Not enough wind to take off: (De)institutionalising electrification, withdrawing

Despite the silent decay of the Tac Island’s hybrid wind mini-grid, while still in its

‘renewable mode’, the project generated high expectations amongst policy makers (mainly at the national scale but also within regional government) and attracted interest from additional international partners. Supplementing NREL support, the e7 Fund for Sustainable Energy Development, formed by a group of energy companies under the umbrella of the G7 countries, expressed willingness to contribute to the RET-based electrification of the Chiloé Archipelago through technical and financial support. Formal commitments were thus agreed between the government and the e7 Fund. The leadership role was assumed by the Rural Electrification Unit of the CNE – formally through the PER - and coordinated and executed with GEF programme support.

As the GEF programme annual reports show (GEF, 2003, 2004, 2005, 2006), a series of complementary activities were planned and executed in an attempt to obtain results at a quasi-system level. Advocacy meetings and awareness activities undertaken with both regional policy makers and private companies were combined with a wind monitoring campaign implemented in selected islands of the archipelago. During 2002 a technical workshop was held at the Federico Santa María University (USM) in Valparaíso. NREL experts trained local consultants, the technical staff of energy companies and regional government officers in wind monitoring campaigns. Following the workshop, the monitoring of wind resources was initiated in Chiloé for a period of 2 years.

Also in 2002, with the aim of improving public sector capacity to assess projects and to act as a counterpart to the wind experts, the regional officer in charge of rural electrification planning processes at MIDEPLAN attended a training course on RETs at NREL in USA (with a particular focus on wind technology). Additionally, a commercial mission to Australia brought together the CEO of Wireless Energy and the technical chief of the GEF programme to improve their knowledge of wind technology, new equipment and commercial practices in the small scale wind power market. Additional training sessions were organised both in the Los Lagos region and in Santiago on topics such as project cycle, basic knowledge about wind power, project assessment and design and use of modelling software for hybrid energy systems (HOMER, ViPOR and Hybrid 2, all developed by NREL).

By mid-2004 an extensive fieldwork campaign, similar to the one which had been implemented in the case of PV projects in the northern regions, was carried out in all islands of the archipelago. Fieldwork was done by a consultant who had previously worked at the Rural Electrification Unit of the CNE. That work fed into a project pipeline for 32 additional islands in Chiloé. Those projects were included in the official PER database managed by MIDEPLAN (Integrated Project Data Bank). Between 2004 and 2005, by means of technical support and financing, the GEF programme commissioned feasibility studies and techno-economic assessments and prepared all official documentation for the submission and approval of wind-based projects in the remote Chiloé islands.

However increasingly diminished support from the dominant distribution utility SAESA (which eventually turned into powerful opposition to the project) and a lack of high-level regional political commitment towards RETs led to the scope of the original project being reconsidered by regional authorities. Originally, 32 islands were to have been included in the project, but between 2004 and 2005 it was decided that more than 20 of those islands would be electrified through submarine grid extension (Interview 14, Interview 15, Interview 36). Although political, economic and technical grounds were given for this change, it is not clear whether sufficient evidence and studies existed to support such a decision.

Wind-based electrification initiatives were therefore regrouped as the Quenu and Tabón islands diesel project (in the Calbuco council) and the Desertores Islands wind-diesel/gas project (a group of 7 small islands in Chaitén and Hualaihué councils). These two projects involved slightly more than 400 rural families (Poch Ambiental, 2009), a

substantial decrease in numbers compared to the initial estimate of 3,500 rural families in the Chiloé Islands as a whole. A complete list of the hybrid wind-fuel projects remaining in the rural electrification pipeline in Chile is included in Table 6.1.

The absence of long term vision, weak regional networks and diminished political support soon led to both the e7 Fund for Sustainable Energy Development and NREL withdrawing from their engagement in the projects. By 2005 both international partners had provided technical support in wind resources monitoring campaigns and pre-investment studies. Their decision to end their support (Interview 15, Interview 36) was a result of two problems. First, there was no clear commitment on the part of regional government and private actors to implement the original plan of RET-based electrification of all Chiloé Islands. Second, the projects were not big enough to generate a minimum threshold of carbon emission reductions applicable as a programme of activities in the framework of the clean development mechanism (CDM).

This decision negatively affected expectations about small scale wind power in rural electrification at the regional scale. As the level of knowledge about RETs was still limited in the country, but more crucially within regional public institutions, the fact that two internationally renowned expert institutions had withdrawn their support was taken to mean that wind power was not the right technology (Interview 18, Interview 21). A negative impression of wind projects permeated the political bureau of the regional government and so political support diminished further. The reasons for the decision taken by NREL and e7 Fund were not, however, technical, but linked to the lack of clarity and the small size of the projects (Interview 14, Interview 15, Interview 36).

