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Back in the USA after nearly two months abroad. Many people have asked me how I’m reacting to being back – is it a tremendous culture shock?
The answer: absolutely not.
I have been lucky enough to travel extensively, and Chile is easily one of the most modern countries I’ve been in. When I came back from China and India, everything seemed extremely different, but things felt perfectly normal after returning from Chile. As I mentioned in an earlier post, our neighborhood in Los Condes reminded me more of Los Angeles than the generic stereotypical South American City.
The one interesting change was speaking English again all the time. I find myself saying “gracias” and “por favor” in restaurants and bars, and honestly don’t even notice it until people look at me strangely or comment in passing.
It is good to be back in the states, but I actually find myself missing Chile more than I’ve ever missed being in a foreign nation. That certainly bodes well for our return in early May!
Over the last several months, I’ve had the privilege of traveling to a number of different countries and interacting with various young people. It really amazes me that despite all the cultural differences, young people generally share the same desire to explore and the enthusiasm about life.
One of my closest friends in Chile is a 24-year old who recently graduated from university in Santiago. Our upbringings couldn’t have been more different. My parents were first-generation immigrants from India who are liberal, exploratory people. The culture in Silicon Valley has always been very open-minded and exploratory. On the other hand, Chilean culture is significantly more formal, with an emphasis on tradition. This isn’t meant to be critical; both tradition and innovation are important to cultural and personal growth.
Even with our different upbringings, my friend and I have very similar outlooks right now. We both want to explore the world and meet different types of people. We are both tolerant of different opinions and culture, and we both have substantial amounts of energy and enthusiasm about the future. Most importantly, we can have frank and honest conversations even though we have so little in common.
Its a testament to a global world; 50 years ago, I could never have imagined this.
Last week in my series on clean energy in Chile, we reviewed Chile’s competitive advantage in wind energy. This week, we will continue to explore the various renewable energy sources available in Chile by examining solar energy. Solar energy is the most widely available energy on Earth. It is produced by the sun and is available in radiant heat and light forms. Currently, humans harness only an infantesimile amount of the total solar energy available. Technology to capture and use solar energy can be categorized as either active solar or passive solar. This broad characterization depends largely on the manner in which the technology captures, converts, and distributes the energy. When we discuss solar energy here, we are talking about active solar. An example of passive solar would be a terrarium.
The most commonly used technology for this capture and conversion is the photovoltaic. The photovoltaic converts radiant light from the sun into direct current electricity. It is commonly made of a few materials: monocrystalline silicon, polycrystalline silicon, microcrystalline silicon, cadmium telluride, and copper indium selenide.The fixed costs of setting up a plant do not make it economically feasible to operate only a few cells. Therefore, cells are grouped together in photovoltaic panels or modules and arranged in arrays. A typical solar energy plant will have a few hundred thousand cells and hundreds of modules (1) (2).
The electricity output of such a plant is dependent on a few factors. Not all of these factors are under control by the plant developer/operator. The first factor is the conversion ratio of the cells; that is, a measurement of how effective the panels are at converting the solar radiation into direct current. The industry average conversion ratio is between 12 – 14%, but some panels can convert as much as 20 – 23%. The second factor, which is arguably more important than the first, is the average solar irradiance of the land the plant inhabits. This operator has no control over how much sun (and the intensity of the solar radiation) that their plant is receiving once it is built. So, as the saying goes, “Location, location, location!”
Take a look at the chart below. As Wikipedia notes, “Average solar irradiance, watts per square metre. Note that this is for a horizontal surface, whereas solar panels are normally mounted at an angle and receive more energy per unit area. The small black dots show the area of solar panels needed to generate all of the world’s energy using 8% efficient photovoltaics.”
The southwest most black dot is the desert of Atacama, in the North of Chile. This dot means that the Atacama desert in Chile receives one of the highest concentrations of solar energy in the world, measured in watts per square meter. In English, this means that the same solar plant built here will produce more direct current electricity than almost any other place in the world. Currently, this desert is extremely underutilized. There are a few mining companies in the area, but for the most part, the vast stretch of arid land is barren and waiting development. The desert is one of the hottest, driest places on Earth and provides Chile with an extreme competitive advantage for the conversion of solar radiation into direct electrical current.
