Sustainable Power Production in Chile

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Sustainable Power Production in Chile

Hållbar Kraftproduktion i Chile

Karl Björnfot

Energisystem

Examensarbete

Institutionen för ekonomisk och industriell utveckling

LIU-IEI-TEK-A--07/0070--SE

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Summary

This report is about how Chile can find its way towards a sustainable power production. The two major Chilean electric systems are modeled and optimized by a special optimization program for energy systems called MODEST. The model is then altered so that new sustainable energy sources can be put into the system. If these new energy sources are more economically beneficial they will enter the system. The time period that is modeled is the years 2006 to 2010 and the demand for electricity is rising between these years. 7 different scenarios where the terms for fossil fuels and renewable energies are changed in different ways is tested to see what can be done to introduce more sustainable energy into the system. The different changes include tax on carbon dioxide emissions, subsidies for new sustainable energy sources and limits in carbon dioxide emissions. The results show that:

• Taxes are an ineffective way to get more sustainable energy but can work to reduce emissions. The tax could be used to fund subsidies for cleaner energies.

• Subsidies can work to bring in more sustainable energy and if there is a possibility to use the clean development mechanisms available within the Kyoto protocol. Then it does not have to be subsidies but investments from companies in countries that have signed the Kyoto protocol.

• Waste to energy is the most cost effective new energy source, although it is questionable however this is really a renewable energy source. The author thinks that although it might not be renewable it is certainly sustainable within a foreseeable future.

• A natural gas shortage will have serious effects on the system and should be avoided at least until there are enough alternative fuels available. It is therefore important to continue encourage the development of sustainable power sources.

• Carbon dioxide limits could be used in Chile. If they are at reasonable levels they do not need to cost that much and could really help the sustainable energy sources to become more interesting for investors.

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Sammanfattning

Den här rapporten handlar om hur Chile kan hitta vägen mot en hållbar kraftproduktion. De två största Chilenska kraftnäten modelleras och optimeras därefter med hjälp av ett speciellt framtaget optimeringsprogram för energisystem som heter MODEST. Modellen ändras sedan så att nya energikällor blir möjliga att sätta in i systemet. Om de nya energikällorna är ekonomiskt fördelaktiga så kommer optimering att ta med dem i systemet. Tidsperioden som optimeras är 2006 till 2010 och elbehovet ökar från år till år. Sju olika scenarier testas med olika förutsättningar för de fossila och hållbara energikällor för att se hur man kan gå till väga för att få in mer hållbara energikällor i systemet. De olika förändringarna är: skatt på koldioxid, bidrag till hållbar energi, koldioxidtak och begränsningar i naturgas. Resultaten visar att:

• Skatter är ineffektivt vad gäller att få in mer förnyelsebar energi men fungerar för att sänka utsläpp. • Bidrag fungerar speciellt om de kan finansieras genom Kyotoprotokollets möjlighet till Clean

Development Mechanisms.

• Avfall är den mest ekonomiska nya energikällan, men det är tveksamt om den verkligen kan räknas som hållbar.

• Begränsningar I naturgasen kan få svåra följder för Chiles kraftproduktion och ska undvikas åtminstone tills det finns gott om nya hållbara energikällor i systemet.

• Koldioxidtak borde kunna användas I Chile, om de är satta på rimliga nivåer så behöver de inte kosta så otroligt mycket och kan göra Chile till ett intressant land att investera i för länder där byggande av förnyelsebar energi är dyrt.

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Forewords

When I first got the suggestion of writing about how Chile can find its way towards a sustainable energy production from Ronny Arnberg at Borlänge Energi I immediately thought about doing an optimization, using MODEST,of the electric-system in Chile and then modifying it. And this is the result; there are some people who have gone out of their way to help me. Thanks to:

Alemayehu Gebremedhin– For helping me with everything, MODEST in particular. Ronny Arnberg for setting me up with the project and helping me with connections. Roberto Broschek for helping me with connections.

Jane and Barbara for helping me with translation, directions and surviving in Santiago. SIDA for giving me money to survive in Chile.

IKP for giving me money to travel.

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12 RESULTS ... 40 12.1 SCENARIO 0...40 12.2 SCENARIO 1...42 12.3 SCENARIO 2...44 12.4 SCENARIO 3...45 12.5 SCENARIO 4...47 12.6 SCENARIO 5...48 12.7 SCENARIO 6...49 12.8 SCENARIO 7...50 12.9 ALL SCENARIOS...53 13 RESULT ANALYSIS ... 55 13.1 SCENARIO 0...55 13.2 SCENARIO 1...55 13.3 SCENARIO 2...55 13.4 SCENARIO 3...56 13.5 SCENARIO 4...56 13.6 SCENARIO 5...56 13.7 SCENARIO 6...56 13.8 SCENARIO 7...56 14 SOURCES OF ERRORS... 57 15 DISCUSSION... 58

