OVALLE, Chile, (Reuters) – A long drought has dried up hydroelectric power production in Chile, sending electricity costs soaring and making renewable power sources like wind, solar and geothermal more attractive, particularly to energy-hungry miners reaping a copper windfall.
“Renewable energies require a greater investment but they have low production costs,” said Mabel Weber, an energy analyst with Banchile Investments. “The more prices rise, the more viable alternative energies look.”
Scarce rains from the La Nina weather pattern have slashed hydroelectric output in Chile, the world’s top copper producer. Generators must rely on plants powered by costly imported oil and gas, compounding inflation risks in the booming economy.
Energy prices have nearly tripled in five years, leading companies to covet the cost stability offered by wind, solar and geothermal power.
Chile’s mining sector in particular, which consumes a third of the country’s power, has the means and motive to stabilize its energy costs by investing in new technology now that copper prices are at record highs.
State miner Codelco has committed $700 million to a 250 MW wind farm that may be the largest in Latin America when finished, and world No. 3 copper mine Collahuasi is exploring geothermal energy to tap Chile’s immense volcanic activity.