Currently, the first solar energy plant, Calama Solar I, is being developed in the Calama region of the Atacama desert in Northern Chile. The plant has an expected output of 10 MW and cost of $40 million S. The project is spearheaded by Solarpack, and solar energy company already running four plants in Spain: “Overseeing an investment of $40 million, Solarpack will be responsible for manufacturing, assembling, operating and maintaining the plant, which will be connected to Chile’s medium-voltage Interconected System of Norte Grande (SING) grid. In this region, heavy industry – particularly copper mining – accounts for 80 to 90 percent of electricity consumption, the main motivation for setting up the plant. Nevertheless, the electricity generated is not intended solely for industrial use. »Part of the output will be consumed by the local population,« says Burgos Galíndez. The Solarpack executive adds that if the initiative progresses as envisaged, the company will double the facility’s capacity to 20 MW in the near future, »possibly as early as 2010.« Provided that everything goes to plan, within 3 years investment could rise to as much as $250 million with installed capacity reaching 60 MW, the equivalent to six Calama I-size plants” (2).
My expectation is that this plate of projects will only be tiny in comparison to what will come as the costs of solar-generated electricity decrease and the demand for renewable energy rises. And since Chile has such a clear competitive advantage in its Atacama desert, I think that it will become a major player in the solar energy market.
In the last several weeks, our Spanish has improved dramatically. We can perform most of the day-to-day tasks (ordering in a restaurant, taking a cab, running errands etc). However, I still find it difficult to explain complex concepts.
For example, a few weeks ago, I went to a spanish-english language practice event. Each of the expats was paired with a native Spanish speaker looking to work on their English. I found it easy to make small talk about my family, my indian culture, and other simple topics, until we somehow transitioned into a discussion on economics and finance. The native speaker that I was paired with was particularly interested in understanding the financial crisis – a topic I’ve explained hundreds of times in English, but have never had to articulate in a foreign language!
It was very interesting! Right off the bat, I realized that my vocabulary was limited. Specifically, I had to explain certain concepts (such as leverage) for which I didn’t know the appropriate terms in Spanish. Roughly translated, my explanation went something like this:
“There were many people and companies who wanted to buy things. They didn’t have the money to buy these things, so they used credit cards to make the purchases. Eventually, they had to repay these credit cards. But they didn’t have the money for that either, so instead they got new credit cards to pay off the old ones. Eventually they needed to pay very large amounts of money each month, and couldn’t get any new credit cards. Companies did the same thing, but not with credit cards, but with money from the bank. Once people lost their jobs, they couldn’t make their payments, and this led to a bad cycle. There was no confidence in the financial system.”
One of the hardest things about a foreign language is coming up with a new way to explain things with limited vocabulary. My explanation was definitely not fully accurate (I left out all sorts of issues about different securities and incentive problems), but at the same time, my native Spanish speaking partner definitely got the idea.
This is my first time struggling with something like this – would love to hear suggestions/comments about similar experiences.
Last week I reviewed Chile’s energy demands and discussed the types of sustainable energy being produced in Chile. While hydroelectric plants are integral contributers to their overall power supply, there has been much interest in exploring other viable sources of energy. Over the past ten years, the Chilean government has diversified its risk of blackouts from droughts by investing in thermal energy plants. These plants generate electricity by burning fossil fuels – coal and natural gas, which are decidedly not renewable. With the world realizing that we cannot depend on a non-sustainable source of energy, governments have started to funnel investment into finding new, cleaner ways of meeting their electricity demands. Similar to the past Chilean energy diversification into thermal electric generation, a consortium of government and private entities have been exploring the benefits of wind and solar energy. While clean technology has certainly been a buzzword lately, Chile provides us with one of the most interesting case studies because of the specific geographic competitive advantages that the country has. In this article, we will focus on harnessing the power of wind through those advantages.
Wind is actually a form of solar energy. The sun’s radiation heats the air and causes it to rise. As the air cools and falls, it creates a circulation of the atmosphere that we call wind. A wind-electric turbine generator (or “wind turbine,” as it is usually called) is used to convert the energy from these streams of air into a usable, highly-productive form called electricity. I’m not going to spend too much time discussing the specific technologies or parts that make up a wind turbine, but the generator functions similarly to a hydroelectric plant. An invisible current or stream of wind passes through the rotors (blades of the fan) of the turbine, causing it to spin. This motion converts the wind into rotational shaft energy, which (through the rest of the turbine system) is then converted into electricity. Typically, for large-scale electricity generation, a “farm” will be built that is composed of dozens of turbines.
So now the biggest questions are: What are the most important factors for understanding the potential electricity that can be produced? Where should we build our wind farms? First, the energy that is contained in the wind is a function of the cube of the wind speed. For example, a 12 mph wind holds 70% more energy than a 10 mph wind. Second, the wind must be consistent. Undoubtedly there will be a variation in the speed and frequency of the wind, but areas that have intermittent wind are not prime locations. Third, the Earth’s geography and the concentrations of solar radiation on any one area contribute to these overall circulation patterns of the atmosphere. Thus, there are specific places where wind energy is higher or lower, since the speed is higher or lower. Which place is Chile?