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Figures

FIGURE 1, THE METHOD... 2

FIGURE 2MAP OF CHILE... 4

FIGURE 3SCHEMATIC VIEW OF THE RANKINE CYCLE...12

FIGURE 4,SCHEMATIC VIEW GAS TURBINE...13

FIGURE 5 INSIDE A WIND TURBINE...14

FIGURE 6, PHOTOVOLTAIC CELL...15

FIGURE 7HYDROELECTRIC PLANT...16

FIGURE 8MINI HYDRO...16

FIGURE 9, MODEST MODEL EXAMPLE... 6

FIGURE 10MAP OF THE SIC-SYSTEM...18

FIGURE 11TOTAL GENERATION SIC2005 ...20

FIGURE 12GENERATION SICJANUARY 1996 TO MAR 2006 ...20

FIGURE 13MAP OF THE SING-SYSTEM...21

FIGURE 14GENERATION IN THE SING SYSTEM 2005...23

FIGURE 15,GROSS GENERATION IN SING1999–2006...24

FIGURE 16,SOLAR POWER HOME SYSTEM IN RURAL CHILE...32

FIGURE 17GENERATION DIAGRAM 2006-2010SIC AND SING ...35

FIGURE 18,MODEST MODEL OVER SIC, SCENARIO 0 ...36

FIGURE 19, MODEST MODEL OVER SING, SCENARIO 0 ...37

FIGURE 20GENERATION BY FUEL SIC2006-2010...40

FIGURE 21GENERATION BY FUEL SING2006-2010 ...41

FIGURE 22GENERATION BY FUEL TYPE SCENARIO 1SIC...42

FIGURE 23GENERATION BY FUEL TYPE SCENARIO 1SING ...43

FIGURE 24GENERATION BY FUEL TYPE SIC SCENARIO 2...44

FIGURE 25GENERATION BY FUEL TYPE SING SCENARIO 2 ...44

FIGURE 26GENERATION BY FUEL TYPE SIC SCENARIO 34$/TON CO2...45

FIGURE 27GENERATION BY FUEL TYPE SING SCENARIO 34$/TON CO2...45

FIGURE 28GENERATION BY FUEL TYPE SIC SCENARIO 4,100 000US$/MW...47

FIGURE 29GENERATION BY FUEL TYPE SING SCENARIO 4,100 000US$/MW ...47

FIGURE 30GENERATION BY FUEL TYPE SIC SCENARIO 5...48

FIGURE 31GENERATION BY FUEL TYPE SING SCENARIO 5 ...49

FIGURE 32GENERATION BY FUEL TYPE, SCENARIO 6,SIC...49

FIGURE 33GENERATION BY FUEL TYPE, SCENARIO 6,SING ...50

FIGURE 34,GENERATION SIC SCENARIO 7, EMISSION LEVELS OF 2005 ...51

FIGURE 35,GENERATION SING SCENARIO 7, EMISSION LEVELS OF 2005...51

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Tables

TABLE 1, THE FOSSIL FUELS... 9

TABLE 2, ENERGY CONTENT IN BIOMASS FUELS...10

TABLE 3ENERGY CONTENT IN MUNICIPAL SOLID WASTES...11

TABLE 4INSTALLED CAPACITY SIC SYSTEM...19

TABLE 5EMISSIONS CALCULATIONS FOR SIC ...20

TABLE 6INSTALLED CAPACITY IN THE SING SYSTEM...22

TABLE 7,SING EMISSIONS...24

TABLE 8WASTE COMPOSITION...25

TABLE 9FIGURES FOR WASTE TO ENERGY...27

TABLE 10WIND POWER PROJECTS...29

TABLE 11MINI HYDRO PROJECTS...31

TABLE 12KNOWN AND EXPECTED GENERATION FOR SIC AND SING ...34

TABLE 13CO2-EMISSIONS SCENARIO 0 ...41

TABLE 14CO2-EMISSIONS SCENARIO 1...43

TABLE 15CO2-EMISSIONS SCENARIO 2...45

TABLE 16CO2-EMISSIONS SCENARIO 34$/TON CO2...46

TABLE 17CO2-EMISSIONS SCENARIO 310$/TON CO2...46

TABLE 18CO2-EMISSIONS FOR SCENARIO 4,100 000/MW...48

TABLE 19CO2EMISSIONS SCENARIO 5 ...49

TABLE 20, EMISSIONS SCENARIO 6 ...50

TABLE 21COMPARISON BETWEEN SCENARIOS...53

Appendixes

Appendix 1: Weekly demand 2006 Appendix 2: Detailed Results

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1 Introduction

This report is about how a country like Chile can find its way towards a sustainable power production. Chile is very dependent of natural gas from Argentina for its power supply. Today natural gas power plants make’s up for about one third of Chile’s power production and the larger cities all have extensive distributions systems for natural gas. Power and heating devices are largely run on natural gas. Lately, due to the economic instability in Argentina, deliverances of gas have been all but reliable. A dependable power supply is crucial for a continued economic growth and to secure power, gas is now also imported from Australia and Africa. This is of course not a good long term solution which along with environmental concerns has made the Chilean government to issue a decree that says that by 2010, 15 % of all new electricity in Chile must come from renewable sources (large-scale hydropower excluded). Today the only sustainable energies, except for large-scale hydropower, are forest residues and black liquor and they constitutes a very small part of the energy production.

1.1 Problem description and objective

For electricity Chile is today very dependent on natural gas. The natural gas that is mainly used in Chile is today imported from Argentina. The gas is not however originally from Argentina but from Bolivia. Political indifferences between Chile and Bolivia coupled with economical problems in Argentina and a nationalization of the gas in Bolivia has made the gas deliveries unreliable and expensive.

To find a sustainable solution to the energy problem is very important since the economic growth is dependent on, if not cheap so at least reliable, electricity. Chiles resources of fossil fuels are very limited which means that the only possibility for Chile to supply their own energy is by renewable energy, such as solar power, wind power and bio mass, there is also the possibility to use municipal waste to energy incineration. To push for this the Chilean government has set a goal that by 2010, 15 % of the new installed capacity should come from Non Conventional Renewable Energy, NCRE. NCRE includes biomass fuels, wind power, solar power, mini hydro and geothermic energy, the author has also chosen to include municipal waste to energy why will be explained later. The questions that this report will try to answer are:

• Can the NCRE's compete with the fossil fuels economically today?

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1.2 Method

The first thing that will be done is getting a good picture of how the electrical system in Chile looks today, what strengths and weaknesses it has and what limitations there are for new facilities. It is also important to know if there are any regulations that might have impacts on new energy production, for example if there are, or there is reason to believe that there might be in the future, limitations of carbon dioxide emissions or if there are government subsidies for renewable energy sources. Finding out the costs for running the current power system is the next step in the study; this includes prices for natural gas and coal now and how they might develop in the future, maintenance costs of the current power stations etcetera. With this information the next thing to do is to make a computer model in MODEST, a program that will be explained later in the report, of the current system. The purpose of the model is that it is to be used to put in new facilities in the system then optimize the whole system and see what new facilities that will be used; the ones that are used are the ones that give most energy per dollar. But before new power stations can be added there it is very important to approximate how much a new facility will cost, this includes not only investment cost but also the cost for fuels and maintenance. It is impossible to know exactly how much a, for example, bio mass plant will cost but by looking at other studies and at existing plants it is possible to make a good approximation. It is also important to see if there are limitations in how much capacity there exist for each new energy source in Chile, for example how much bio mass from forestall residues that can be used without creating large scale deforestation in Chile. When all the costs and limitations have been approximated the new energy sources will be put into the model of the existing power system and an optimized model will be presented. When this is done different possibilities to improve the conditions for sustainable energy can be tested, for example taxes on carbon dioxide and subsidies for renewable energy. A number of different scenarios will be tested. Figure 1 gives a graphical view of the method.

Figure 1, the Method Gathering information About current Electrical-system Gathering information About what sustainable energies which are possible and their capacities.

Building

the model Optimizing

Interpret the results

Finding a conclusion

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1.3 Limitations and Assumptions

The Aysén and Magallanes systems are not included in the report, these electrical systems are isolated and only makes up for 0.28 % and 0.54 %1_{of the total electricity produced. The Magallanes is almost}

self-sustained by a local natural gas supply.

The new energies that will be discussed are biomass, wind, run off river hydro plant, solar power and municipal solid waste. Nuclear power is not discussed although it is currently under investigation by the Chilean government and the largest opposition party in Chile has said that nuclear power should be introduced in Chile2_{. But nuclear power is not included in the renewable energies and although the}

impact on the climate from nuclear power is small it is not considered as a sustainable power source, The investments that are made are always based on what’s most profitable, no environmentalist that are prepared to pay extra for renewable energy are taken into the calculations.

There are also limitations within the model that will be discussed later.

1_{http://www.cne.cl/electricidad/f_sistemas.html, 2007-01-30} 2_{Interview with Gisella Barrera,}_2006-10-23

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Facts about Chile

Area: 757000 km2

Location: see Figure 2

Figure 2 Map of Chile

Population: 16134219 (July 2006 estimated.) Capital: Santiago

GDP: 189.9 billion US$ (Sweden: 268.3 billion US$) GDP per capita: 11900 US$ (Sweden: 29800 US$) GDP growth rate: 6.3 % (2005) (Sweden: 2.7 % (2005)) Population below poverty line: 18.2% (Sweden: N/A)3

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2 Modelling in modest

This chapter describes how a model is being built in MODEST.

2.1 Description of MODEST

MODEST (Model for Optimization of Dynamic Energy Systems with Time-dependent components and boundary conditions) is an energy system optimization model based on linear programming (Henning 1999, Gebremedhin 2003). The objective function in the model is the system cost calculated as the net present value for a given period and given real interest rate. The criterion is to minimize the discounted system cost.

The objective function may consist of several terms depending on the problem. The basic terms represent energy cost, capital cost; costs related to the largest output power and fixed annual cost. The variables to be calculated are time dependent energy flows and the sizes of possible new units. The objective function is subjected to several constraints that include many energy balance equations and different kinds of restrictions regarding availability of energy and capacity.4

2.2 Building the Model

The model is built by first identifying all the different existing power generating facilities, what fuel they use, how big their installed capacity is, if there are any restriction in how they can be used, etcetera. To get as correct in data as possible is very important since bad data in produces bad data out.

