Chile gives away free electricity, reflecting global struggle toward sustainability

Chile’s solar power generation has exploded in recent years, to such an extent that it has been providing customers with electricity for free.

In parts of the country, according to a Bloomberg report, spot prices plummeted to zero on 113 days in the first four months of this year, on track to smash last year’s total of 192 days.

While this is a boon for consumers, it is clearly an unsustainable model for the power industry. As Chile grapples with some unique circumstances, the struggle also reflects a broader trend across the globe, as governments, citizens and companies alike seek a sustainable path toward cleaner energy.

"Michelle Bachelet’s [Chilean] government has set the energy sector as a priority,” Carlos Finat, president of the country’s renewable association, told Bloomberg. “But planning has been focused in the short term when it is necessary to have long term plans to solve these type of issues."

In Chile, a boom in mining production and economic growth boosted energy demands, underpinning the development of 29 solar farms in the central grid, with another 15 planned. In the northern grid, where most of the mines are located, the rush toward solar power generation was even more pronounced.

But the global economic slowdown has torn the steam from the sails, and in Chile, there is another problem: its two main power grids are isolated from one another, meaning that if one has an energy surplus, and the other is in need, transfer is impossible.

That infrastructure weakness is being addressed, but Chile is not alone in facing problems as the demand for clean energy forces traditional industries to adapt and challenges governments to mold appropriate policies.

“Fundamental changes have forced the utilities to reconsider their business model,” Alex Laskey, president of Opower, a company that provides software services to utilities, tells Time. “They have decided that they don’t want to be a commodity provider any longer. What they want to be is an energy services provider.”

This is a fundamental shift in thought for an industry that began serving American cities more than a century ago and followed the same business model ever since: consumers use their appliances, companies bill them for the electricity they use, and the consumers send a check.

California has an official goal of making all new homes zero net energy by 2020. In other words, these homes need to make as much energy as they consume over the course of a year, using a combination of solar panels, advanced water heaters, smart thermostats and other high-efficiency features.

Across the United States, there are already thousands of homes that meet these standards, in areas such as New England, New York, the Carolinas and Colorado. Part of the challenge for utilities companies is the fluctuating impact this has on demand, with solar power only able to function during daylight hours.

“We know very little about how all these devices interact – we have so much to learn,” Mark Duvall of the Electric Power Research Institute, a nonprofit utility-funded group, told The New York Times. “Hopefully at the end of the day we can contribute to a greater understanding of how these technologies work together and what it really means going forward.”

Mr. Duvall’s organization is conducting a study in California whereby a cluster of 20 homes have been built to test the zero net energy concept and understand how feasible it is on a larger scale.

On the other side of the Pacific, The Australia Institute, a progressive think tank, recently carried out a survey of households already equipped with rooftop solar panels – of which the country boasts 1.5 million – and found that 80 percent are considering buying batteries to store the power they generate.

One in four Australians, according to the report, also want to reach such a point of energy self-sufficiency that they can unplug entirely from the grid.

The momentum towards a global economy based on renewable energy is building, and while the benefits espoused by proponents are legion, the utilities industry faces an uncertain future if it fails to adapt.

“Every new solar panel installed on... rooftops chips away at power utilities' centralized production model,” notes Reuters. “Unless they reinvent themselves soon, these giants risk becoming the dinosaurs of the energy market.”