To close out the week, here’s some fresh and exciting news out of South America: the administration of Chilean President Michelle Bachelet has embarked on an ambitious new energy agenda, with energy efficiency right at the center.
As our blog detailed last week, the Latin American electricity sector is at an inflection point – a time of great challenge, but also of immense opportunity. Countries in the region must find a way to meet the energy needs of an increasingly affluent population, navigate controversial power projects, and build resiliency in the face of a changing climate.
One South American leader – Michelle Bachelet, the recently reelected President of Chile – took a significant step yesterday toward addressing these challenges and capitalizing on their opportunities, as she and her government formally announced Chile’s new Energy Agenda.
There are many important components to Chile’s new energy strategy, but there are four key themes in particular that caught our eye, for their focus on the central role that energy efficiency will play in the country’s future.
Energy efficiency is a clean, cheap and accessible energy resource.
The strategy lays out a plan for meeting Chile’s growing demand through an energy matrix that prioritizes clean, low-cost solutions for consumers. To this end, the government vows to treat efficiency as an energy “resource” that can meet the needs of Chile’s population in the same way that building new power plants can, allowing supply-side resources and demand-side resources to compete on a level playing field.
Utilities should be energy efficiency providers…
Utilities are inherently well-positioned to implement energy efficiency programs. They have long-standing relationships with consumers and access to detailed customer data that can be used evaluate the cost-effectiveness of efficiency programs. In its new strategy, Chile pledges to support mechanisms that encourage utilities to implement energy efficiency programs for their residential and small-business customers.
… But utilities need the right incentives.
Chile has committed to developing legislation that will “decouple” utilities’ revenues from the amount of energy they sell. When utilities no longer stand to lose money if they sell less energy, they no longer have a disincentive to invest in energy efficiency programs. Decoupling has been an effective tool in promoting successful utility-led energy efficiency programs in dozens of innovative regulatory environments such as California, Massachusetts, and New York.
And people are at the heart of the solution.
Recognizing that the ultimate goal of any energy strategy is to generate cleaner and more affordable solutions for consumers, the government pledges to support large-scale customer-focused awareness campaigns. The objective of these initiatives will be to educate consumers about their own energy use and empower them to save energy.
Jake Levine is Opower’s Director of Regulatory Affairs for Latin America. Kelsey Ranta is a policy and strategy analyst at Opower.
To learn more about how utilities and policymakers can use energy efficiency and customer engagement to help meet Latin America’s energy challenges, register for our upcoming webinar “Transforme a sus clientes en activos para el sector eléctrico.”