District Heating and Energy Efficiency in Chile: An Example of Project Bundling in Practice (Podcast)


Chile is pursuing plans and investment strategies to implement district energy systems in cities and regions across the country. The overall aim of the initiative is to improve well-being in urban communities currently dealing with severe air pollution, as well as to fulfil part of the country’s commitment to the Paris Agreement by decarbonizing heating.

Key message:

Replacing outdated and unhealthy heating systems with district energy simultaneously tackles local public health concerns and global carbon emissions reductions, yet various practical barriers to doing so require a new approach to designing and financing project investments. This podcast discusses the application of UNEP-CCC’s investment bundling methodology to enable a demand-side shift in clean and low-carbon energy systems.


[00:00:05.290] Aristeidis Tsakiris
Welcome to the Podcast series “Scaling up Energy Efficiency”. I’m excited to share that this is episode 10 where we will be discussing “District Heating and Energy Efficiency in Chile: An Example of Project Bundling in Practice”. Our podcast today is coming to you from Denmark, where an impressive 64% of private Danish households are now connected to district heating for their space heating and hot water needs. My name is Aristeidis and I’m an advisor at the Copenhagen Center on Energy Efficiency, which is part of the UNEP Copenhagen Climate Centre. Now let me introduce to your host for today’s podcast Vania Elizabeth Wylie, who is Senior Climate Analyst and will be moderating our discussion.

[00:00:53.310] – Vanja Elizabeth Wylie
Hello and welcome. My name is Vanja Elizabeth Wylie, and I’m greeting you today from the UN City in Copenhagen. This podcast is a part of a series of podcasts by the Copenhagen Center for Energy Efficiency, which we host here at UNEP Copenhagen Climate Centre. Moreover, the UNEP Copenhagen Climate Centre supports Mission Efficiency, which is part of an effort to build the ecosystem needed to drive progress on energy efficiency to elevate it in personal, organizational and global agendas. And if you’re looking for more information on this, you can visit missionefficiency.org. But for today’s podcast, we’re going to be talking about UNEP Copenhagen Climate Centre’s work on district heating and energy efficiency in Chile. And with me today to discuss this, I have Javier Piedra Fierro, who is visiting the UNEP Copenhagen Climate Centre. Welcome Javier. Sorry for mispronouncing the name. I’ll get it next time. Are you enjoying the summer in Copenhagen, so far?

[00:02:00.940] – Javier Piedra Fierro
Yes, yes, I think that Copenhagen is a really good city and in summer they have a really good weather.

[00:02:13.050] – Vanja Elizabeth Wylie
I think it’s been up and down, right?

[00:02:16.490] – Javier Piedra Fierro
Yes, but it’s better than the winter in Chile.

[00:02:20.750] – Vanja Elizabeth Wylie
That could be right. I haven’t been well. Please introduce yourself. Tell us a bit about where you work and what you do.

[00:02:30.530] – Javier Piedra Fierro
Okay. My name is Javier Piedra Fierro. I come from Chile. I work in an NGO called “Energy for All Foundation”. In Spanish is Energia Paratos Foundation and University of Conception. I work with the public sector, designing projects, making consulting, et cetera.

[00:02:50.990] – Vanja Elizabeth Wylie
Okay, could you please elaborate a bit on our collaboration with the UNEP Copenhagen Climate Centre? First of all, how exactly did you come to know about the Climate Center’s work in Chile?

[00:03:06.170] – Javier Piedra Fierro
I know because I came here four years ago to a district energy conference organized by District Energy in Cities Initiative and I knew the work that UNEP does in Chile and other countries.

[00:03:20.770] – Vanja Elizabeth Wylie
Okay, so maybe we can talk a bit more about the work that UNEP Copenhagen Climate Centre does for the District Energy in Cities initiative in Chile. Could you tell a bit about that?

[00:03:34.410] – Javier Piedra Fierro
Of course. Chile is pursuing plans and investment strategies to implement district energy system in cities and region across the country since 2015. UNEP and UNEP CCC have been providing technical assistance. The overall aim of the initiative is to improve well-being in European communities currently dealing with severe air pollution. This is our very big problem, as well as to fulfil part of the country’s commitment to Paris agreement by decarbonising heating.

[00:04:13.500] – Vanja Elizabeth Wylie
Okay, so employing district heating and operating a centralized plant is of course, much more efficient or more optimal in terms of energy efficiency. But maybe we can or you can elaborate a bit on the current situation in Chile. So what systems are currently being used for heating and how exactly does it contribute to pollution?

[00:04:40.330] – Javier Piedra Fierro
In Chile, in the average city in the central of southern regions of Chile, more than 70% of the total energy consumption come from heating and cooking system cooking demand. Sorry.

[00:04:55.140] – Vanja Elizabeth Wylie

[00:04:56.050] – Javier Piedra Fierro
Many urban buildings are single or single-family homes are heating primarily by individual stuff and open fireplaces with less than 20% of efficiency.

[00:05:10.730] – Vanja Elizabeth Wylie
That’s very low.

[00:05:12.080] – Javier Piedra Fierro
So, so low. A lot of heat you lose than just wet and low-quality biomass. This is another problem which contributes significantly to air pollution. This is especially true for cities located in the Andes foothills where poor air circulation traps pollution. The Chilean government attribute 4500 case of premature death from cardiovascular disease to urban air pollution. Resulting in an old cost of $2.5 billion in medical expenses and lost labour productivity.