Because Chile is so long (it covers about 4300 km from top to bottom), the country is quite geographically and meteorologically diverse. In the north is the Atacama desert, one of the hottest places on Earth. The closer to the middle of the country is home to Santiago and a nice Mediterranean climate. And I haven’t seen it with my own eyes, but the lakes region in the south is supposed to be one of the most beautiful places on Earth. But what’s also in the south are two sections of land called the Roaring Forties and the Furious Fifties. These areas were given their names by sailors from the 1800 and 1900’s whose unfortunate task it was to travel around the tip of South America. The latitudes between 40 – 50 and 50 – 60 maintain some of the highest speed and most consistent winds on Earth. Since the energy contained in wind is the function of the cube of its speed, these latitudinal areas establish Chile as the categorically best location on Earth to build and operate sustainable wind energy farms.
Make sure to check back next week, when we’ll be discussing solar power in Chile.
I’ve been lucky to have lived and traveled to many different cities over the last few years. In 2008, I spent a blissful summer in the City of Angels. Now that I’m in Santiago, I’m finding some pretty incredible similarities between the Los Condes neighborhood and certain areas of Los Angeles.
For one, the modern architecture is quite similar. Los Condes is a beautiful area, filled with gorgeous buildings and delectable eateries. Although public transportation is excellent in Santiago, its far more common to walk or drive within each individual neighborhood. The apartments, offices, restaurants, and even some small parks/outdoor areas are all within walking distance – much like Century City in LA. Both cities have great views of nearby mountain areas; a great way to spend a day hiking and taking in the sunset.. When I tell people that I’m in Chile, they often get the sense that it isn’t quite modernized. But truth be told, the physical infrastructure here is outstanding, which provides a great opportunity for technological growth.
The business culture is also relatively casual. In both Los Angeles and Los Condes, most people do not dress in suits every day. In Los Condes, personal relationships are crucial , and many business deals are cultivated over a long lunch as opposed to within a more formal office environment. Of course, its not like everything is the same, but like in LA, the “know-who” is clearly more important than the “know-how”
It is funny talking to my friends who say that after several weeks in Chile, it will be a “culture shock” going back to the U.S. In truth, there are many more similarities than I would’ve imagined – both in infrastructure and in culture. I encourage anyone who doesn’t believe me to come visit and find out for yourself!
Last week I mentioned that I would be reviewing the current cleantech environment in Chile. This week, we will discuss the source of Chile’s energy supply with a specific focus on renewable energy. Before we discuss specific types and applications of this sustainable energy, let us first define what we are talking about:
Alternative energy: an umbrella term used to describe any source of energy that can possibly replace existing sources. The motivation for discovering and harnessing such new sources usually centers around avoiding the undesirable side-affects of the existing energy usage.
Sustainable energy: the use of fuel sources to fulfill current energy demands without risking or adversely affecting our future generation’s ability to power themselves.
Renewable energy: energy derived from natural resources that replenish themselves at a high frequency, like solar power (sun), wind power, hydropower (water and tides) and geothermal energy (heat from the earth’s core). Renewable energy is a category of sustainable energy, which is an alternative energy (in this case, sustainable energy as an alternative to fossil fuels).
What Type of Energy Production Does Chile Currently Rely On?
Traditionally, hydroelectric plants were Chile’s major source of electricity delivery. Frequent changes in the environment, including droughts and dry-spells, have encouraged the government to diversify its risks of blackouts and shortages. Currently, Chile’s energy production mix is split roughly 40% hydro and 60% thermal (mostly from burning natural gas deposits – only 20% or so of this is coal-fired), equating a 40/60 percentage split of sustainable / non-sustainable energy. Renewable sources besides hydroelectricity amount for less than 1% of the total installed capacity. Another interesting fact is that Chile does not produce its own natural gas – most of its demands are filled by Argentinian imports.
For the most part, the majority of sustainable energy currently produced in Chile is Hydro and Wind-powered, with hydroelectric plants dominating the category. Only recently as January 20th of 2010 was the first wind farm opened by SN Power, a Norwegian company specializing in renewable energy production. The Totoral Wind Farm, located about 300 km north of Santiago, is a 46 MW plant with 23 wind turbines. It should produce around 100 GWh per year. This amount is not much, but it all could change within the next few years.
About a year ago, a company called Mainstream Renewable Partners signed an agreement to develop $1 billion US worth of wind energy production farms in Chile. As they note on their website:
Chile has some of the best wind resources in South America representing a great opportunity for wind farm development in Chile. The Chilean government also recognises the economic, social and environmental benefits of creating this new industry which will have huge positive repercussions for its future. Already, the policy-makers are being proactive in putting the optimum support structures in place and the government’s goal is to source 5% power from sustainable sources by 2010.
