Chile Dams Its Rivers to Unleash Its Economy

Under an azure Patagonia sky, a few dozen conservation-minded citizens and their children took part in a puppet show recently in the town square of Cochrane, a tiny hamlet in southern Chile nestled between ancient forests and winding rivers. In the story, a purple otter sought guidance from the mystical forest spirit about the malevolent plans of a gravelly-voiced developer who wants to dam the river, a scheme that would disfigure the landscape and, with it, the otter's home.

The program, hosted by the Patagonia Without Dams campaign, was a small but illustrative part of what has grown this year into a nationwide protest movement against a real-life proposal: a $3.2 billion project to build five hydroelectric dams along the nearby Baker and Pascual Rivers, and to stretch 1,200 miles (1,920 km) of high-tension wires across national parks and other protected lands to transmit the electricity out of Patagonia and up to central Chile, where most of it will be used. "Compared to a thermoelectric plant, this is clean energy," Patagonia resident and radio station employee Claudia Torres, 36, conceded. "But on the scale they mean to implement this project, it will have a tremendous environmental and social impact."

Still, puppet shows — and polls that show a majority of Chileans opposed to the plan, many of them taking to the streets en masse in recent weeks — were apparently no match for the energy needs of one of Latin America's fastest-growing and most developed economies. This week a federal environmental commission, appointed by pro-dam President Sebastián Piñera, approved the Patagonia project headed by HidroAysén, a joint venture between Chile's largest electrical utility, Endesa, and another, Colbún. By the time the HidroAysén project is up and running in 2026, according to the company, the dams could generate a total of 2,750 megawatts. That's almost a third of the current 10,000-megawatt capacity of Chile's central power grid, where the capital, Santiago, is located, and almost a fifth of the nation's total 15,000-megawatt capacity.

The problem for HidroAysén's opponents is that Chile needs to double that national capacity by the end of this decade to keep its tiger-like economy, a mining- an export-driven model for Latin America, humming and growing. And hydropower, given the prodigious supply of rain and rivers in regions like Patagonia, is one of the most abundant and affordable sources to tap."Sometimes governments have to take hard decisions," Piñera, a conservative, said after the commission's vote. "But if we don't take these decisions today, we're condemning our country to blackouts down the road." The more liberal Eduardo Frei, a former President and current Senator, agrees. In Chile, which has scant oil and gas reserves, "the greatest energy wealth [is] water," Frei insisted recently, and little can dissuade governments right now from pursuing it. In neighboring Brazil, in fact, hydropower accounts for 80% of total electricity.

But the problem for governments like Chile's is that hydro-electricity is also becoming one of the most controversial energy sources in regions such as South America. On that continent, large protests have met not just the HidroAysén proposal but also the Belo Monte hydro-dam project in Brazil, which is slated to be the world's third-largest. Among environmentalists and ordinary citizens alike, there is a growing fear that countries have grown too reliant on water power, whose dam complexes can cause significant eco-disruption in pristine swaths like Patagonia, a paradise of glaciers, lakes, woodlands, fjords and rivers like the Baker, Chile's largest in terms of water volume. The HidroAysén dams would flood 14,000 acres (5,700 hectares), carve up forests and threaten eco-tourism attractions like white-water rafting.

Douglas Tompkins, a millionaire U.S. businessman turned conservationist and part-time Patagonia resident who is a backer of the Defense Council of Chilean Patagonia, told TIME that the campaign against the HydroAysén dams represent "the epic campaign in the whole history of Chile's environmental movement." Even Robert F. Kennedy Jr., senior attorney for the U.S.-based Natural Resources Defense Council, who kayaks in Patagonia each year, lobbied Piñera to halt the HidroAysén project.

Piñera government officials, including Energy Minister Laurence Golborne (who is also Chile's mining minster and a former executive at Gener, another utility) argue that hydro is a more eco-palatable alternative than increased use of polluting fossil fuels. But even hydropower can only account for so much of Chile's energy supply, environmentalists insist, which is why the government is still having to OK coal-fired electrical projects like the $5 billion Central Castilla in the nation's northern Atacama Desert, where much of Chile's mining industry is found. Castilla's six, 350-megawatt thermoelectric plants will take 15 years to build.

In that time, say conservationists, Chile should instead be focused on developing its massive alternative energy potential — wind, solar and geothermal — which has barely been scratched. In fact, alternative energy accounts for less than 3% of Chile's matrix. Of the 10,000 megawatts keeping Santiago and the central grid lit, only 150 are generated by wind, although scientists say regions like the Atacama are a wind-power goldmine that could generate as much as 5,000 megawatts. Solar power is even more promising. Roberto Román, an engineer and energy expert at the Universidad de Chile in Santiago, says that if Chile were to dedicate a 25-sq-mile (40-sq-km) tract of the northern region to develop solar power, the country could "easily double or triple [its] installed capacity."

But a key obstacle, experts like Román point out, is that Chile's energy system is dominated by three large utilities, Endesa, Colbún and Gener. In 1989, for example, when then military dictator General Augusto Pinochet privatized Endesa just a year before he stepped down from power, he gave the company a parting gift of the lion's share of Chile's water rights. Such anti-competitive dealings have helped the three utilities secure a stranglehold on contracts to generate and transmit power, leaving little room for companies that might want to invest in alternative sources. "For any one else to get into the system it's very difficult," says Román.

Ironically, a recent drought has greatly reduced output from Chile's other hydro-electric dams — a warning, say conservationists, that makes alternative energy development all the more urgent. Piñera says more than 100 pilot programs are up and running from a $182 million fund; but he conceded this week that Chile's alternative energy supply "isn't sufficient." Without more open market access and larger government incentives and subsidies to boost investment, it could be decades before wind, solar or geothermal add any meaningful input to Chile's energy mix. In the meantime, the question for Chile is whether its failure to be an alternative-energy model for the developing world might someday also threaten its status as an economic model.