Many factors point to the importance of energy diversification in South America. Since the early 2000s, countries such as Brazil and Argentina have been showing a delicate energy supply balance. Chile, considered by many as the South American rising star, has similar problems with regard to energy supply stability. Indisputably, it is time for action and incisive planning.
In 1996, Chile witnessed a period of drought, which made the country realize the need for energy diversification. At that time, the feasible solution was opting for natural gas supplies from neighboring countries such as Argentina. However, as time elapsed, this proved to be unsafe and unreliable, and Chile continued to show a delicate balance regarding its energy demand and supply. In 2006 and 2007 (when reservoirs levels were significantly below the average), the country found itself in a difficult situation once again, with companies and entrepreneurs facing many challenges. Around 75 to 80% of Chile's small- and mid-sized companies (SMSCs) have been impacted by electricity shortages and price changes in recent years. This is highly significant, especially taking into account that around 70% of these SMSCs use electricity as a core production input, and around 25% rely strongly on a combination of natural gas, oil, and electricity to effectively perform their activities.
More recently, the lack of energy security has driven the Chilean Government to call for a 5% reduction in the public sector's electricity consumption. Although a difference between preemptive action and rationing has to be drawn, the move clearly shows signs of tension among Chilean stakeholders. Frost & Sullivan opines that it is time to adopt constructive alternatives to overcome these challenges.[1]
