Chile’s Energy Sector Faces Climate Change: Adapting To Rising Temperatures And A Projected 25% Decline In Hydropower Capacity

Chile has been experiencing an accelerated increase in average annual temperatures, rising at a rate of 0.18°C per decade from 1981 to 2022. This trend is expected to continue, with significant regional variations. Higher temperatures are anticipated to shift the peak electricity demand from winter to summer, as increased use of cooling technologies will drive up energy consumption during hotter months.

Precipitation in Chile has been declining, leading to more frequent and severe droughts. The impact of reduced precipitation is evident in major electricity generation sectors. Hydropower, which is a significant source of Chile’s electricity, may see a reduction in its capacity factor by about 14% under a low-emissions scenario and up to 25% under a high-emissions scenario by the end of the century. Thermal power plants, which provide over 40% of Chile’s electricity, are also affected by reduced water availability, which limits the cooling water necessary for coal and gas plants. Furthermore, decreasing precipitation raises concerns about water-intensive mining activities, particularly for lithium and copper.

Chile has been proactive in adapting to climate change, particularly in the energy sector. The country’s efforts are guided by two main policies: the Framework Law on Climate Change and the General Law of Electric Services. These policies emphasize resilience and guide Chile’s 2050 National Energy Policy, which identifies resilience as a key priority. Chile is updating its Climate Change Adaptation Sectoral Plan for the Energy Sector, which was first published in 2018, to address climate impacts and incorporate resilience into energy planning.

Average temperatures in Chile have been rising since 1961, with recent decades seeing an acceleration. From 2011 onwards, Chile experienced 12 consecutive warmer-than-normal years, including eight of the ten warmest years in its history. The rate of warming varies, with coastal regions warming more slowly due to ocean effects, while the central valley and Andean regions are warming much faster.

The increase in Cooling Degree Days (CDDs) and decrease in Heating Degree Days (HDDs) reflect the shift towards higher temperatures. From 2000 to 2023, CDDs increased at a rate of 6.5 per decade, while HDDs decreased at a rate of 73.9 per decade. This shift has led to fewer frost days and accelerated glacier melting.

The Intergovernmental Panel on Climate Change (IPCC) projects that Chile will continue to warm through the century. In a low-emissions scenario, average land surface temperatures are expected to rise by 1.72°C by mid-century and 1.78°C by the century’s end. In a high-emissions scenario, temperatures could increase by 2.2°C by mid-century and 3.7°C by the end of the century. Regional variations in warming are also projected, with northern Chile experiencing more warming compared to the southern regions.

Chile’s energy system is likely to see a shift in peak electricity demand due to these climate changes. Increased temperatures will reduce the peak demand in winter but increase it in summer as cooling needs rise. Energy efficiency measures could help balance these seasonal demand changes and improve resilience.

Precipitation has been decreasing overall, with the most significant reductions occurring in southern and central Chile. The decline has been associated with severe droughts, including a mega-drought from 2010 to 2015, which led to record-low reservoir levels and increased forest fires. The IPCC projects that precipitation will continue to decline, with regional variations. Some areas will experience significant reductions, while others will see minor changes.

This decline in precipitation is detrimental to Chile’s hydropower sector. Hydropower plants, particularly in central regions where precipitation reductions are most pronounced, may face a reduced capacity factor. To address this, Chile is expanding its hydropower capacity and increasing investments in wind and solar power.

Thermal power plants are also affected by reduced precipitation, as drought conditions can limit cooling water availability. Past droughts have led to operational disruptions and financial impacts for power companies. Chile plans to phase out coal power plants by 2040, and the current climate projections suggest that nearly all gas and coal plants will face a drier climate by the century’s end.

Increased aridity and higher temperatures also heighten the risk of wildfires, as seen in February 2024, when a major wildfire led to power outages and the temporary shutdown of a significant oil refinery.

Chile’s mining sector, particularly for copper and lithium, is also vulnerable to climate change. Water-intensive mining operations face risks from reduced precipitation and droughts. Chile is addressing these issues with a national lithium strategy and water usage reviews for the mining sector.

Despite the general trend towards drier conditions, Chile can still experience heavy precipitation and flooding, particularly during the rainy season from April to September. Flooding can disrupt energy supply and infrastructure, as seen in recent years.

Sea level rise poses an additional risk, with projections indicating significant increases by the end of the century. Coastal infrastructure, including power plants and refineries, may be exposed to flooding and erosion. Chile is working on adaptation measures, such as improving coastal defenses and relocating vulnerable infrastructure.

Chile’s climate resilience policies are robust, supported by legal frameworks like the Framework Law on Climate Change and the General Law of Electric Services. These policies guide the country’s adaptation and mitigation efforts, including updates to the energy sector’s climate adaptation plans. Chile’s approach to climate resilience involves integrating climate risk assessments into energy planning and diversifying energy sources. The country’s favorable climate conditions for renewable energy, such as solar and wind, provide opportunities for enhancing resilience against climate impacts. Continued coherence among energy policies and adaptation measures will be crucial for building a more resilient energy system.