CHILEAN ENERGY MINISTER TOKMAN OUTLINES SOLAR

UNCLAS SANTIAGO 001087

SENSITIVE
SIPDIS

STATE FOR WHA/BSC AND EEB/ESC/IEC

E.O. 12958: N/A
TAGS: ENRG KNNP KGHG SENV TRGY CI ECON PGOV
SUBJECT: CHILEAN ENERGY MINISTER TOKMAN OUTLINES SOLAR
ENERGY PILOT PROJECT


1. (SBU) Summary: In a November 10 meeting with the
Ambassador, Energy Minister Marcelo Tokman reviewed Chile's
progress in moving ahead on renewable energy projects.
Recognizing the difficulty of launching any commercial-sized
solar generation project without government incentive, Tokman
indicated that he had secured up to $15 million in direct
budgetary support to subsidize the capital costs of a 10
megawatt solar generation plant. The GOC planned to offer
those subsidies in a public tender in the near future.
Tokman said he believed that with the capital cost reduction,
it would be possible to attract companies to bid, drawing on
both solar photo voltage and concentrating solar power
technologies. He invited U.S. firms to bid on the project,
noting the three firms that Chilean authorities (accompanied
by the Ambassador) had visited in their June trip to
California. End Summary.

Germany To Support Renewable Energy Sector
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2. (SBU) In order to demonstrate other countries' support for
Chile's energy sector, Tokman shared with the Ambassador
details on Germany's current contribution to renewable energy
projects in Chile. From 2004 through 2012, the German
Government plans to contribute a total of 95 million Euros to
the GOC to fund advances in the sector: 7 million Euros in
technical assistance, 8 million Euros in grants, and 80
million Euros in lines of credit managed by CORFO.

A Call For Help
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3. (SBU) Tokman highlighted this initiative as an excellent
opportunity for the U.S. to work with Chile in the solar
energy sector. The Minister encouraged the USG to support
the effort financially by fully matching the GOC's award with
U.S. funds to increase the overall amount of the subsidy and
thus strengthen the impact of the project. Tokman regarded
this endeavor as a way the U.S. can also help reduce
greenhouse gas emissions in Chile. He characterized the
proposal as an example for the international community that
showed progress in the energy sector is feasible through the
use of renewable resources.


4. (SBU) The Ambassador expressed interest in the proposal.

Confidence in Hydroelectric Generation
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5. (SBU) Tokman expressed optimism over the future of the
hydropower project under consideration for Region XI's Baker
and Pascua Rivers. HydroAysen, an energy company, plans to
build five major dams in the area which have an estimated
price tag of $3.2 billion and would add approximately 2,750
MW of electricity to Chile. Tokman admitted that the project
could not be completed during the Bachelet Administration.
He expected significant opposition to the project due to the
size and environmental implications of the endeavor.

One Step Closer to Nuclear Energy
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6. (SBU) The Ambassador raised the recent nuclear energy
studies requested by the GOC. The Chilean National Energy
Commission is in the process of selecting an international
corporation to investigate the feasibility of developing
nuclear energy in Chile. Tokman listed four finalists for
the GOC's three proposed projects but did not indicate a
preference among their proposals. (NOTE: Subsequent to the
Ambassador's meeting with Tokman, the GOC announced its
selection: Amec-Cade, (British-Chilean),Stuk (Finnish),and
Technopark-Intermash (Chilean-Russian).) The Ambassador
noted the project's scope and the study's guidelines had
perhaps been too narrow to raise much interest among American
firms.
SIMONS