The Cardones Polpaico transmission line was created during the first term of President Sebastián Piñera through decree 115 dated May 7, 2011 of the Ministry of Energy.
Given its great length (753 km), the mega project was divided into three sections; i) Nueva Cardones Nueva Maitencillo, ii) Nueva Maitencillo Nueva Pan de Azúcar and iii) Nueva Pan de Azúcar Polpaico.
One of the main objectives of this project was to increase the energy transmission capacity between the central zone and the north of Chile, in order to send hydroelectric and thermoelectric power from the center to the north to supply the demand of the mining industry.
On January 16, 2013, the Cardones Polpaico project was awarded to the company Interconexión Eléctrica SA with an execution period of 60 months from that date, that is, it should be in service by January 16, 2018 .
On January 30, 2015, through exempt decree #33, the ownership of the project was changed to the company Interchile SA (subsidiary of the Colombian Grupo ISA) and on December 10, 2015, the project received environmental approval through RCA #1608.
From there the execution of the project began, which, like any mega project, was not without its difficulties.
Some of the main problems the project faced were:
- Opposition from communities and landowners.
- Poor management by the contractor regarding community relations, permit processing, and handling of its subcontractors.
- Lack of coordination among state bodies to support the progress of the work (including two government transitions).
That is, 17 months later than established in the award decree.
So far, it's the typical story of almost any megaproject, but something changed during the execution of this major project: the scenario. New scenario and renewable generation constraints. Instead of increasing the mining demand in the northern region and creating a need to send energy from the central region to the north, renewable energy plants were massively incorporated in the northern region, generating an abundant supply of renewable energy.
This renewable energy exceeded the demand of the northern region and flowed south to supply the demand of the central zone until it reached the transfer limit of the existing transmission lines.
As a consequence of this large availability of renewable energy, the insufficient transmission capacity to send the energy from the north to the central zone and also the inflexibility of the thermoelectric power plants in that area, from the first quarter of 2016 it became necessary to restrict renewable generation in the north.
In turn, as a direct consequence of the restrictions on renewable generation, marginal costs of 0 USD/MWh were produced in the areas of Diego de Almagro and Cardones.
This situation worsened with each new renewable energy plant that was incorporated into the system in the north of the country.
The spillover (renewable generation restrictions) increased in energy volume and system scope, and did not stop until two years later, in March 2018, when the electrical system had the SIC-SING interconnection, the northern section of Cardones Polpaico (Nueva Cardones Nueva Maitencillo) and a greater degree of flexibility in some thermoelectric power plants.
In this way, the system continued to operate with occasional restrictions on renewable energy generation due to a lack of transmission capacity.
This scenario of exposure to spillage in the northern area was finally ended on May 30, 2019 with the commissioning of the southern section of the Cardones Polpaico line.
The final result, according to records from the National Electric Coordinator, was that the renewable energy industry stopped injecting more than 680 GWh due to the delay in the transmission line.
For reference, Chile's largest solar power plant, El Romero Solar, produces 493 GWh in a whole year.
Another important change in the scenario was the greater awareness regarding the impact of CO2 emissions on the atmosphere and their contribution to climate change.
In this regard, the government announced important commitments such as the retirement of coal-fired power plants before 2040 and hosting COP25. Cross-cutting Impact The restriction of 680 GWh of energy meant losses of more than 100 million USD for the renewable energy industry.
Chile's recently formed renewable energy industry failed to act in a cohesive manner to avoid/minimize damage, and although some investors acted proactively to achieve this, their effects were not decisive due to a lack of cross-cutting support.
With this, the impact extended to the level of market competition.
On the other hand, the 680 GWh of energy that the renewable energy industry in the northern zone could not inject had to be replaced by hydroelectric and thermoelectric energy from the central zone.
In other words, the delay of the line implied a greater use of water for hydroelectricity in a local context of mega drought and greater thermoelectric generation in a global context of climate change.
For reference, 680 GWh produced by a coal-fired power plant would emit 735,080 tons of CO2 according to the emission factors of the National Energy Commission.
This means that the impact of the delay in this important project was not limited to the electricity sector, but also affected public health, the environment, the economy, investments, and market competition; in other words, the impact was widespread. The Chilean State, through the current government, continues to blame the communities for these delays and has—rightfully—collected the bills and fines from the winning bidder for the delay in bringing the Nueva Maitencillo-Nueva Pan de Azúcar section online, totaling more than US$6.8 million.
Regarding the Nueva Pan de Azúcar Polpaico section, it has been more than 20 months since the completion date established in the Award Decree expired and more than 4 months since it actually became operational, but the authority has not yet made a statement.
This section has accumulated more than 90 million USD between the ticket and fines for days of delay.
The winning company has denied responsibility for the delay and has lobbied at the presidential level to avoid the application of the sanctions established by the Bidding Terms and the Award Decree.
Along the same lines, he has sued community representatives in court and threatened to escalate the conflict against the State to an arbitration body.
Meanwhile, evidence of sloppy management by the winning bidder continues to emerge.
The communities, for their part, have accused the winning bidder of mismanagement, non-compliance with the RCA and have requested the invalidation of this environmental permit.
Furthermore, they have accused the State of being too lenient with business owners. Global Scenario Given this turbulent scenario, it is important to adopt a global perspective.
The importance of transmission lines in accelerating the decarbonization of electricity systems has been reflected in the most recent actions of countries such as Germany to facilitate the construction of these infrastructure works in their territory and Australia.
The United States has also highlighted the importance of transmission lines in order to increase the penetration of renewable energy and reduce thermoelectric generation.
In the case of Chile, transmission lines are especially important due to its geography.
A very long country with great solar potential in the north, great hydroelectric potential in the south and a wind resource spread more or less evenly is obliged to better interconnect its network in order to move towards the decarbonization of the electricity matrix.
In addition to the importance that Chile's geography gives to transmission lines, Chile has made concrete commitments in the fight against climate change, for example, the decarbonization of the electricity matrix by 2040.
This date was largely determined by the construction timelines for transmission lines, which are longer than the construction timelines for renewable energy generation plants.
This highlights the great importance, or rather the criticality, of transmission lines and the precedent that the Cardones Polpaico line will set in order to meet the commitments made.
Furthermore, if the new dialogue with the companies to bring forward the closure of the thermoelectric plants concludes as expected, that is, with a date prior to 2040, the precedent set by Cardones Polpaico will undoubtedly be decisive.