Canada Pension Plan

Big hydro plans for Chilean Patagonia

La Tercera
June 26, 2004

Endesa, Chile’s largest utility, announces plans to build five hydro-electric power stations in the next fifteen years for a total of $2.8 billion.


Endesa, Chile’s largest utility, announces plans to build five hydro-electric power stations in the next fifteen years for a total of $2.8 billion.

According to the UN twelve million people die every year from lack of water. In Chile, especially in the Patagonia region, this resource will continue to exist abundantly. “It’s our oil,” claims Endesa, the country’s largest utility which sees in this region something like the
water version of the Persian Gulf. It’s here, in Chilean Patagonia, where the utility plans to expand their electrical generation with projects totaling $2.5 billion.

Endesa foresees developing five mega hydro power stations within the next fifteen years, although it is also evaluating the construction of two additional projects. Aside from Neltume, located in the tenth region of Chile, in the next decade four hydro power stations would be built in the Aysén region, two on the Baker river and two on the Pascua, which will require a $1.5 billion investment with an additional $1 billion for construction of power transmission infrastructure. These series of stations will generate 2,800 MW of electrical power, which by themselves can handle the increase in electrical demands for the next seven years.

Neltume, on the Fuy river, will require a total investment of $300 million and will generate 300MW, the equivalent to the annual increase in demand for electricity in the country. The engineering of the projects proposed for the Aysén region would likely start next year with construction starting towards the end of this decade and fully operating by 2017. Prior to that, Neltume should become operational with its environmental impact report to be submitted in 2005.

Endesa also plans to take advantage of the large hydrological potential found in the Futaleufú and Puelo rivers, both found in northern Patagonia.

Beyond Neltume, it’s clear that Endesa will concentrate in the austral region. There is hydro capacity there to generate 12, 000 MW; the entire electrical system in Chile could be replaced by tapping into Chilean Patagonia alone.

Endesa already controls water rights to generate 4,882 MW of electricity. This figure amounts to 70% of the current installed capacity found in the Central Interconnected System (Chile’s main power grid) and twelve times the annual growth in demand for electricity in Chile.

These figures could go up even further: Endesa has requested additional water rights in Patagonia to generate an additional 3,200 MW. These rights are on top of what they already own on the Baker river, the country’s largest, and the Pascua.

Endesa is not alone, other utilities like Colbún and Gener also control water rights in this austral region. Their current rights are capable of generating 1,300 MW and have requested additional water to generate another 2,600.

Endesa doesn’t have similar large size projects based on non hydro sources of power. The closest in terms of size is the expansion of the San Isidro power station which depends on natural gas and its expansion has now been suspended due to the failing gas supply agreements with Argentina.

The Tompkins Factor

There is worry in Endesa that Parque Pumalin, which belongs to Douglas Tompkins, could become an obstacle to their expansion in Patagonia. There isn’t a political or anti ecological motivation in their apprehension; the utility mainly fears that high power lines will not
be able to cross the park if declared a Nature Sanctuary by the Chilean government.

The President’s General Subsecretary, Rodrigo Egaña, refutes such charges. “This aspect is duly addressed in the agreements signed with Tompkins in 1997, as well as in those signed last year, where it has been clearly stated that electrical lines, roads and any other works of national interest are to be allowed through the park.” To some of Endesa’s executives this wording is not sufficient. “We want more transparency,” one executive said.

Egaña disagrees. “There are appropriate safeguards.” Evidence of this is that since last year executives from the utility have not contacted government officials at La Moneda, Chile’s government palace. At Endesa they acknowledge that they are not banging on doors and claim that Egaña already has their proposal indicating where the transmission
lines and towers should be placed.

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