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Pitch

The greatest global challenge in transitioning to a clean energy matrix is to be able to store electricity at a low cost.


Description

Summary


The world is changing.  Against the backdrop of the increasingly visible effects of climate change, exploitation of natural resources and reduction in biodiversity, a major revolution is developing ‒ a technological, cultural and economic transition with the power to change the course of our planet. This paradigm is the transformation of our energy matrix towards clean, economical and infinitely abundant resources.

Most of this energy comes from the sun. In just one hour, the sun provides the earth with more energy than humankind can utilize in a whole year ‒ considering all forms of energy consumption such as electricity and fuels.

Electricity demand requires continuous supply, and the peak demand occurs at 10 PM, when there is no sun. In other words, solar energy is intermittent and is not available during Chile’s peak consumption hours.

Our company is developing Espejo de Tarapaca, a pumped storage hydroelectric plant, with sea water, equivalent to a large “water battery”, that will allow us to store energy in an exceptionally economic manner and also to transform solar energy into an electricity source available 24 hours a day, 7 days a week, at a competitive price with energy produced from conventional sources.

This presents a great opportunity. The union between intermittent renewable energy and storage systems will transform Chile into a world leader in the transition toward the electricity matrix of the future, where energy produced by the sun and wind will supply a significant portion of the demand by homes, industries and vehicles - providing economical, clean and unlimited energy. 


 


Category of the action

Reducing emissions from electric power sector.


What actions do you propose?

Chile has an energy matrix with less than 5% of NCRE, in turn; the world is facing a visible climate change, overexploiting natural resources and a technological and cultural revolution that has the power to turn the course of our planet. We visualize a change in the matrix towards clean, economic and abundant sources where Chile will have an infinitely rich supply of clean energy for the future. How to achieve this? We need to store electricity.

The best method to store large amounts of electricity is through the use of pumped storage plants. Pumped storage requires two bodies of water, located at different heights, which can be interconnected. The plant uses electricity (when available) to pump water from the lower to the upper body. When required, the water is released back down from the upper body thereby generating electricity like a traditional hydroelectric plant. 

Espejo de Tarapacá (EdT) – one of the most innovative infrastructure projects in the world – it is comprised of a 300 MW pump hydro plant that operates with seawater. This project is essentially a large electricity storage system that will eliminate, at a low cost, the intermittency of non-conventional renewable energy – such as solar energy and wind.

The project takes advantage of the unique geographic characteristics of the Atacama Desert in order to build a pumped storage hydroelectric plant tailored to natural conditions:  a site distinguished by a high coastal cliff located close to the ocean which contains natural surface concavities, making it ideal for the storage of seawater.

The above characteristics minimize the environmental impact and the cost of the plant, which together with the best solar irradiation conditions in the world, make EdT a clean and abundant electricity generation alternative, which is competitively priced with thermoelectric plants.  

Complementing EdT, Valhalla is developing Cielos de Tarapacá (CdT), a 600 MW-AC photovoltaic solar plant with single-axis tracking technology in order to follow the sun during the day from east to west.  The size of the plant is such that if it were to begin operations in 2015, it would be the largest solar plant in the world. 

In 2019, the combination of these two projects will create the first large scale system in the world capable of producing solar energy 24 hours a day, 7 days a week, competing directly and without subsidies with thermoelectric generation.


Who will take these actions?

Valhalla is a Chilean company founded in 2011 by two entrepreneurs with a vision to revolutionize the electric sector ‒ one of the largest industries in the world, a foundation for economic development and one of the principal contributors to climate change on the planet.

Valhalla is comprised of a multidisciplinary team of individuals motivated with the challenge of making a different kind of company, a world-class company with unbending ethics, dedicated to helping improve Chile and the world. The team is lead by some of the most experienced engineers in Chile, responsible for the design and construction of large-scale hydroelectric plants with underground works, like Alfalfal (178 MW), commissioned in 1991, and Alto Maipo (531 MW), currently under construction.

Also, the government has an important role to promote and develop public policy that boosts new technologies and cleaner energy.


Where will these actions be taken?

Chile, in the Atacama Desert, the place with the clearest skies and where the best solar irradiance in the world is found. The Atacama Desert not only has the World's best conditions for the solar energy, but also excellent geographical conditions for seawater pumping stations: a terrain marked by a big coastal buttress, very close to the ocean, which has naturally occurring concavities just beyond the upper ledge, ideal for the storage of seawater, eliminating the need of dams.

This unique location allows the construction of the plant at a very low cost, making the combination of the pumped storage plant and the photovoltaic solar plant competitive with conventional sources of energy that use fossil fuels.