The fuels, power plants, electric grid and electric demand builds up a grid of nodes that are connected by outflows, an example can be seen in Figure 3

Since the demand for electricity varies just using the yearly consumption would not give a good result so to catch the variances the year is divided into firstly 53 weeks and thereafter the weeks are divided into weekdays and holidays, in total 105 time periods. It would probably be better to use night and day instead but since no information of variances between night and day could be found this is the second best idea.

4_{By Gebremedhin from:}

Gebremedhin A.(2003) "Regional and Industrial Co-operation in District Heating Systems" LIU, Dissertation No. 849, Linköping Institute of Technology, SE-581 83 Linköping, Sweden.

And

Henning D. (1999) Optimisation of Local and National Energy Systems: Development and Use of the MODEST Model, Dissertations No. 559, Linköping Institute of Technology, SE-581 83 Linköping, Sweden.

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Figure 3, modest model example

The first step in building the model is to identify the existing electric system and getting all the needed information about prices, installed capacity, energy limitations and efficiencies and so on. After having identified the existing system a model of the system has been built it will be tested to see if the result of the optimization is reasonable and somewhat matches the production for previous years.

When the existing system has been built and the model is working new components will be added, again prices, energy limitations, efficiencies and what capacity there is in Chile to build each one of the new facilities. After the necessary data has been collected and put into the model, different scenarios are optimized, see chapter 11.

2.3 Limitations in the model

It is important to remember that the model is just a model and not reality. One limitation is that it is hard to predict price levels and the optimizer will always use the cheapest alternative to the fullest, this means that for the model to be exact it is necessary to know the prices of fuels during the whole year and have different prices for different time periods. Furthermore no regards to stops for maintenance exists in the model, all facilities where there nothing else is mentioned, are assumed to be available all the time.

Since the time periods that are used are weekdays and holidays large deviation in the demand are smoothed out and that means that there might be very high demands where there is not enough capacity for the cheaper facilities so that the more expensive ones has to be used, the model misses this and that can have the effect that some facilities are not used at all.

GC Gas open cycle SING

Conversion Node Output: Same 37.5 MW 1 Outflow NG Natural gas NG outflow 3 Efficiency = 55% Price: 28 $/MWh GC Combined cycle SING Conversion Node Output: Same 2074 MW 1 Outflow NG outflow 4 Efficiency = 30% Price: 26 $/MWh GS Electrical Grid SING Conversion Node 2 Outflows

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3 Clean Development Mechanism (CDM)

The Clean Development Mechanism, under article 12 in the Kyoto Protocol, is a project based flexible mechanism that works as an instrument for promoting foreign investment in Green House Gas, GHG, emissions reductions in primarily underdeveloped countries. It is designed to make it easier and cheaper for industrialized countries to meet their GHG reduction demands and at the same time promote sustainable development in underdeveloped countries. The mechanism works like this: Countries in Annex I of the Kyoto protocol, the countries who has binding obligation according to the Kyoto protocol, can invest in projects for reducing GHG emissions in countries that are not included in Annex I. The emission reductions that the projects results in can then become accredited to the Annex I country5_.

There are currently ten CDM-projects in Chile, most of which are about collecting gas from landfills etc. If a European country, or more likely an organisation in a European country, starts a CDM project in Chile the country, or organisation, can then sell the emission reductions on the European market for emissions.

The spot price on emissions for 2008 at the Nordic market, nordpool, was at the time this was written

15.5€/ton CO26, this is equal to 20.1 US$/ton CO27.

5_{http://unfccc.int/resource/docs/convkp/kpeng.html ,}₂₀₀₆_-₁₂_-₀₂ 6_{www.nordpool.com ;}₂₀₀₇_-₀₁_-₂₃

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4 Types of fuel

There are many different types of fuel in a national power system and here follows a short description of the ones that are used, or might be used in the future, in the Chilean system.

When using the suns radiation for power production the photoelectric effect is utilized, how that works can be read about on page 15.

For a description of how hydropower works see chapter 5.

4.1 Fossil fuels

The fossil fuels that are used in the electric system in Chile are mainly natural gas and coal, but some different kinds of oils are also used. Since these fuels are not being recreated, at least in a rate comparable to the rate at which they are being used, they are seen as none renewable and when burned they produce Carbon dioxide (CO2) and also some sulphur and heavy metals.

Quantities of natural gas is measured in cubic meters at a pressure of 75 kPa and a temperature of 15

°C8_{, at these conditions one m}3_{of natural gas that is used commercially contains a minimum of}₁₀_,₅

MWh/m3_{. If the gas is found to contain much more energy/m}3_{than the minimum value of commercial}

gas when it comes out of the ground it is often diluted to fit industrial standards9_{. Natural gas that is to}

be used commercially has to be refined to get rid of water and other non-combustibles and is composed almost exclusively by methane and ethane. The carbon dioxide content of natural gas is 184 kg/MWh10_,

which is the lowest CO2 content of the fossil fuels but still it gives a considerable net increase of CO2 to

the atmosphere. Sulphur emissions from natural gas are almost negligible and nitrous oxide emissions are considerably lower than for coal and oil. Natural Gas can be used in both gas turbine plants and combined cycle plants. Put together Natural gas is environmentally friendly when compared to other fossil fuels, but is still non renewable and when burned increases the CO2 content of the atmosphere.

Chile is using a number of petroleum products in their electrical system, these are: Fuel Oil 6, Diesel, IFO 180 and something just called petroleum, which is assumed to be a light fuel oil. Fuel Oil 6 has an energy content of 17 677 Btu/lb11_{which is equal to about}₄₂_.₆_{kWh/gallon, since oil is sold by the}

gallon and not in tons that is the most usable unit. For diesel fuel the energy content is about 18 320

Btu/lb12_{and that is equal to about}₃₈_.₇_{kWh/gallon. IFO}₁₈₀_{is an intermediate fuel oil and should have}

about the same properties as No. 4 oil and that is about 41.8 kWh/gallon. The oil called petroleum probably has the same properties as diesel. The carbon dioxide content is for all oil products around 250

kg/MWh.

8_{http://www.unctad.org/infocomm/anglais/gas/quality.htm}₂₀₀₆_-₁₂_-₂₀ 9_{http://www.energy.vt.edu/vept/naturalgas/index.asp}₂₀₀₆_-₁₂_-₂₀ 10_{Boyle, Energy Systems and Sustainability, Oxford press,}₂₀₀₃_{, table}₇_.₈

11_{Black, Power plant Engineering, Chapman & Hall, New York 1996, table 4-8}

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The coal that is used in the Chilean electric system is of the bituminous and sub bituminous type, although Chile has a coal reserve of about 155 million tons, coal is also imported from Indonesia. Coal has an energy-content of about 5.93 MWh/ton13_{. The carbon dioxide energy of coal is}₂_.₉_{ton CO}

2/ton

coal14_{, which is equal to}₀_.₄₉_{ton CO}

2/MWh heat. This makes coal the worst fossil fuel from an

environmental point of view. Coal is used exclusively in steam power plants, when it’s used for power production in Chile. Table 1 shows a comparison between the fossil fuels.

Table 1, the fossil fuels

Fuel Energy content kg CO2/MWh

Natural Gas 10.5 MWh/m3₁₉₀

Fuel Oil 6 42.6 kWh/gallon 250

Diesel 38.7 kWh/gallon 250

IFO 180 41.8 kWh/gallon 250

Petroleum 38.7 kWh/gallon 250

Coal 5.927 MWh/ton 490

13_{Mail from Andrés Tornquist}_2006-10-18

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4.2 Bio mass fuels

The Swedish standardized definition of Bio mass fuels is biomass that has not been altered, or very little, chemically15_{. This means that waste products from the paper industry like black liquor are not classified}

as bio mass fuel. Today Chile has an installed capacity of 105.9 MW for bio mass fuels. The type of bio mass that is used is residues from forestry, like branches sand tree tops. Other types of biomass fuels can be energy crops, like Salix, wood pellets and using forestry directly for energy production. The energy content in these fuels differs depending on composition, as shown in Table 2. As long as the biomass fuels that are used for energy production are recreated at the same rate there are no net emissions of CO2.

