With the aim of supporting the development of an energy matrix powered by 90% renewable energy by the year 2050, Rodrigo Moreno, researcher at Chile’s Complex Engineering Systems Institute (ISCI), and his team have collaborated with the Ministry of Energy in the different stages of this challenge for the nation.
The first step was the joint design of a methodology to study a range of energy scenarios for Chile. They then developed mathematical models that determined the viability of aspiring to decarbonization, while establishing intermediate milestones. With this evidence, they worked with different actors in the energy industry to evaluate how to disconnect the various plants. At present, they have taken on the challenge with authorities of developing science-based public policies and regulations that make it possible to meet the objective of a more energy-sustainable Chile.
The collaboration between Rodrigo Moreno, an academic from ISCI’s Energy Systems Engineering group, and the Ministry of Energy dates back to 2015, when he led the academic team that supported the development of Chile’s first energy policy. Since then, he has worked on various initiatives, most notably in 2018 when he and his team were invited to design the base methodology behind the Long-Term Energy Planning Process. This roadmap projects Chile’s energy future over a 30-year horizon and proposes specific objectives, among them, an energy matrix based on 90% renewable energy by 2050, according to its latest version.
At present, 50% of Chile’s annual electrical energy comes from thermal plants (coal, gas, and diesel), and 50% from renewable sources (considering hydraulic, wind, and solar generation). Of that percentage, the country stands out for having one of the highest levels of solar energy penetration in the world. While 50% renewable energy in the matrix is by no means a low figure, Chile has the perfect geographical conditions and the natural resources required to further develop its potential.
“At the geothermal level we are in debt. We have less than 100 MW installed, and the potential is 4,000 MW. Why is that so if geothermal energy is a proven and economical energy? Because Chile offers no adequate regulatory incentives to tempt investors to install this type of technology. On the other hand, what has proven convenient in terms of investments are solar plants, but the system was saturated due to a lack of infrastructure. For example, the installation of batteries allows the energy produced by solar plants to be transferred into the night and get more out of solar energy. Currently, the ‘rules of the game’ are not designed to make storage a profitable business, so we are not moving ahead as fast as we should. A similar thing occurs with wind energy, which, being less economical than solar plants, has the potential to present greater benefits due to the more distributed contribution of generation throughout the day. Chile also has hydroelectricity, which is at risk due to the effects of climate change, although new plants can be developed sustainably and some existing plants can be adapted and turned into pumping systems,”
says researcher Rodrigo Moreno.
Potential aside, academics confirm that research, technology development, and progress in regulation are required to achieve the commitments of the Long-Term Energy Planning currently in force.
How can we make the decarbonization of the energy matrix viable?
Making a significant shift in the country’s energy sources from coal to renewables is a major challenge, which has required researchers to develop advanced optimization models.
Many tests are carried out by applying optimization models to determine the optimal portfolio of investments to replace coal plants in the country. This replacement is designed minimizing costs, considering reliability constraints and quality of supply. Finally, the model provides a solution with a list of items and conditions that enable the disconnection of each specific plant, according to its characteristics.
What is innovative about this model is that it not only considers the replacement of coal-based energy with renewable sources in its projections, but also other relevant variables, for example the development of storage systems such as batteries or new transmission lines.
The model shows that the optimal level of decarbonization depends on the value of green taxes. The current tax of US$5 per MWh is not conducive to extensive or early decarbonization, while a higher tax of the order of US$30-35 per MWh could justify a 100% retirement of coal plants by 2030. However, this will only be possible if we work on the necessary improvements that the system requires in terms of new transmission infrastructure, storage, and greater renewable generation.
It is also noted that achieving the goal of 90% renewable energy is complex, bringing with it technical challenges. For example, thermal plants have a rotating rotor, and this movement is capable of providing stability to the electrical grid. While renewable sources provide energy, they do not provide natural inertia to the system, making it more vulnerable. In any case, it is important to highlight the fact that there are technological solutions to this problem, but regulation must be created that is capable of encouraging these new technologies.
“From this base, we have worked on the design of policy and regulation that encourages renewable generation and removing thermal plants from the system. To do this, in a market context, we are working on a series of incentive mechanisms that encourage investors to take actions consistent with the long-term policy to decarbonize the electrical matrix,”
explains Rodrigo Moreno.
Science-based regulation and policy development
Under the guidance of ISCI, the researcher and his team have designed lines of work with different groups of stakeholders, trade associations, and the government, by way of participatory tables to develop and propose regulation that facilitates the future decarbonization of the national energy matrix.
“What we are doing at ISCI is preparing quantitative studies that support recommendations for policy, regulation, and market design. In the near future, our ambition is to sit down and discuss these results with authorities and stakeholders and, depending on the feedback, tweak our studies and recommendations. Historically, we have had a very positive experience working with the industry and with authorities such as the Ministry of Energy. We hope to publish a complete exercise in the near future that serves as a roadmap for the changes to be made in Chile over the coming years, to improve our regulation and promote a rapid, effective, resilient, economical, and fair energy transition process.”,
concludes the researcher.