Also, the natural conditions minimize the environmental impact, as most of the works are under ground and by using the ocean and natural concavities, it is not necessary to build damns. This last point has been thoroughly analyzed in the environmental impact study currently under evaluation that has been elaborated by a team of highly experienced specialists and academics. One of the main concerns was the impact on sea life, for which the project designed a custom made water intake that guaranties a low suction velocity combined with a filter that impedes sea life over a certain size to go in to the tunnel. Also, the discharge of water doesn’t imply risk to local sea life.


How much will emissions be reduced or sequestered vs. business as usual levels?

The Clean Development Mechanism (CDM) of the UNFCCC has stated that for most renewable power generation project activities -like Cielos de Tarapacá- its CO2 emissions are considered Zero.

The Project will delivery its energy to the Sistema Interconectado del Norte Grande (SING) network, which based on CDM calculations has an emission factor of 0.7865 tons of CO2 / MWh generated. Accordingly, delivering solar energy to this system will displace CO2 emissions attributable to the generation of energy that would have otherwise been generated by the operation of fossil fuel fired grid-connected power plants connected to the SING.

Cielos de Tarapacá will deliver 601,450 MWh per phase per year. Thus, Cielos de Tarapacá will account for the reduction of 473,040 tons of CO2 per year per phase. The project consists of 3 phases of 200MW each one. 


What are other key benefits?

The centerpiece of Valhalla is long-term sustainability. This goal exceeds by far the mere development of renewable projects, it is essential to have an early, honest and inclusive relationship with local communities, understanding that we are the new neighbors in an existing reality.

We make an effort to work with local communities around 2 key factors: i) What are their concerns about our project and how we can address them together; and ii) Finding ways in which projects can support local development. With EdT, we accomplished long term agreements with the fishing community placed by the project, after process that lasted over 2 years, building foundations for a long-term relationship.

One of the main risks of large-scale energy projects has been community opposition, leading to the downfall of many initiatives in Chile. The approach described in the previous paragraphs has permitted to create a relationship built on trust and respect, minimizing the possibility of future conflicts.


What are the proposal’s costs?

The project investment is USD 400 million with 300 MW Capacity in Pumped Storage and USD 900 million in a 600 MW-AC photovoltaic plant. The investment for the Pumped Storage facility is considerably low in comparison to a standard pump storage. As mentioned before, this is possible because of the local geographical conditions.

The main issues that could impact the projected investment are geological complications for underground works and the use of seawater on the turbines. To mitigate the first of these risks, the project has undergone numerous intensive geological campaigns and hired the consultancy of word class experts. As for the seawater challenge, there is ample experience on the use of salt water on turbines. In fact, there is a pump storage of 30 MW located in Okinawa, Japan, that has been operating successfully for the last 15 years and the tidal power plant La Rance in France, operating since 1966.

The low cost of the pumped storage means that the combination with photovoltaic can offer an output of energy 24/7 at a price around USD100/MWh, making it competitive with conventional energy sources that use fossil fuels. As a reference, in the last electricity supply auction for distribution companies the allocated price for coal was USD109/MWh and for NLG it was USD 111/MWh. The project aims to land a stable Power Purchase Agreement which will guaranty profitability. However, that revenue stream doesn’t include income from ancillary services, where a pumped storage has much to offer. Also, the future taxation of fossil fuel emissions that is taking over the public agenda, will make EdT even more competitive.

As for our funding, it has come from angel investors and contests (such as Startup Chile). We just finishes our fifth fundraising round of US$13MM. The plan is to keep in the developing stage until July 2015; after which we will raise a sixth fundraising round or, more likely, invite a sponsor or strategic partner to fund the equity for the building phase.


Time line

Since 2011 we have been working on the development of EdT, submitting the Environmental Impact Assessment (EIA) in August 2014. The study includes pioneering environmental modelling which has led to scientific articles in specialized international journals, that makes us confident of a successful evaluation. In the case of CdT, the EIA was submitted in January 2015.

The engineering design for the pumped storage facility is finished. Currently, the company is focused on the completion of all the associated development work for the Project principally, the permits request. Therefore, we hope to start the construction at the beginning of 2016 and expect operation by 2019.


Related proposals

https://www.climatecolab.org/web/guest/plans/-/plans/contestId/1301501

https://www.climatecolab.org/web/guest/plans/-/plans/contestId/1301415


References

http://www.minenergia.cl

http://www.acera.cl

http://valhalla.cl

https://vimeo.com/97777534

https://vimeo.com/116568554