Table 2, energy content in biomass fuels.16

Fuel Moist level

% Ash levels % Heat Value MWh/m3s Saw mill chips, large 23 (18-23) 0.3 0.78

Saw mill chips, small 57 (35-64) 0.3 0.65 Forestry Residues Chipped Crushed 45 (40-49) 45 (39-46) 2.3-3.0 4.5 0.85 0.85 Recycled wood fuel 20 (20-50) 15-20 0.70

Energy forest 50 (48-55) 3-6 0.35

Energy crops 15 (15-60) 3-6 10.5-10.8

15_{Svensk Standard SS}₁₈₇₁₀₆

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4.3 Municipal Solid Waste (MSW)

The American federal definition of MSW is: “Any garbage, refuse, sludge from a waste treatment plant, water supply treatment plant, or air pollution control facility and other discarded material, including solid, liquid, semi-solid, or contained gaseous material resulting from industrial, commercial, mining, Carland agricultural operation, and from community activities, but does not include solid or dissolved material in domestic sewage, or solid or dissolved materials in irrigation return flows or industrial discharges..., or sources of special nuclear, or by-product material as defined by the Atomic Energy Act of 1954.”17_{Table 3 shows the different energy contents of some different types of wastes.}

Table 3 Energy content in Municipal Solid Wastes18

Material MWh/ton Food Waste 1.49 Yard Waste 1.68 Plastic 8.89 Paper 4.44 Textiles 4.85 Glass 0 Metal 0 Miscellaneous 0.64

4.4 Wind

The wind energy is kinetic energy and kinetic energy can be described as

2

mv

E = _{, where m is mass in}

kilograms, v is velocity in m/s and E is energy in Joule. If air moves through an area, A, with a velocity, v, and the mass of the wind passing will be:m& =ρ⋅A⋅v_whereρ_{is the density of the air. This}

coupled with that power, p, is equal to energy per time unit the expression for power in the wind is:

2

3

v A

p= ρ⋅ ⋅ where p is power in watts. This is not however the energy that is produced by a wind

power plant. To estimate the energy production in a number of wind power turbines the following equation can be used:E_A =K⋅v_m3 ⋅A_t⋅T19_{where K =}2.5 and is a factor based on typical turbine performance characteristics; vm is the sites annual mean wind speed in m/s. At is the swept area of the

turbine in m2_{, T is the number of turbines and E}

A is the annual energy. This gives a rough estimate and

should be used with caution.

17_{http://www.cee.ucf.edu/classes/env}₄₃₄₁_{/msw-defn.htm 2006-12-20}

18_{Estevez, P, Management of Municipal Solid Waste in Santiago, Columbia University, 2003}

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5 Types of power generation

In this paper six different types of power generation are primarily discussed: Steam based power plant, open cycle gas turbine generation, combined cycle plant, hydro electrical power including “Run off River”, photovoltaic cell technology and wind power. This chapter gives the reader a quick overview of how the different methods of producing power works.

5.1 Steam based power plants

A steam power plant transforms heat into electricity; the heat can come from burning different kinds of fuel, such as coal, oil or biomass or, in the case of the combined cycle plants, from exhaust gases. A schematic picture if the process can be found in Figure 4 Schematic view of the Rankine Cycle.

The cycle is called a Rankine Cycle with over heating and works as follows: Cold water goes into the water pump, position 1, where the pressure increases, thereafter the water enters the steam boiler where it’s heated up under constant pressure so it becomes steam, additional heating occurs in the over heater. In the steam turbine the pressure drops under constant temperature by spinning the turbine, which in turn drives a generator that produces electricity20_{. After the turbine the water has to cool down}

more before it can go back to the pump. In reality there are always unwanted temperature losses because perfect isolation is impossible.

Figure 4 Schematic view of the Rankine Cycle

The theoretical thermal efficiency of the process is expressed as ) ( ) ( ) ( 4 1 1 2 4 3 h h h h h h Q Q W OH steam t th − − − − = + =

η , where hx stands for the enthalpy in position x. Although

the efficiency varies depending on what temperatures and pressures that are used in the process, in power plants it’s usually between 30 and 40%21_.

20_{Cengel, Fundamentals of Thermal Fluid Sciences, McGrawHill, New York, 2001, figure 8-40.}

21_{Alvarez, Energiteknik, Studentlitteratur, 2006}

Heat in Steam Q& 4 2 1 Condensator Steam turbine Steam boiler

Heat out, Q&cond

Water pump

Power out, W&t

Heat in Q&OH

3 Over

heater

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Making use of the excess heat that needs to be removed between positions four and one can raise the total efficiency.

5.2 Open Cycle Gas Turbine

The open cycle gas turbine is a process where heat is added by burning compressed gas in a burning chamber, the gas fumes then drives a turbine, which in turn drives a generator. A Schematic picture is shown in Figure 5, Schematic view Gas Turbine22_{. The turbine drives the compressor directly. The gas}

turbine has a lower efficiency than a steam power plant, between 20 and 30%23_{, but they are cheaper to}

build. Since they are expensive to operate but cheap to build they are often used for dealing with top loads and not for continuous use.

Figure 5, Schematic view Gas Turbine

5.3 Combined cycle

A combined cycle plant uses the exhaust gases from an open cycle gas turbine to provide heat for a steam based power plant. This greatly increases the efficiency of the process. For natural gas the electrical efficiency can be as high as 60 % if the excess heat is not used or 50% if the excess heat is used, if the excess heat is used the total efficiency can be around 80%. A drawback with the combined cycle plant is that it is much more expensive than the gas turbine or a steam power plant.

5.4 Wind Power Plant

A wind turbine works like an inverted fan; instead of using electricity to make wind the wind turbine uses wind to make electricity. The wind spins the rotor that drives a shaft that connects to a generator that produces electricity. How a wind turbine can look inside is displayed in Figure 6 inside a Wind Turbine. This turbine is an upwind turbine, which means that the turbine faces the wind direction; there are also downwind turbines.

Compressor Turbine Burning Chamber 1 4 2 3 bc Q& netto W

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Figure 6 inside a Wind Turbine24

The different parts do the following things:

Anemometer: measures the wind speed and communicate it to the controller. Blades: most turbines have two or three; the wind causes them to rotate. Brake: used to stop the rotor in emergencies.

Controller: starts the turbine when sufficient wind speeds have been reached, about 3.6 m/s, and shuts off when the wind reaches about 29 m/s, since higher wind speeds can damage the turbine.

Gearbox: connects the low speed shaft to the high-speed shaft. The rotations are increased from about

30-60 rpm to 1200 – 1500 rpm.

Generator: an ordinary generator that usually produces 60 cycles AC electricity. High-speed shaft: drives the generator.

The rotor drives the low speed shaft directly.

Nacelle: the rotor attaches to the nacelle, which sits on top the tower and includes the gearbox, low- and high-speed shafts, generator, controller and brake.

Pitch: the blades are pitched to keep the rotor from turning in winds at speeds that are too high or too low.

Rotor: the blades and the hub together are called the rotor. Tower: the tower is made from tubular steel or steel lattice.

Wind vane: measures the wind direction and communicates it to the yaw drive:

Yaw drive: the yaw drive is used to keep the wind turbine facing the wind, not needed in downwind turbines.

