Sustainable Power Production in Chile

Abstract: Summary This report is about how Chile can find its way towards a sustainable power production. The two major Chilean electric systems are modeled and optimized by a special optimization program for energy systems called MODEST. The model is then altered so that new sustainable energy sources can be put into the system. If these new energy sources are more economically beneficial they will enter the system. The time period that is modeled is the years 2006 to 2010 and the demand for electricity is rising between these years. 7 different scenarios where the terms for fossil fuels and renewable energies are changed in different ways is tested to see what can be done to introduce more sustainable energy into the system. The different changes include tax on carbon dioxide emissions, subsidies for new sustainable energy sources and limits in carbon dioxide emissions. The results show that: • Taxes are an ineffective way to get more sustainable energy but can work to reduce emissions. The tax could be used to fund subsidies for cleaner energies. • Subsidies can work to bring in more sustainable energy and if there is a possibility to use the clean development mechanisms available within the Kyoto protocol. Then it does not have to be subsidies but investments from companies in countries that have signed the Kyoto protocol. • Waste to energy is the most cost effective new energy source, although it is questionable however this is really a renewable energy source. The author thinks that although it might not be renewable it is certainly sustainable within a foreseeable future. • A natural gas shortage will have serious effects on the system and should be avoided at least until there are enough alternative fuels available. It is therefore important to continue encourage the development of sustainable power sources. • Carbon dioxide limits could be used in Chile. If they are at reasonable levels they do not need to cost that much and could really help the sustainable energy sources to become more interesting for investors.