Despite the lack of response from regional authorities, the GEF programme continued to develop the activities according to its original work plan. In 2006 detailed designs and technical specifications for the Quenu and Tabón projects were commissioned from Lahmeyer International, a German engineering and consulting firm. In April 2007 all designs and tendering documents were handed over to the municipal and regional authorities. In 2008 designs, technical specifications and tendering documents were commissioned for the Desertores Islands project from Trama Tecno-Ambiental (TTA), a Spanish engineering and consultancy firm. Both projects had been assessed in accordance to MIDEPLAN’s rural electrification methodology. By 2009 the Quenu and Tabón projects and, by 2010, the Desertores Islands project had both been granted technical recommendations (planning permission) from MIDEPLAN and funds had been made available in the form of investment subsidies from FNDR (Poch Ambiental, 2009).

In July 2009, after a public bid, the proposals for Quenu and Tabón were rejected on technical grounds as tenderers offered different wind turbines to those requested in the bidding specifications (GORE Los Lagos, 2009). Interviewees referred to the rigidity of technical specifications prepared more than two years in advance and said that the firms making the bids had evaluated ‘state-of-the-art’ wind technology which would have performed better under the wind regime of the islands (Interview 1, Interview 19, Interview 24). A second tender was also rejected in June 2011 because its financial proposals exceeded the budget allocated to the project (GORE Los Lagos, 2011). In light of the negative results for Quenu and Tabón, a first bid for the Desertores Islands project was unable to attract interest from sufficient proponents and had to be cancelled (Interview 18). At the time that fieldwork was being undertaken for this thesis the two projects were still in the regional pipeline. Negotiations between regional and central authorities had led to an instable agreement in which new public bids would be called but these new tenders would only request equipment and infrastructure provision, relegating operation and maintenance to the vanishing space of user responsibility.

In effect, the attempt to disseminate small scale wind power in Chiloé resulted in a downscaling experience. Although the project had been launched as an innovative and sustainable plan for off-grid rural electrification, two thirds of the islands initially considered were subsequently excluded from the wind power plans and reconsidered for submarine grid extension from the main grids of the Great Chiloé Island. However, as will be discussed in the next section, these islands did not become connected to the main grid but are now being electrified by stand alone diesel generators. Furthermore, the long period between the first proposal of the regional off-grid electrification strategy its final demise created fertile ground for political speculation and unfulfilled electoral promises, which was used in election after election, whether municipal, parliamentary or presidential (Interview 24, Interview 36).

The inability to execute these projects had consequences in terms of the expectations of rural communities and policy makers about wind power: “small scale wind turbines were not suitable for Chiloé” began to be the perceived wisdom (Interview 4, Interview 21). Fed by this not very promising outlook, regional authorities started to demand that their technical staff articulate new options for Chiloé’s rural electrification and so regional government officials had to negotiate with distribution companies which easily co-opted struggling public servants (Interview 6, Interview 19).

The result of the series of events described above impacted on cognitive and normative dimensions. Regime actors imposed their vision and turned other actor’s beliefs into negative attitudes towards small scale wind power and the overall institutional framework that supported RET-based rural electrification started to crumble as project execution decisions, once negotiated and agreed, where bypassed by regional authorities. Municipal authorities then demanded solutions to the electricity access problem of their constituencies, with the result that new options and means of financing had to be considered (Interview 25).

Table 6.1: Complete Database of Rural Wind Electrification Projects in Chile (2001-2012). Sources: (Ministerio de Energía, 2010, Canales, 2011a, Poch

14 X Chaitén Auteni Island Hybrid Project (Desertores) HIB (wind-diesel) 25 43 4,550,000 EXEC 2012

15 X Hualaihué Llanchid Island Hybrid Project (Desertores) HIB (wind-diesel) 19 11 EXEC 2012

16 X Chaitén Chuit Island Hybrid Project (Desertores) HIB (wind-diesel) 35 25 EXEC 2012

17 X Chaitén Imerquiña Island Hybrid Project (Desertores) HIB (wind-diesel) 6 6 EXEC 2012

18 X Chaitén Nayahue Island Hybrid Project (Desertores) HIB (wind-diesel) 31 EXEC 2012

19 X Chaitén Talcan Island Hybrid Project (Desertores) HIB (wind-diesel) 48 24 EXEC 2012

20 X Chaitén Chulin Island Hybrid Project (Desertores) HIB (wind-diesel) 50 43 EXEC 2012

21 XI Puesto Viejo Police Station Hybrid Project HIB (wind-diesel) 5 3 25,000 EXEC 2007

22 XII Pto, Natales Villa Renovales Hybrid Project HIB (wind-diesel) 12 64,000 FNDR

23 XII Laguna Blanca Villa Tehuelche Hybrid Project HIB (wind-diesel) 50 238,000 EXEC 1995

TOTAL 971 268 9,517,000

The sense of urgency and perceived lack of alternatives created the ideal conditions for the search for piecemeal solutions. Rural electrification projects started to be conceived increasingly outside of the efforts to institutionalise practices around RET-based rural electrification. In the case of the few remaining wind projects, if it was too difficult to attract interest from companies to supply equipment and sign a maintenance contract over a period of 10 years, new calls would only include provision and installation of equipment. If RETs were not the distribution companies’ favourite option, regional authorities would accept any technology proposed by the incumbent firms, including diesel-based electrification. If the prices charged by incumbent companies were too high, regional authorities would have little capacity, or willingness, to negotiate, given the need to reach electrification targets.

