There are four interconnected systems that supply electrical power to Chile. The SIC (Central Interconnected System) is the largest one, with 80% of the installed capacity in the country. While sources of energy in the system are quite diversified, 39.21% of the energy comes from water, through hydroelectric power plants and hydro run-of-the-river power plants.
Multiple companies provide energy to SIC, being Endesa Group, AES Gener and Colbun the bigger ones. Colbun not only holds 21% of the market share of installed capacity, but has also been recognized as one of the leading companies in climate change in Chile, given the incorporation of this issue as an essential part of its business.
The effects of climate change on the available supply of water, have become clear in recent decades. A CONAMA (National Environment Commission of Chile) study, shows that variability in rainfall patterns have resulted in decreases in river flows and accumulated snow. This is compounded by higher temperatures, that affects snow melting, and an increase in the height at which the isotherm 0°C is located, which reduces the available surface for snow to accumulate. If electric generation companies like Colbun don’t adapt to climate change, we may not be able to have light during nights, we will be living in the dark.
To address the challenges posed by climate change, Colbun has adapted its operational model in two edges: (1) diversifying its energy matrix and (2) optimizing water resources.
Diversification of the energy matrix
Since Colbun was established as a company in 1985 and until 1999, all the energy they produced came from hydroelectric power plants. However, given the rainfall and water flow volatilities, the company decided to diversify its production to other types of energy, to ensure a stable supply of energy to SIC.
Today the company has 49% of its installed capacity in hydroelectric plants, and 51% in thermoelectric power plants based on gas, diesel and coal.
Optimization of water resources
In recent years, the company has focused its efforts on the innovation of its operating system, to promote energy efficiency and sustainable use of the available water. For example, the company has built what is known as “mini hydro run-of-the-river power plants” to take advantage of energy remnants of water flows. In addition, the company developed a system of automatic control of wells to monitor and optimize the use of water in them. The company has also installed plants to process the remains of water in cooling towers, which allows to reuse water and thereby reduce the total demand for this resource.
Adaptation to climate change has also affected the long-term investment decisions of the company. To ensure the sustainable use of natural resources, Colbun has developed most of the new hydropower plants in series, to reuse water that was already used by other plants of the company located downstream.
What else can Colbun do?
While the company has already begun to adapt its operational model to the challenges posed by climate change, there are other initiatives that can be implemented to ensure the long-term sustainability of the company. The company can (1) continue diversifying its energy matrix and (2) replace fossil fuels with biomass in the thermoelectric generation and (3) further optimize its hydroelectric plants.
The biggest problem of having only hydroelectric and thermoelectric plants, is that both use water in their operation, and are affected by the lower availability of this resource. Colbun could analyze investing in other energies that don’t require water to function, such as wind, solar or geothermal energy. Also, thermoelectric plants operated by Colbun are fueled with fossil fuels (coal, diesel and gas). Replacing this fuels with biomass decrease the amount of water needed in the refrigeration towers, for a more efficient use of the available water. Finally, Colbun must continue to seek for operational efficiencies to adapt to climate change. The Company may try to increase the storage capacity of the smaller hydroelectrical plants, to increase their operational flexibility.
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