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5.5 Solar Power

The common way to generate electricity directly from the sun is to use a photovoltaic cell. The cells are made of some kind of semiconductor, most commonly silicon. The cells are designed with a positive and a negative side. As photons hits the cell and absorbs into it they causes electrons to become free, the electrons then moves to the bottom of the cell and exit through a connecting wire, thus causing an electric current in the wire.

Photovoltaic cells are today very expensive, a cost of between six and eight US$ is common25_{, and since}

they only work when the sun is shining this make solar power expensive. But solar power has one advantage over the other system and that is that very small systems can be built in areas that lack access to a power grid and are to small or poor to be interesting for the companies that owns and builds power lines.

Figure 7, photovoltaic cell26

5.6 Hydropower

A body of water that is positioned at a higher level than its environment has potential energy. This energy can be described asE =m⋅g⋅h_{, where E is the energy in joule, m is the mass of the water and h}

is the height difference in meters. The energy can be transformed in to electricity in a hydroelectric plant, as shown in Figure 8 Hydroelectric plant. The main components are the storage reservoir, where the water is gathered and the penstock that brings the water to the turbine which in turn drives the generator that produces the electricity. Some hydroelectric plants are “Run off River” ‘run of river’; in other words, any dam or barrage is quite small, usually just a weir, and generally little or no water is stored27_.

25_{http://www.oja-services.nl/iea-pvps/isr/index.htm, 2007-01-25}

26_{http://www.pv.unsw.edu.au/future-students/pv-devices/how-they-work.asp 2006-12-21} 27_{Micro Hydro Power Status and Prospects, O Paish,}₂₀₀₂

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Figure 8 Hydroelectric plant

There is no internationally agreed definition of small hydro, a commonly accepted maximum limit is 10

MW but in for example China the limit is 25 MW. They are mostly “Run off River”, which means that their local environmental effect is limited.

Figure 9 Mini Hydro

Figure 9 shows a typical mini hydro installation. Water is taken from the river by diverting it through an intake at a small weir. The weir is a man-made barrier across the river which maintains a continuous flow through the intake. Before descending to the turbine, the water passes through a settling tank or ‘forebay’ in which the water is slowed down sufficiently for suspended particles to settle out. Water is

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carried to the forebay by a small canal or ‘leat’. A pressure pipe, the penstock, conveys the water from the forebay to the turbine.28

6 Chilean Electric Market

The Chilean electric sector is divided into generating, transmission and distribution. Since it is primarily the generating side that is involved in this paper it is enough to say that the transmission sector is obliged according to amendment 19,940 of March of 2004 to the “Ley General de Servicio Eléctricos”, the transport of electricity by systems of main transmission and systems of sub-transmission are electrical public service, therefore the transmitter has obligation to invest in new line or extensions of the same ones29_{. This means that the transmission companies have to connect new facilities to the main grids.}

The price of the end user is divided into three parts: Node price, added value of distribution price and a price depending on position in the system. The node price is the most interesting price for the generators since that is the price they get for the power that they generate.

The node price is set in April and October every year. It is determined by the National Commission of Energy, the CNE, and then set by the Ministry of Economy, Promotion and Reconstruction. This is a fixed price and depending on two components. Firstly the average fuel price and operating costs and secondly a price that depends on the cost of increasing the installed capacity to meet maximum demands and for reserve power. The node prices of October 2006 was on an average 5.3 US¢ in SIC and 4.9 US¢ in SING.

28_{O Paish, Micro Hydro Power Status and Prospects, IT Power Limited, Manor House, 2002}

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7 Current Production Mix

As mentioned in the previous chapter the first step in building a model is to describe the existing system. The production of power in Chile is, as stated before, divided into four electric systems of which two are represented in this paper. The type of fuels that are used for power production differs between the SING and the SIC-system and there is currently no connection between the systems. So in this chapter the systems are presented separately

7.1 Sistema Inerconectado Central

The Sistema Interconectado Central, SIC, covers the central part of Chile where 90 % of the population lives. The system covers the land between the city Taltal in the north and the island Chiloé in the south. The SIC-system is, unlike SING, dominated by smaller costumers. About 60 % of the electricity goes to costumers with fixed taxes30_{. A picture of the system can be seen in Figure}₁₀_{Map of the SIC.}

Figure 10 Map of the SIC-system

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7.1.1 Installed Capacity

The system is dominated by hydropower but there is also a variety of fossil fuels, mainly natural gas based power plants. Interesting is that the system also contains power from forest residues and black liquor, this is because much of the foresting industry is located within the SIC system. Table 4 Installed Capacity SIC systemshows what different types of facilities that are represented in the system.

Table 4 Installed Capacity SIC system

Type of Installed

Power source Potential [MW]

Run of River 1 301,9

Hydro electrical 3 393,4 Steam – Black Liquor 73,0

Steam – Coal 937,7

Open cycle – Diesel 725,3 Open cycle – IFO 180 64,2 Open cycle – Natural Gas 252,0 Steam – Foresting residues 105,9

Combined cycle 1 509,4

Petroleum products 75,0 Total Installed Capacity 8 437,8

7.1.2 Consumption

In 2005 the total generation in the SIC system was 37.9 TWh which more than twice that of the SING system. As can be seen in Figure 11 Total Generation SIC 2005 about two thirds of the electricity comes from hydroelectric plants (with dam and run off river). The most used fossil fuel facilities are Coal and Combined cycle that represent about 25 % of the electrical energy in the system. The non conventional sustainable resources black liquor and forestall residues makes up for about 1.25 % of the total energy31_.

Generation by Type SIC 2005

3% 42% 25% 15% 10% 0% 1% 3% 1% _{Gas Turbine}

Hydro with Dam Hydro Run off River Combined cycle Coal Black liqour Forest Residues Diesel Oil 31_{www.cne.cl 2007-01-29}

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Figure 11 Total Generation SIC 2005

As Figure 12 shows there has been a steady increase of the generation over the last ten years, there are also some monthly variations.

Histórico generación bruta SIC (GWh)

1 650 1 850 2 050 2 250 2 450 2 650 2 850 3 050 3 250 3 450 3 650 jan-96 m a r-9 6 ma j-9 6 ju l-9 6 s ep-96 no v -9 6 jan-97 m a r-9 7 ma j-9 7 ju l-9 7 s ep-97 no v -9 7 jan-98 m a r-9 8 ma j-9 8 ju l-9 8 s ep-98 no v -9 8 jan-99 m a r-9 9 ma j-9 9 ju l-9 9 s ep-99 no v -9 9 jan-00 m a r-0 0 ma j-0 0 ju l-0 0 s ep-00 no v -0 0 jan-01 m a r-0 1 ma j-0 1 ju l-0 1 s ep-01 no v -0 1 jan-02 m a r-0 2 ma j-0 2 ju l-0 2 s ep-02 no v -0 2 jan-03 m a r-0 3 ma j-0 3 ju l-0 3 s ep-03 no v -0 3 jan-04 m a r-0 4 ma j-0 4 ju l-0 4 s ep-04 no v -0 4 jan-05 m a r-0 5 ma j-0 5 ju l-0 5 s ep-05 no v -0 5 jan-06 m a r-0 6

Figure 12 Generation SIC January 1996 to Mar 2006

7.1.3 Emissions

The CO2-emissions for SIC are displayed in Table 5 Emissions calculations for SIC. Since there is much

hydroelectric power in the system the carbon dioxide emissions are quite low, but there is still a high percentage of coal power that is used which emits much CO2.