Electrification planning and decision making started to be an eminently political issue and less a technically informed process. Authorities and advisors inexperienced in technical and scientific issues (such as particular technologies, social contexts and community needs) opted out from wind-based electrification. Only Quenu and Tabón and the Desertores Islands projects were kept in the pipeline as a concession to central authorities given the expected outcomes of the GEF programme (Interview 19, Interview 20, Interview 21, Interview 24, Interview 36).

The overall dis-institutionalisation of rural electrification in the Los Lagos region had the following consequences. By 2010, rural electrification projects for the remaining islands, now taking the form of submarine grid extension, were being implemented by local councils through a mix of stand-alone and mini-grid diesel gen sets in the absence of clear standards and outside the framework of the PER. That is to say, the implementation of these projects was taking place without the use of official assessment and selection criteria or through alternative funding mechanisms provided by sectoral institutions for which assessment guidelines, standards and procedures for state investment in electrification projects were less strict or neglected. (Interview 18, Interview 19, Interview 25). After years of promises, rural communities were demanding solutions via their most accessible gateway to the public sector:

the municipal authorities (Interview 24). Local council mayors had to find new sources of public finance to implement electrification projects. In doing so, they had to adapt electrification projects to other ministries’ infrastructure programmes, such as the Neighbourhood Improvement Programme of the Housing Ministry, which had never been intended to fund electrification projects but rather infrastructure in villages (Interview 21, Interview 25).

Not surprisingly, these programmes did not consider technical assistance for RETs or rural electrification, so although projects provided electricity to rural communities they did not even meet PER technical and safety standards. Projects did, however, benefit from some RET-linked protection measures. For example, a consumption subsidy was considered for all diesel projects. Regional authorities and mid-level officials lobbied to apply the same rationale behind the operational subsidy to SHS in Coquimbo region to all off-grid projects (not only RET-based). They argued that regardless of the electricity generation source, off-grid rural consumers would be hit by higher electricity tariffs, so the consumption subsidy should be approved on the grounds of social inclusion (Interview 12, Interview 20, Interview 38).

In fact the subsidy is decided (and normally approved) by the Parliament on an annual basis, when the provision of funds to be distributed to Regional Governments is included in the Budget. These funds are negotiated directly between regional authorities and ministries (Treasury and Interior Ministry) and there is no incentive or reason for other authorities (from other regions or different ministries, such as the Ministry of Energy) to oppose such subsidies (which are counterproductive from a sustainability perspective). This is because the regions might recall the reasons for additional funds in potential future projects and the Ministry of Energy is, in the end, seeking to achieve electrification targets rather than RET diffusion (Interview 21, Interview 36, Interview 38). Rural municipalities which have implemented electrification projects regardless of the source of finance and the type of electricity generation technology simply applied consumption subsidies to pay for fuel (Interview 18, Interview 25).

This phase of wind power dissemination was marked by the attempt by the central authorities to undertake systemic intermediary functions, including needs assessments and the connection of actors through conferences, workshops and technical missions and courses. The engagement of international cooperation actors (NREL, e7 Fund) helped improve the visibility of small scale wind power for the national authorities. However such top level relationships did not permeate to the local and regional decision making arena. Additionally, rural communities and R&D actors were never considered in formal mechanisms for project development and execution, so the rigidity and non-adaptive institutional structure of the rural electrification regional strategy meant that experimentation was not stimulated.

Misaligned visions with respect to the role of wind power in rural electrification are an important factor explaining why expectations grew and then declined. The changing nature of visions also impacted on the expansion and sudden contraction of the network of wind supporters and the self exclusion of incumbent actors from the rural electrification regime in

the Los Lagos region. Against this backdrop, decision making became trapped within regional authority circles, and the action of the latter was influenced by the narrow range of possibilities offered by powerful actors such as the dominant distribution utility in the southern regions.

That not very promising scenario made it impossible to internalise lessons from previous experience: the Tac Island project results did not feed into new management models or the consideration of socio-cultural factors. Those localised lessons from Tac were not heard, implying that it was difficult to embed socio-political capital in different arenas. What the experience shows is that networks broke down and expectations turned into parallel plans for the electrification of Chiloé islands outside the PER framework, with the result that diesel gen-sets started to be considered and installed in several locations. Finally, protection measures originally devised for RET development (subsidies for operation of off-grid RET systems) were applied to support the operation of those gen-sets.