The World Bank lists Chile’s economy as high income, but Chile is also ranked by the Organization for Economic Co-operation and Development as the country with the most income inequality in the world and as the fourth poorest country among the organization’s 34 member states. The survey by OECD showed that 18 percent of the population gained “less than 50 percent of the countries average income.” One of the contributing factors to this is high-energy costs.
Government spokesman Alvaro Elizalde explains, “We have a structural problem, which is that energy in Chile is very costly, and this not only represents a hurdle for economic growth but also hurts the poor.” Lack of energy sources has driven the cost of electricity over 160 dollars per megawatt an hour. However, a solution has recently been presented to use thermal solar energy in order to reduce poverty in Chile.
Abengoa, the largest solar thermal energy plant developer in the world, has been granted a 1 billion dollar contract to build a 110-megawatt solar tower with storage in Chile. The solar tower will store approximately one eighth the amount of energy stored by the average nuclear reactor, and the location of the plant is in the Atacama Desert, one of the most abundant solar resources in the world. It will be the first project in Latin America of its kind and is expected to meet the residential sectors regional energy demands.
The construction and operation of the plant, named Cerro Dominador, will benefit the commune of Maria Elena by creating 700 temporary jobs and an estimated 2,000 building jobs, as well as 50 permanent positions. Abengoa will be receiving assistance from the European Union, Inter-American Development Bank, German bank KFW, Clean Technology Fund and the Canada Fund for Local Initiatives.
Despite the initial capital costs, the plant is predicted to reduce technology costs to under $100 per megawatt an hour by 2020. Green Tech Media explains, “This would make the plant cheaper than many gas-fired peaking plants.” According to The Guardian, Chile has become Latin America’s leading solar market and is continuing to break ground with their business models and their development of large solar projects without the use of subsidies.
What does all this mean for the poor in Chile? It means that a greater number will be able to afford electricity. Energy poverty is damaging because it limits opportunity and access in what is continually becoming a more technologically advanced world. As Elizade points out, the current high energy costs directly hurt the poor. Increasing the supply of energy in the area will, at least, reduce the cost of electricity.
– Christopher Kolezynski