Table 5 Emissions calculations for SIC

Type Generation GWh Efficiency Ton COheat 2/MWh Ton COElectricity 2/MWh ton CO2005 2

Open Cycle NG 973.7 28% 0,19 0,67857 660 725

With Dam 16 050.50 - - 0

Run off River 9 324.80 - - 0

Combined cycle 5 542.10 55% 0,19 0,34545 1 914 544 Coal 3 820.00 34% 0,49 1,44118 5 505 294 Black liquor 91 30% 0 0 0 Biomass 383.4 30% 0 0 0 Diesel 1 307.10 28% 0,27 0,96429 1 260 418 Oil 422.5 28% 0,27 0,96429 407 410,71 Total 37 915 0,257 9 748 391

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7.2 Sistema Interconectado del Norte Grande

The Sistema Interconectado del Norte Grande, or SING, covers the desert areas in the northernmost part of Chile. A map of the SING-system can be seen in Figure 13 Map of the SING the area is scarcely populated and covers the regions II and III. These regions have a total population of around 100000032_,

which is about 6% of the total population. The largest cities, where most of the population lives are: Arica, Antofagasta, Iquique and Calama, they are all coastal cities although the population is relatively small, the SING-region is home to most of Chiles mining industry, among the mines are the two largest copper mines in the world: Escondida and Chuquicamata. This is an industry that uses a lot of energy. About 90 % of the electricity in the SING-system goes to large industrial clients.

Figure 13 Map of the SING-system

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7.2.1 Installed Capacity

The SING system today relies heavily on fossil fuels, the only none fossil energy comes from two hydro electrical plants whose combined capacity is 12.8 MW or 0.4 % of the total capacity.

Table 6 Installed Capacity in the SING system shows how the installed capacity looks in the SING system.

Combined cycle plants stands for more than half of the installed capacity and Coal power for about a third. The average demand in the system during 2005 was 1485 MW, which is less than half of the installed capacity.

Table 6 Installed Capacity in the SING system33

Type of Installed Capacity

Power Source [MW]

Combined cycle 2074,2

Open cycle – Diesel 212,3 Open cycle – Fuel Oil 127,6

Steam – Coal 1205,6

Open cycle – Natural Gas 37,5

Hydro electrical 12,8

Total Installed Capacity 3759,0

7.2.2 Consumption

In 2005 the total generation in the SING system was 13.0 TWh. The consumption by fuel type, as shown in Figure 14, combined cycle and Coal dominates while the more inefficient open cycle generators are only used when needed. The hydro electric plants are used and probably running at full capacity but since the installed capacity is so limited their contribution is small.

0% 65% 0% 35% 0% 0% Hydropower Combined Cycle Gas Turbine Coal Diesel Fuel Oil 33_www.cne.cl,₂₀₀₆_-₁₂_-₀₅

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The consumption over the last years in the SING system is displayed in Figure 15, Gross Generation in SING 1999 – 2006.

Histórico generación bruta SING (GWh)

650 750 850 950 1 050 1 150 1 250 jan-9 9 mar -99 maj -99 ju l-9 9 s ep-99 nov -9 9 jan-0 0 mar -00 maj -00 ju l-0 0 s ep-00 nov -0 0 jan-0 1 mar -01 maj -01 ju l-0 1 s ep-01 nov -0 1 jan-0 2 mar -02 maj -02 ju l-0 2 s ep-02 nov -0 2 jan-0 3 mar -03 maj -03 ju l-0 3 s ep-03 nov -0 3 jan-0 4 mar -04 maj -04 ju l-0 4 s ep-04 nov -0 4 jan-0 5 mar -05 maj -05 ju l-0 5 s ep-05 nov -0 5 jan-0 6 mar -06

Figure 15, Gross Generation in SING 1999 – 2006

As can be seen in Figure 15, Gross Generation in SING 1999 – 2006, there is a steady increase in the consumption with some monthly variations. December has the highest consumption and February the lowest.

7.2.3 Emissions

The CO2 emission for the SING system has been calculated in

Table 7, SING and should be around 10.5 million tons for 2005. The SING system has high CO2

emissions per MWh and this is of course due to that the main power sources are fossil fuels and especially the large quantities of coal power raises the emissions. The system has actually higher emissions totally than the SIC system despite the fact that they only produce about a third as much electricity.

Table 7, SING emissions

Type Generation MWh Efficiency

Ton CO2/MWh

Heat Ton COElectricity ton 2/MWh CO22005

Hydroelectric Power 62 545 - - - -

Combined cycle 8 295 370 0.55 0.19 0.35 2 865 673

Open Cycle Natural

Gas 44 384 0.28 0.19 0.68 30 118

Coal Power 4 587 696 0.3 0.49 1.63 7 493 237

Diesel Gas Turbine 15 130 0.28 0.27 0.96 14 590

Fuel Oil as Turbine 85 0.28 0.27 0.96 82

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8 Capacity for sustainable energy in Chile

8.1 Municipal Solid Waste to Energy

Although Municipal Solid Waste is not considered as a renewable energy source there are good reasons why it could be in Chile’s future energy mix and there are also reasons why it should be considered an environmentally friendly fuel, as will be presented here. Waste to Energy is shorted down to WTE in this chapter.

8.1.1 Waste situation in Chile

Chile’s economy has been growing a lot the last fifteen years. But as industrial production increase and consumption goes up so doe’s waste production. The problem is as worst in the Santiago Metropolitan region. This region holds about five and a half million inhabitants and makes up for 37 % of the population. In 2001 the Metropolitan region produced about 2.3 million tons of municipal solid waste. All the waste today is deposited in sanitary landfills; no further treatment is done to the waste. This is not a good long term solution, land that can be used for landfills in the Santiago region is scarce and there is strong opposition against them from both political groups and the population in general. A part of the solution of the problem could be to burn the waste for power production.

8.1.2 Waste Composition and Capacity

The composition of the Santiago Waste has been investigated by Conama, a Chilean environmental organization; it is presented in Table 8 Waste Composition.

Table 8 Waste Composition34

Type of waste Percentage

Food waste 43 % Paper 19 % Plastic 10 % Yard Waste 7 % Textile 4 % Metal 2 % Glass 2 % Miscellaneous 13,4

This composition together with Table 3 gives that the Santiago Waste has an average energy content of about 2.79 MWh/ton. Compared to oil this is of course rather low but since MSW is often seen as a problem and not a resource and therefore a company can be paid to take care of it. The municipalities in Santiago pays 25 US$/ton MSW for placing MSW in landfills, of this 15 US$ is for transport and 10 for the landfill35_{. It is also estimated that materials supplies will cost about}₃_{US$/ton MSW and land filling}

of the fly-ash that is left after the incineration will cost about 0,75 US$/ton MSW, it is estimated that about 3% of the MSW will be turned into fly ash and have to go to landfill after incineration. In conclusion the fuel for the power plant is not a cost but an income of 6.25 US$/ton, which is equal to

2.24 US$/MWh.

34_{Estevez, P, Management of Municipal Solid Waste in Santiago, Columbia University, 2003} 35_{Estevez, P, Management of Municipal Solid Waste in Santiago, Columbia University, 2003}

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In 2007 the Santiago region will produce about 8000 tons of MSW/day and this, if the current trend continues increase to about 9500 tons/day in 201036_{. Of the MSW about}₁₂_{% goes to}

recycling37_{.currently and this percentage is increasing. It is expected that the percentage that goes to}

recycling will increase and in 2010 it should be about 17 %. This gives that about 2.1 million tons/year in

2007 and about 2.87 million tons/year in 2010. With an energy content of 2.79 MWh/ton this means that in 2007 about 5884 GWh are available per year from waste and in 2010 about 8000 GWh, observe that this is heat and not electricity.

