Chile: Selected Issues
IMF Staff Country Reports, February 6, 2024
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- Chile: Selected Issues
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Bibliographic details
- Published: February 6, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400266591.002
Summary and scope
- The paper studies renewable energy in Chile, estimates the gross domestic product (GDP) impact of replacing coal power with solar and wind power, and assesses the role of policies.
- Emphasis on Chile's comparative advantage in renewable energy and the constraint posed by electricity transmission from production sites to consumption centers.
Key findings
- Replacing coal power with solar and wind power, as announced by the government, could boost the long-term GDP level by at least 1 percentage point.
- Targeted support for electricity transmission has benefits that exceed costs.
- State support to industries such as electricity transmission may have economic benefits that outweigh the costs.
- An additional benefit of the renewable transition is greater economic resilience to abrupt increases in coal and fuel prices that can have large negative impacts on the economy.
Economic impact estimates
- Long-term GDP level boost from replacing coal with solar and wind: at least 1 percentage point.
Transmission constraint and cost‑benefit analysis
- A key constraint for the renewable energy sector is transmission from where it is produced to where it is used.
- Cost-benefit analysis indicates that targeted state support for electricity transmission can be economically justified, with benefits exceeding costs.
Policy implications and recommendations
- Support the expansion and upgrading of electricity transmission infrastructure to unlock renewable potential.
- Consider targeted state support for transmission where private incentives do not internalize broader economic benefits.
- Prioritize policies that increase economic resilience to fuel-price shocks through accelerated renewable deployment and improved grid connectivity.
Source: Chile: Selected Issues (IMF Staff Country Report No. 2024/042).
Content in this bundle
- Chile: Selected Issues; IMF Country Report No. 24/42; February 5, 2024