Analysis: Community support and access key in Chile

CHILE: Winning over local communities and negotiating land access are becoming increasingly important to the development of the new energy capacity in Chile.

El Arrayn, Chile’s largest wind project

According to the latest report by the energy ministry's sustainable energy centre, Chile currently has 836MW in operation, 61MW under construction and more than 7GW undergoing environmental assessment or with the licence already in place.

However, as well as official approval, new projects need to obtain the consent of people living near the sites to prevent protests or legal challenges hindering development. Community opposition has become a major hurdle to new energy projects in Chile, including wind farms.

Enel Green Power head of business development for Chile and Peru James Lee Stancampiano said: "Here in Latin America, all communities have a tremendous impact on the success of projects." Like other energy projects, wind farms are increasingly running into the need to consult with indigenous communities in line with Chile's obligations under the International Labor Organisation's Convention No 169 on indigenous and tribal peoples.

In 2012, the supreme court cancelled a license granted for a 112MW windf arm on the southern wind-swept island of Chiloe after finding a local Huilliche community had not been properly consulted.

Two years on, and despite the publication of rules regulating such processes earlier this year, there is still a lack of clarity about who should be consulted. But rather than seek to avoid contact, companies should seek to work with communities to each other's mutual benefit.

One way to win the support of local communities that is gaining traction is to offer them a stake in the business.

This was the approach adopted by Colombia's Empresas Publicas de Medillin at its 110MW Cururos wind farm, its first in Chile, where the farming community which owns the site will receive 3% of sales from the project.

Chilean Developer Eolica Tablaruca is negotiating a similar deal with an indigenous community living next to its 99MW project on Chiloe. "They are all entrepreneurs, so we decided to show them the idea of developing the project together as partners," explained project manager Pablo Blanco.

The firm hopes to sign on a definitive agreement by March, allowing construction to begin the following year.

Mining rights

Mining rights represent another important barrier to the development of renewable energy projects in northern Chile.

Indefinite in length and relatively cheap to maintain, mining concessions cover huge swatches of mineral-rich northern Chile, a major supplier of copper, nitrates and other minerals.

Although the rights only cover underground mineral wealth, the priority given to mining in Chilean legislation effectively implies a veto on any activity that could hinder their extraction. As a result, holding the relevant concessions is often a prerequisite to financing.

"But there is a great deal of speculation, which can make it difficult to provide the concessions that the banks demand," noted Mauricio Caañamo, commercial manager at renewable energy company Latin American Power.

At Tchamma, developer Mainstream Renewable Power had to negotiate with six individuals and companies that owned mining rights covering the wind farm site and ten more for the transmission line, said Christian Evans, the Mainstream's operations manager for Chile.

Evans welcomed a promise by the government to reform the country's mine property to make it more costly for firms to hold on to so much land for so long.