8.1.3 Costs Associated with Waste to Energy

Since there are no WTE-plants in Chile today it is hard to know in advance exactly how big an investment is needed and what the operational costs will be is unknown but since plants have been built out side of Chile and this is an area under investigation from Chilean organizations a good assessment should be possible.

There are mainly two types of technologies for burning MSW and those are processed and unprocessed solid waste combustion. In a processed solid waste combustion the waste is first separated to remove incombustibles and burned thereafter. Since the waste in the Santiago region is unsorted it should be easier with a system for unprocessed waste, the most widely used system in that category is the Martin Grate Technology38_.

Building a WTE plant in Chile should be a bit cheaper than in USA or Europe since labour is cheaper but the equipment, such as power turbines and incinerator equipment, has to be bought from abroad and is therefore at least not cheaper than in Europe. A WTE-plant should cost about 65000 $US per daily ton39

or heat heat MWh day US ton MWh day ton US ⋅ =23298 $ / 79 . 2 ) / /( $ 65000

. That is equal to 23298⋅24=559140US$/MW

considering an efficiency of about 25 % gives that the cost is 2.2 million $US/MW. Building a plant in Sweden will cost between 15 and 30 millions SEK40_{per installed MW depending much on what sort of}

cleaning equipment that is installed. The fixed costs for a WTE-plant is mainly personnel, the labour costs for a 36 MW plant is about 50775 US$/month, giving that the fixed costs for WTE-plant is around

1410 US$/MW and month.

36_{http://www.conama.cl/rm/}₅₆₈_/article-₉₀₇_.html#h₂_{_}₁₂₀₀₆_-₁₁_-₁₁ 37_{Interview with Ximena Rojas,}₂₀₀₆_-₁₁_-₂₃

38_{Estevez, P, Management of Municipal Solid Waste in Santiago, Columbia University, 2003} 39_{Estevez, P, Management of Municipal Solid Waste in Santiago, Columbia University, 2003}

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8.1.4 Environmental Concerns

Since the waste contains plastics some CO2-emissions will occur when it’s being burnt. But if the MSW

is left untreated in landfills it emits methane when decomposing, methane is a much more potent green house gas than CO2 about 23 times as powerful. The amount varies of course since the MSW is not

completely homogenous but on average a landfill produces methane that is equal to about 2,541 ton CO2/ton. There is currently in Santiago three landfills that collects the landfill gas, the gas is not used

but flared directly42_{. This decreases the greenhouse gas emissions to somewhere above}_1,2543_ton

CO2/ton. Since there are plastics in the waste and burning plastics give a net emission of CO2 one ton of

MSW from Santiago produces 35044_kg_{of CO}

2. So from an environmental point of view it would be best

to build waste to energy plants primarily for the waste that does not have landfill gas collection. Doing this will actually cause a decrease in carbon dioxide emissions by 676 kg/MWh. If the waste that is burnt instead would go to a landfill where the landfill gas is collected and flared it would cause a net emission of carbon dioxide of -228 kg/MWh. It would be best for the environment to use the waste that would not otherwise be put in a landfill with gas collection, but since that will be hard to guarantee, the figure of -228 kg CO2/MWh will be used. Table 9 Figures for Waste to Energy summons up the Waste to

Energy chapter. Investment

US$/MW Fuel cost US$/MWh Maintenance Cost _{US$/MW and month} Net CO_{No LG-collection}2-emission ton/MWh

Net CO2-emission

LG-collection ton/MWh

MSW 2 200 000 -2,24 1410 -0.676 -0.228

Table 9 Figures for Waste to Energy

41_{Mail from Jan-Olov Sundqvist}₂₀₀₆_-₁₁_-₂₈ 42_{Interview with Ximenia Rojas,}₂₀₀₆_-₁₁_-₂₃ 43_{Mail from Jan-Olov Sundqvist}₂₀₀₆_-₁₁_-₂₈ 44_{Mail from Jan-Olov Sundqvist}₂₀₀₆_-₁₁_-₂₈

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8.2 Biomass

The biomass fuels that are most interesting in a near future in Chile is residues from the forest industry, such as tops and branches that cannot be used in the sawmills and for pulp and is therefore left in the forest. These residues can be burned in steam based power plants with an approximated efficiency of 30%.

8.2.1 Current Situation and capacity

There are currently three facilities that burn these types of fuels in the SIC-system. They have a combined installed capacity of 105.9 MW45_{. The rest of the residues from the foresting industry are not}

used at all today, but the two largest Chilean foresting companies, Arauco and CMPC, who owns 70% of forest plantations in Chile, have started a three year project to not let any biomass resource leaving their system46_{. How much biomass that can be extracted from the forests without leading to deforestation is}

currently not exactly known but according to Jorge Urrutia, president of INFOR, Iinstituto de investigacíon forestall de Chile, the native forest can contribute with 7.7 million m3_{s annually for power}

production and the forest plantation with about the same amount47_{. This gives a total capacity of}₁₅_.₄

million m3_{s/year. Tops and Branches have an estimated energy content of}₀_.₈₅_MWh/m3_s48_{if dried and}

all the biomass in this report is approximated as tops and branches. The total annual capacity is therefore estimated to 13.09 TWh/year. With an efficiency of about 30% a total of 3.9 TWh electricity could be generated each year from biomass.

8.2.2 Costs Associated with Biomass to Energy

Unfortunately to obtain as good information for biomass to energy as for waste to energy was very hard, but a plant that was built in Motala, Sweden, with a capacity of 17 MW cost about 120 millions SEK, which corresponds to about 1.0 million dollars per MW, because costs for workers is lower in Chile it is probably a bit lower, approximately 900000 US$/MW. Collecting and transporting foresting residues should cost about 10-15 US$/m3_s49_{, with the before mentioned energy content this means that the fuel}

cost is about 14.5 US$/MWh. The cost of operating and maintain a biomass fuelled power plant is approximately 2% of the total investment50_{. In this case the cost will be around}₁₅₀₀_{US$/MW and}

month for Swedish conditions but since it should be cheaper in Chile it is estimated to be around 1200

US$/month.

45_{www.cne.cl 2007-01-29}

46_{Mail from Aldo Cerda 2006-08-11}

47_{Urrutia, Energía de Biomasa, Lignum 72, Santiago de Chile, June 2004}_{page 24}

48_{Externa kostanders inverkan på tekniska energisystem, A Carlsson,}₂₀₀₀ 49_{Mail from Aldo Cerda,}₂₀₀₆_-₁₁_-₂₀

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8.3 Wind Power

Wind power is by many seen as symbol for renewable energy. It has no emissions and is completely renewable. The drawback with wind power is that it is hard to control the output, since the weather decides what percentage of the power plants maximum capacity that can be used for the moment. So location is crucial for a wind power plant. Average wind speeds of at least 5 m/s are needed for a wind turbine to generate electricity at economically viable levels51_.

8.3.1 Costs for Wind Power

How big an investment a wind farm needs depends not only how many turbines it contains but also where it is located, building in very remote and unpopulated places is of course more expensive. Corfo, the Chilean economic development agency are currently helping 11 wind farm projects finding investors, the projects, needed investment and how much energy they will produce is shown in Table 10.

