96 Luis E. Gonzales Carrasco and Rodrigo Cerda
The third scenario consists of testing the possible expansion of hydroelectric
projects in the south of Chile. Because of its geographic location, Chile has a
significant hydroelectric potential. In 2015, the most recent survey from the
University of Chile (Jiménez-Estevez et al., 2015) established that the total
potential is 7.704 MW distributed across 142 generation plants, with about onethird of them in the south of the country. This was calculated by considering
operational plants, plants under construction, and provisional plants.
The fourth scenario modifies the last assumption on LNG prices. This scenario is justified because of the dynamic experienced in the industry over the last
ten years. This dynamic is characterised by the expansion in US gas production.
In the following years, it expects an annual production growth of 1.6%, satisfying the demand of emerging countries like China, which represents 40% of the
total demand. The USA is expected to fulfil more than one- third of the extra
production in the following five years, making a considerable impact in the
natural gas market.
These four scenarios are represented by a baseline that will vary according
the level of carbon tax simulated in each scenario. The carbon tax varies from
$5 to $50; for simplicity we will report variations of each baseline scenario for
$5, $20 and $40 per ton.
Research process and methods
To diagnose the bigger picture of the Chilean energy sector and the resulting multilevel challenges, we conducted open- ended interviews with the main stakeholders
in the three main industries: the electric sector, mining, and manufacturing.
We used Mitigation Action Plans and Scenarios (MAPS) scenarios for estimating energy poverty under different future characteristics of the energy sector
(MAPS Chile, 2014). These scenarios were built through several rounds of consultation with a mixed group of more than 300 experts from seven sectors:
(1) generating and refining transformation; (2) mining and other industries;
(3) transport; (4) commercial, residential, and public energy consumption;
(5) land use and agriculture; (6) forestry; and (7) waste.
At the same time, the quantitative assessment process was conducted in two
phases. The first was about building the baseline, imagining Chile in a business- asusual scenario and forecasting the economy over 20 years from 2006. The second
phase was characterised by the identification of possible measures that could be
introduced in the following years in the sectors of Chile’s economy. For our proposes, the electricity sector was defined as one of the most dynamic sectors in the
adoption of new technologies for electric generation, for example liquefied natural
gas, solar, and wind. Experts brought not only technical arguments for consideration in the scenario, but also normative arguments for their justification. This
phase was the most significant for considering our estimates at the time for the
energy poverty scenarios.
With the possible scenarios identified, we used a minimum cost model representing the electricity generation market in order to obtain the equilibrium price
of that electric generation market for each scenario. With that equilibrium price
The third scenario consists of testing the possible expansion of hydroelectric
projects in the south of Chile. Because of its geographic location, Chile has a
significant hydroelectric potential. In 2015, the most recent survey from the
University of Chile (Jiménez-Estevez et al., 2015) established that the total
potential is 7.704 MW distributed across 142 generation plants, with about onethird of them in the south of the country. This was calculated by considering
operational plants, plants under construction, and provisional plants.
The fourth scenario modifies the last assumption on LNG prices. This scenario is justified because of the dynamic experienced in the industry over the last
ten years. This dynamic is characterised by the expansion in US gas production.
In the following years, it expects an annual production growth of 1.6%, satisfying the demand of emerging countries like China, which represents 40% of the
total demand. The USA is expected to fulfil more than one- third of the extra
production in the following five years, making a considerable impact in the
natural gas market.
These four scenarios are represented by a baseline that will vary according
the level of carbon tax simulated in each scenario. The carbon tax varies from
$5 to $50; for simplicity we will report variations of each baseline scenario for
$5, $20 and $40 per ton.
Research process and methods
To diagnose the bigger picture of the Chilean energy sector and the resulting multilevel challenges, we conducted open- ended interviews with the main stakeholders
in the three main industries: the electric sector, mining, and manufacturing.
We used Mitigation Action Plans and Scenarios (MAPS) scenarios for estimating energy poverty under different future characteristics of the energy sector
(MAPS Chile, 2014). These scenarios were built through several rounds of consultation with a mixed group of more than 300 experts from seven sectors:
(1) generating and refining transformation; (2) mining and other industries;
(3) transport; (4) commercial, residential, and public energy consumption;
(5) land use and agriculture; (6) forestry; and (7) waste.
At the same time, the quantitative assessment process was conducted in two
phases. The first was about building the baseline, imagining Chile in a business- asusual scenario and forecasting the economy over 20 years from 2006. The second
phase was characterised by the identification of possible measures that could be
introduced in the following years in the sectors of Chile’s economy. For our proposes, the electricity sector was defined as one of the most dynamic sectors in the
adoption of new technologies for electric generation, for example liquefied natural
gas, solar, and wind. Experts brought not only technical arguments for consideration in the scenario, but also normative arguments for their justification. This
phase was the most significant for considering our estimates at the time for the
energy poverty scenarios.
With the possible scenarios identified, we used a minimum cost model representing the electricity generation market in order to obtain the equilibrium price
of that electric generation market for each scenario. With that equilibrium price