Following two years of an arduous environmental permitting
process, Chilean authorities are expected to make a final decision
on the giant HidroAysen project by March or April, the
megaproject's chief executive, Daniel Fernandez, said Thursday.
HidroAysen, which will spend at least $3.2 billion to build five
dams to supply 2,750 megawatts to the central SIC power grid,
responded to authorities' over 1,100 questions regarding its
environmental impact study earlier in the day. The project had
previously responded to some 2,600 questions and observations posed
by environmental authorities.
The hydroelectric project, a joint venture between Chilean power
generators Empresa Nacional de Electricidad SA (EOC, ENDESA.SN) and
Colbun SA (COLBUN.SN), first submitted its environmental impact
study, which has been plagued by delays, in late 2008.
HidroAysen has faced staunch opposition because of plans to lay
a transmission line that would span nearly 2,000 kilometers through
pristine land and to dam the Baker and Pascua rivers.
"If authorities approve the project, shareholders will make an
investment decision in mid-2013, which, if positive, will see the
first generation unit operational in 2019 and the last in 2025,"
Fernandez said.
Energy Minister Ricardo Raineri recently came out in support of
developing large-scale power projects such as HidroAysen, so the
nation can keep up with increasing energy demand.
As the country's gross domestic product is forecast to grow at a
pace of about 5%-6% a year, some 10,000 megawatts of new installed
capacity--roughly a doubling of capacity--will need to be added by
2020.
"There's a very direct correlation between economic growth and
energy demand growth...If we look beyond 2020, to 2030, the country
will need to nearly triple its current capacity and projects such
as ours are key to being able to keep up with forecasted growth,"
Fernandez told Dow Jones Newswires.
Raineri has been on the offensive, reassuring investors about
the security of developing big projects in Chile, after President
Sebastian Pinera's nod to environmentalists in August regarding GDF
Suez's (GSZ.FR) Barrancones thermal power project threw the energy
sector into a tailspin. Pinera's request to "move" the site where
Barrancones was set to be built essentially killed the project.
"I want to differentiate our project, from projects like [the
2,354 megawatt coal-fired] Castilla project. HidroAysen is a
renewable energy project and we use Chilean resources, water in
this case, instead of having to import expensive and contaminating
fossil fuel," Fernandez said.
While Chile is looking to incorporate more alternative
renewable-energy sources into its energy matrix and to acquire the
technical capabilities to eventually make a production decision on
nuclear energy, experts argue that large-scale hydroelectric energy
projects also need to be developed so the Andean nation can keep up
with burgeoning demand.
"The option of not having this project built is developing
thermal generation projects, which will increase costs for end
users," he said.
Environmental authorities are also scrutinizing HidroAysen's
long transmission line which will run from the southern Aysen
region to capital city Santiago.
Although Fernandez wouldn't comment on the price tag for the
transmission line, but he did say that a section of the line would
be built underwater and will cost nearly seven times more per
kilometer than the above-ground line.
Local press has reported in recent weeks that with the addition
of the underwater section, the transmission line will cost $3.8
billion, or nearly 20% more than the construction of the project's
five power plants.
HidroAysen is talking with Chilean power generator Energia
Austral Ltda., a subsidiary of global diversified mining company
Xstrata PLC (XTA.LN), to see about sharing the transmission line.
Energia Austral has three hydroelectric projects in its pipeline,
also in the southern Aysen region.
"No decision has been made yet, but we're studying the situation
to see if there are considerable synergies to be created from
sharing the transmission line," said Fernandez, who added that a
300-megawatt project by local Electro Austral is also being
considered for sharing the transmission line.
In any case, if approved, the construction of the transmission
line, which will be outsourced, will take approximately three years
and be complete in time to receive energy from the first of
HidroAysen's energy units.
"We've seen a lot of interest from international EPC
[Engineering, Procurement and Construction] companies. It's an
interesting project for anybody up to the task of building 2,000
kilometers of transmission line," Fernandez said.
-By Anthony Esposito, Dow Jones Newswires; 56-2-715-8929;
anthony.esposito@dowjones.com
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