SANTIAGO, Chile — The Overseas Private Investment Corporation (OPIC) announced that it will guarantee loans of up to $230 million for the development of Luz del Norte, a solar energy plant in Chile’s Atacama Desert. If completed, Luz del Norte will provide 141 megawatts of energy, which would make it the largest solar power project in Latin America.
While the Atacama Desert receives large amounts of direct sunlight, Chile has not established many solar plants there. In fact, in 2012 the number of solar projects planned would provide fewer than 500 megawatts to Chile’s grid. Chile’s National Energy Strategy cites “high cost of the initial investment and limited possibilities for financing” as reasons for slow solar development.
OPIC, which provides capital and loan guarantees to private companies starting development projects outside the U.S., can help offset the high investment costs. It has allocated its funds to the Arizona-based energy firm First Solar, which has already provided 800 megawatts of solar power to countries around the world.
“The support we’ve received from OPIC has been instrumental in bringing the project to life,” said First Solar Senior Vice President Tim Rebhorn, who intends to continue building solar plants in other Latin American countries.
According to Chile’s National Energy Strategy, to protect the environment the country needs to get more than 20 percent of its energy from renewable sources like solar power. In addition to Luz del Norte, OPIC is financing five other plants to be built in Chile, which altogether are projected to reduce carbon dioxide emissions by 210 million tons while providing many megawatts of power.
The U.S. also profits from this foreign energy investment, as giving Chile access to cheap, renewable energy will help its economy and allow it to consume more. The White House predicts that Luz del Norte alone will increase U.S. exports by $97 million. Combined, all six of OPIC’s solar investments in Chile will increase U.S. exports by $290 million and add more than 400 jobs to the U.S. economy.
In addition to the immediate benefits it will provide for Chile’s infrastructure and the U.S. economy, the Luz del Norte project might encourage future Latin American development.
“The construction of Luz del Norte will help pave the way for further solar power development in Chile,” said Elizabeth Littlefield, the President of OPIC.
Solar energy is extremely beneficial to people living in poverty because panels placed on individual homes and other buildings can provide electricity without being connected to a central power grid. With greater access to electricity and the ability to replace dangerous gas-powered appliances with rechargeable electrical ones, more people can live better and escape poverty.
Foreign investments in Chile have proved profitable and helpful, especially to the country’s poor. According to the World Bank, Chile’s 2011 poverty rate was 14.4 percent, down from 20.2 percent in 2000. While only 58 percent of Chileans had access to clean water in 1995, today that number has risen to 91 percent. Investing in clean, easily accessible energy will allow Chile’s economy to continue to grow.
Luz del Norte is a promising project not only because of the electricity it will provide but also because it will open up more opportunities for solar energy development in Latin America. Both central solar plants and decentralized panels for rural areas will give people access to energy that will improve the overall quality of light. Luz del Norte truly is a light of hope for people in Latin America that need electricity, and continued investments in solar power will greatly help the region’s poor.
– Ted Rappleye