Chile launches 3-year GEF project on efficient and renewable district energy systems

Santiago, Chile, September 9 2020 - Representatives from Chile and UNEP came together today to launch a new exciting project that will further the country’s district energy ambitions. 

The 3-year project, named “Accelerating investment in efficient and renewable district energy systems in Chile”, will contribute to the country’s climate goals while putting Chile on the path to rebuilding back better and greener in the aftermath of the current health and economic crisis. The US$ 2 million project will be implemented by UNEP and executed by the Ministry of Energy through the Sustainable Energy Agency (Agencia de Sostenibilidad Energética). UNEP will provide technical assistance through the District Energy Cities Initiative.

District energy systems create synergies between the supply and demand of heating, cooling, domestic hot water and electricity and can be integrated with other municipal services such as sanitation, sewage treatment, transport and waste, meaning that heating and cooling can be low-carbon and energy-efficient, hence maximizing the integration of local renewable resources. The strategic importance of district energy systems is their ability to aggregate heating and cooling demand from multiple buildings to scale and thus facilitate the utilization of local renewable and waste energy sources to an extent that would not be possible at an individual building level. This makes district energy a key measure for cities and countries with ambitious GHG emission reduction targets and renewable energy use.

The project aims at scaling-up investment on district energy in Chile by developing an enabling framework and establishing mechanisms to support project developments, and will contribute to reducing local pollution and emissions in cities, reduce primary energy consumption, as well as increase health and resilience for the country’s population. 

Air pollution is responsible for 4,000 annual cases of premature death by cardiovascular diseases and costs the country $690 million per year in associated medical expenses and reduction of labor productivity. Concentrations of PM2.5 in cities in southern Chilecan be five times higher than World Health Organization standards. Some 94% of this air pollution is attributed to wood burning for heating single-family homes.

Studies conducted by Chile and UNEP have showed that the adoption of district energy systems in the country has the potential to reduce local concentrations of particulate pollution by approximately 99% in the areas where district energy is applied. This could result in nearly USD 2,500 million in public health savings and approximately 2,800 lives saved annually.

According the to the study “Heat Roadmap Chile” developed by the Initiative in collaboration with Aalborg University, district energy could allow for a 13% reduction inthe total primary energy consumption and a 20% reduction of CO2 emissions compared to alternative scenarios. The study highlights that district energy could cover around 40% of the heating market by 2050 without bringing additional costs to consumers. 

The potential of this technology marks the country's need to develop frameworks and markets conducive to supporting the implementation of district heating technologies and infrastructure. Building on previous country and city-level efforts in Chile supported by the District Energy in Cities Imitative, this GEF project is a crucial first step in this direction, as it provides for the establishment of a National District Energy Office, as well as collaboration on demonstration projects, the design of a regulatory framework and capacity building. 

Today’s event marks the official launch of this project that over the next three years will aim at consolidating the district energy market in Chile.