginal costs of electricity by 2017, by 30% in the Central Interconnected System (SIC), from US$151.36/MWh to US$105.96/MWh in 2017, and to cut by 25% the bid prices of electricity supply in the next decade to homes, businesses and small enterprises. To this end, Chile aims to develop hydropower and thermal projects and to lift the barriers for Non Conventional Renewable Energy (NCRE); under the existing legislation, renewables are expected to account for 20% of power generation by 2025. The energy strategy aims to cover 45% of the new installed capacity between 2014 and 2025 with renewable capacity. To better develop energy infrastructures, national energy company ENAP should be strengthened (capital increase). A Project Management Unit will be created within the Energy Ministry. Land for power generation projects could be auctioned and the two electricity grids, SIC and SING could be unified. Chile will promote the use of LNG in power generation as substitution fuel for diesel, but also in industrial and residential use. ENAP will offer gas contracts and regasification capacities from the existing two LNG import terminals; in the long term (after 2020), the Quintero LNG terminal will be expanded to serve two additional CCGT plants and ENAP will develop a new LNG terminal in the central-south region. Chile also sets an energy savings target of 20% by 2025, in order to save 20 TWh/year (the equivalent of 2 GW of coal-fired capacity).
The country is suffering from a lack of domestic resources. Chile is reliant on gas imports from Argentina, which may interrupt gas supply to meet its growing demand, and can't purchase gas from Bolivia due to their border dispute. Hydropower generation was also harmed by successive droughts in recent years and new hydropower projects are facing rising difficulties to get environmental approval.
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