Copper scarcity to slow down green energy projects in Chile

The world’s largest copper producer has struggled to keep up previous levels of extraction and this will inevitably restrict the growth of the sustainable energy sector.

Chile has been determined to push for sustainable energy for years now, they went from producing less than 4 megawatts in solar energy in 2013, to over 220 by 2016. They are the increasingly reliant on solar resources, and most experts agree this sudden change depends greatly on the mining industry.

Chile is also the world’s largest copper ore producer, and this has worked in its favor when shifting to solar energy.

All the remote mines and refineries, scattered throughout the sunlit Chilean desert, which are incredibly energy hungry, have made the best out of their location and installed vast solar power stations to supply their needs.

However, with copper prices half what they were two years ago, extraction has slowed down tremendously, and with it, demand for clean energy.

Furthermore, with the vast majority of the copper industry located up north and with no power lines built to transfer the solar energy generated there towards the population centers in the south, the greatest consumer of clean energy slowing down will translate to a dramatic drop.

The drop will not manifest itself this year, as solar and wind energy projects already financed will still become a reality, effectively tripling the current output. Still, by 2017, the number of new panels will fall by 66%. In the meantime however, many of the planned investments are inevitably going to be frozen or receive substantial reviews.

Carlos Barria former chief of the government’s renewable energy division stated that “the first boom of clean energy is over,” and that “we are going to see fewer new projects”, which almost seems like an understatement, considering the steepness of the fall.

Available solar panels will also become less profitable, as there will effectively be an overabundance of energy with no demand to consume it, although the consequences of this price slump are still unpredictable, it can be safely assumed that many of these plants will probably have to halt operations until copper extraction regains its lost steam.

The Chilean government refuses to assume defeat in the face of adversity, as they ratified their desire to generate 70% of their energy from renewable sources.

"In two years of government we have doubled the number of renewable energy parks under construction (…) almost half of all projects that we are building are from clean sources." Assured Energy Minister Maximo Pacheco.

Looking forward, if Chile wants to make the best out of their increasingly large solar resources, and in turn make it a more reliable industry, they are inevitably going to have to work extensively on their power grid. They will have to connect the solar panels in the north, and the hydroelectric plants in the south to large population centers. Otherwise, they are simply investing in a sustainable product, which will paradoxically become unsustainable through lack of effective demand.

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