Mainstream Renewable Power signed a $1bn joint venture deal with local company Andes Energy.
The joint venture company plans the development of more than 400MW of wind energy in the next five years. (source)
The second most promising type of renewable energy is solar power, specifically solar power provided by photo-voltaic plants. Solarpack, a Spanish company that currently operates four photo-voltaic plants in Spain, has announced that it is developing a 9 MW plant in Calama. The plant will be operating in one of the hottest and driest places on Earth, within the Atacama desert in the northern region of Chile. This new solar plant will be the first of its kind in Chile and should pave the way for more like it.
Next week, we will discuss the specific geographic advantages that Chile’s climate provides for the production of renewable energy.
Last week, we had a business meeting with the owners of a high-growth information technology company. Over a delicious meal at the company offices, we had a fairly in-depth conversation about the business opportunity in Chile. Towards the end of the conversation, I asked if their team had any questions for us – they looked at each other and asked once of the more poignant questions I’ve heard so far: What do you think are the key cultural differences between business practices in Chile and elsewhere in the world?
Now I am no expert on Chilean business practices, but I have noticed one fairly unique Chilean virtue: patience.
Throughout the world (and especially in the United States), investors and entrepreneurs are eager for quick returns. They will often do anything to get the deal done, sometimes damaging key relationships in the process. In Chile, the motto is “take your time.” Lets get to know each other first before jumping into a commitment. This way, we can build trust, understand each other’s interests, and move forward at a more appropriate pace.
While this might not always produce the most immediate results, I believe that this approach yields much better long-term returns for investors and entrepreneurs alike. By taking time to find the right fit, Chileans can mitigate many of the risks associated with the more common “shotgun approach” to dealmaking. It sets up the stage for a win-win situation – not just in the short term, but for years to come.
On a more personal note, I am increasingly excited to be a part of this culture – I consider lack of patience to be a weakness of mine, and I see this is a tremendous opportunity for personal growth in adapting to the needs of a successful local business environment.
I’m the man in this venture still in the States, so all I know about Chile is second-hand, but I’ve gleaned enough to see what the future could be for Chile.
We’ve talked about Chile in relation to China and India. In the outsourcing realm, China has been the hot spot for low-cost manufacturing, and India has been the place for general English-language services like call centers or data entry. Chile is not going to beat China on price for low-skilled labor, and will not topple the established Indian outsourcing industry any time soon. So where does Chile fit in?
Chile can become the center for biotech outsourcing.
The big dollars in biotech lie in human health. While Chile doesn’t have the strong research base to support a full drug discovery or medical treatment industry, it does have universities that are churning out competent lab technicians who can be trained to operate state-of-the-art machines. Some lab operations, like DNA sequencing, are destined to be outsourced. They’re preformed infrequently by most labs and require expensive machinery and specially trained staff. Chile, with its lower costs than the States and national focus on fostering high-tech industries, can become the go-to place for this kind of work.
The beauty of this vision is that Chile wants this and (as far as I can tell) doesn’t know it yet. CORFO incentives provide subsides for capital expenditures and staff training in high tech industries like biotech. The capex subsides cut the cost of the expensive lab equipment, and the training subsides get the staff up to speed on latest techniques and use of the machines.
Everyone is looking to ag and mining related biotech to grow, but it can never explode like human health can. Chile can be the low-cost alternative where biotech and academic labs in the States send their samples for some kind of processing. Chile becomes a link in the chain that goes from basic research to medical treatments, and gets to capture some of the big dollars while training Chileans for productive and relevant jobs.
We spend millions of dollars pumping a polluted black liquid out of the earth to feed it into the veins of our society. The economies of the world’s most developed nations depend on the constant supply of oil. The cogs of the process that turn crude oil into gasoline also control the lives of billions of consumers across the planet. But there is not an infinite supply of this natural resource. And what happens when changes in government or policy limit or eliminate our access to the precious material?
We’ve mentioned before that we are pursuing investment opportunities in cleantech and alternative / renewable / sustainable energy. We believe that the next wave of innovation will involve the dissemination and commercialization of inexpensive alternative energy. Over the course of our time in Chile, we’ve discovered that this country has valuable competitive advantages in the development, production, and management of renewable energy.
Over the next few weeks, I plan on spending some time reviewing the clean tech / alternative energy space and where Chile fits in. Some questions that I plan on answering:
What are cleantech and sustainable energy?
What are different ways of producing clean energy?
What are the different types of clean energy that are or could be produced in Chile?
How does the production of energy (quantity and quality) compare to the production in other countries?
If you’re interested in this space and have specific questions about certain clean technologies or applications, please let me know in the comment section.