Table 10 Wind Power Projects52

Installed Potential annual Expected annual Required Project

number Capacity [MW] energy (GWh/year) energy (GWh/year) investment [MUS$] MUS$/MW

1 8,00 70,08 22,40 15,90 1,99 2 9,90 86,72 26,00 17,00 1,72 3 10,00 87,60 26,30 ? 4 20,00 175,20 54,00 29,26 1,46 5 6,00 52,56 7,50 4,50 – 16,00 6 100,00 876,00 376,70 119,00 1,19 7 20,00 175,20 51,80 32,00 1,60 8 20,00 175,20 52,60 ? 9 100,00 876,00 290,00 140,00 1,40 10 10,00 87,60 26,30 10,00 1,00 11 10,00 87,60 31,00 13,00 1,30 Mean Value 1,46

This mean value might seem crude to use in the calculations. It does however have an advantage since these numbers are calculated for Chilean circumstances and they include all side costs. As can also be seen in the table none of the actual expected energy that the projects will yield differs much from the potential energy that could be created if the turbines ran at full capacity all the time. There is nothing strange with this since wind speeds shifts. The average used percentage of capacity in all cases except for project five and project six is very close to 31 %. Even though the wind itself is free there are still some costs related to wind power, mainly for maintenance. The price for this in Chile is unknown but in

51 _{Hoogwijk, Assessment of the global and regional geographical, technical and economic potential of onshore energy,}

Utrecht University, 2004

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Sweden it is approximated to be about 70 SEK/MWh or 10 US$/MWh, since labour is cheaper in Chile it is estimated to be lower, around 8.50 US$/MWh53_{.Capacity for Wind Power}

The potential for wind power may seem unlimited, or at least as long as there is available land. But to make a wind farm interesting from an economical view point it is important that it is built in a fairly windy spot. The Universidad de Chile made an evaluation of the wind power potential of the nation and they found out that the most interesting places to build wind power are54_:

• The Calama zone, in Region II.

• Along the cost in the northern parts of the country, in the Limarí-Los Vilos sector.

• In places that goes out into the ocean, along the coast in the northern and central parts of the country.

• On hilltops and open mountain areas.

• In the zone that is open to the ocean in the Austral region, region XI and XII. • In the trans-Andian zone facing the Patagonian plains, in the region XI and XII. • In the Antarctic stations.

• On the remote islands.

• Since it is so hard to really determine how much capacity that exist no upper limit is set, but if the optimization results will include much wind-power this will have to be revised.

53_{Authors approximation}

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8.4 Mini Hydro

The best sites for generating power from hydroelectric plants are places where large height differences exist since because large height difference means less water is required and therefore smaller and less expensive equipment can be used55_{. The problem with these areas is that they are often scarcely}

populated with low demands of electricity meaning that long, hence expensive, transmission lines are required. Because no reliable data regarding to the capacity and cost of mini hydro has been found an approximation has been made, in the same way as for wind power, using data from Corfo for a number of mini hydro projects that are trying to find investors, Table 11 shows these projects.

The price for mini hydro projects is set to 1.47 million US$/installed MW and because it is difficult to estimate how much that can be built a limit of 256 MW of installed capacity is set.

Table 11 Mini Hydro Projects56

Installed Potential annual Expected annual Required Project

number Capacity [MW] energy (GWh/year) energy (GWh/year) Usage

investment [MUSD] MUSD/MW 1 2.40 21.02 13.70 0.65 3.00 1.25 2 15.00 131.40 85.00 0.65 25.50 1.70 3 3.00 26,28 17,00 0,65 5,00 1,67 4 2,50 21,90 14,00 0,64 4,60 1,84 5 9,12 79,89 44,70 0,56 13,10 1,44 6 19,20 168,19 92,30 0,55 25,50 1,33 7 6,30 55,19 32,00 0,58 9,20 1,46 8 0,50 4,38 3,00 0,68 0,60 1,20 9 75,00 657,00 394,00 0,60 100,00 1,33 10 5,60 49,06 24,00 0,49 4,80 0,86 11 1,10 9,64 4,80 0,50 1,40 1,27 12 0,70 6,13 3,00 0,49 1,00 1,43 13 9,00 78,84 43,30 0,55 11,70 1,30 14 0,80 7,01 5,60 0,80 1,75 2,19 15 1.20 10.51 8.00 0.76 2.00 1.67 16 0,84 7,36 4,40 0,60 0,60 0,71 17 3,66 32,06 21,50 0,67 5,25 1,43 18 25,00 219,00 142,40 0,65 26,00 1,04 19 0,75 6,57 5,10 0,78 1,20 1,60 20 11,40 99,86 65,00 0,65 17,00 1,49 21 12,00 105,12 75,80 0,72 22,30 1,86 22 25,00 219,00 142,40 0,65 32,00 1,28 23 15,00 131,40 85,40 0,65 25,87 1,72 24 9,00 78,84 60,00 0,76 19,00 2,11 25 2,00 17,52 11,00 0,63 3,00 1,50

55_{Paish, Micro Hydro Power Status and Prospects, IT Power Limited, Manor House, 2002}

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Mean Value 256,07 (Sum) 0,64 1,47

8.5 Solar Power

In the northern parts of Chile there are some very dry deserts where the sun radiation reaches values of about 4 500 kCal/m2_{and day}57_{, these are among the highest values in the world and if solar power is}

worth investing in anywhere it should be here. As mentioned before the capital costs of solar power are very high, about 7 million US$/MW and that will probably make it uninteresting for the big power systems. The Chilean government however tries to increase the electrification in rural areas58_{and here}

solar power could have a place as showed in the article: “Introducing Photovoltaic Systems into Homes in Rural Chile”. In that article some Solar Home, SHS, Systems projects in Rural areas were evaluated and although there had been some technical problems they were used and appreciated. These homes had a maximum power requirement of about 260 Wh/day59_{, this is very low and therefore a small solar}

power cell is economically beneficial compared to the other power sources. The circled object in Figure 16 shows an installed SHS.

Figure 16, Solar Power Home system in Rural Chile60

57_{http://www.cne.cl/fuentes_energeticas/f_renovables.html, 2007-01-25} 58_{http://www.cne.cl/fuentes_energeticas/f_renovables.html, 2007-01-25}

59_{Cancino B, Introducing Photovoltaic Systems into Homes in Rural Chile, IEEE Technology and Society Magazine, spring}

2001, page 31.

60_{Cancino B, Introducing Photovoltaic Systems into Homes in Rural Chile, IEEE Technology and Society Magazine, spring}

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9 Costs for existing fuels

The operational costs for a combined cycle in the US is about 2 US$/MWh61_{. This is set to 1.5}

US$/MWh to compensate for Chilean conditions. The price of natural gas was at 6.63 US$/m362 in January 2007. The operational costs for gas turbines are higher and therefore set to 3 US$/MWh.

The price of coal varies but the last notation for December showed that coal was at 58 US$/ton63_or

13.68 US$/MWh. The operating cost of a Coal Power plant in the US is about 3.5 US$/MWh64_{, since}

wages in Chile are lower and much of the maintenance cost is just wages, it should probably be closer to

2 US$/MWh.

The oil prices used are: 155 US¢/gallon for fuel oil 6, IFO180 and for diesel 150US¢/gallon65_{, this gives}

a cost of 36.4 US$/MWh for the oils and 34.9 US$/MWh for diesel.

Black Liquor and forest residues are hard to price since they are handled internally as waste products in the companies, but since the big forest companies has decided to take care of all forest residues they are set to be free. But there is a limit in the yearly energy that is available from these two and it is set as a mean value of 2004 and 2005.

Hydropower is handled similarly, there is a cost of 5US$/MWh but the energy is limited by the week and those weekly values are also a mean value of the power produced from 2002 to 2005.

61_{Tester, Sustainable Energy, The MIT Press,}₂₀₀₅_table₇_.₆ 62_{http://www.nymex.com/index.aspx}₂₀₀₇_-₀₁_-₁₈

63_{http://www.globalcoal.com/ mean value of ARA, RB and NEWC-indexes}₂₀₀₇_-₀₁_-₁₉ 64_{Tester, Sustainable Energy,}₂₀₀₅_{The MIT Press, table}₇_.₆

Sustainable Power Production in Chile