[00:05:57.970] – Vanja Elizabeth Wylie
Okay, so that’s quite significant numbers, both in terms of health and also in terms of financial losses.

[00:06:04.480] – Javier Piedra Fierro
Yes, it’s a very big problem.

[00:06:06.870] – Vanja Elizabeth Wylie
Okay, so then basically replacing these heating systems with district energy would both tackle the public health concerns and then also the global carbon emission reductions.

[00:06:18.220] – Javier Piedra Fierro

[00:06:19.130] – Vanja Elizabeth Wylie
So UNEP and UNEP CCC entered the picture in 2015. And since then, how has the district heating initiative progressed? Are there any pilot projects or success stories?

[00:06:32.510] – Javier Piedra Fierro
Yes. Today, a total of 13 cities in Chile are receiving technical support from UNEP and UNEP CCC for the identification and development of pilot district energy projects. Ten rapid assignments had been finalized showing potential of district and heating in seven cities and for district cooling three. Now this is more important. Now we have three pilots starting in Coyhaique, Talca and Recoleta and Independencia in Santiago, Chile.

[00:07:09.230] – Vanja Elizabeth Wylie
Okay, so how long will the pilot period be, do you know?

[00:07:14.650] – Javier Piedra Fierro
I don’t know specifically the time long, but I know that these three pilot projects are starting. I’m sure of that.

[00:07:27.870] – Vanja Elizabeth Wylie
Okay, well, that’s fantastic.

[00:07:30.100] – Javier Piedra Fierro

[00:07:30.770] – Vanja Elizabeth Wylie
So when exactly did your collaboration with UNEP CCC start? And maybe you can talk a bit more about the work that you do with us.

[00:07:41.970] – Javier Piedra Fierro
I started two years ago because from UNEP CCC asking me if I could design a project with a new methodology that they create to upscaling energy efficiency in municipalities based on Project Bundling. This is the importance of the project that I am designing or I am designing. To me, it was a very attractive idea because I work within the municipalities in Chile and I know that in Chile we don’t make this kind of project. Every project of energy efficiency in Chile by the public sector is always a singular ploy. The new of my ploy is try to bundling a lot of project in only one and try to get funds for this.

[00:08:33.990] – Vanja Elizabeth Wylie
Okay. So in terms of, say, housing, the municipalities will typically focus on one house as an individual project. Whereas your method is looking at, say, 20 houses at a time.

[00:08:46.970] – Javier Piedra Fierro
20 buildings. In this case in a region in the south of Chile, in a region in Aysén is the name of the region in the very south of Chile.

[00:08:54.500] – Vanja Elizabeth Wylie

[00:08:57.470] – Javier Piedra Fierro
17 schools and three municipalities buildings like office.

[00:09:05.170] – Vanja Elizabeth Wylie
Okay. And then, let’s say the renovation of the houses, it was for insulation?

[00:09:12.380] – Javier Piedra Fierro
Insulation, exactly. This is the idea. Insulate the buildings in Chile the thermal rules. It’s a new rules. It’s not a new rules. 20 years, but every building was constructed before the 20 years have any are uninsulated.

[00:09:43.730] – Vanja Elizabeth Wylie
They’re uninsulated.

[00:09:44.800] – Javier Piedra Fierro
Are uninsulated.

[00:09:45.890] – Vanja Elizabeth Wylie

[00:09:46.170] – Javier Piedra Fierro
Okay. Every old building in Chille don’t have any insulation, lost a lot of heat.

[00:09:57.070] – Vanja Elizabeth Wylie
So in addition to having really inefficient heating, really inefficient stoves, you then also have a house which is uninsulated and loses a lot of heat.

[00:10:05.870] – Javier Piedra Fierro
Yes. For example, I made a study in the south of Chile, in Cochrane, in another room city, to a study of district heating. And when we modulate the buildings in this city, we can calculate that we can save 50, 60 or 70% of the energy that they are using now. It’s a lot.

[00:10:38.090] – Vanja Elizabeth Wylie
Yeah. Okay. So now that you’re visiting the UNEP Copenhagen Climate Centre the summer and collaborating with us on this proposal, what exactly is it that you hope to achieve? And maybe you can talk a little bit more about this work.

[00:10:56.930] – Javier Piedra Fierro
I come here with a design energy efficiency project in the south of Chile, like I said. But it’s so different. Design and calculate an energy efficient project. My specialty that finding funds and business model with all of the stakeholders. I’m learning a lot about that here. I can get interesting discussion with a different advisor that have a lot of experience. They help me to order the project, comment me about another similar project in another countries in the world, et cetera. I can spend 100 times of my time in only think about this project. I think this is more important to stay here because in Chile I work in a lot of projects and in universities, and not concentrate or focus in only one project. But when I come here, I’m only thinking in that because I think that I can improve the project. This is idea. I hope when I finish it, I guess research here, I will have more clarity of how I can finance the project, know the gaps of the project, and how I can resolve a good proposal for the business model. This is also important have more information about international funds, of course, and naturally make documents with information, concept notes, presentation, et cetera.

[00:12:34.630] – Vanja Elizabeth Wylie
Well, that sounds great. I think we touched upon this a little bit earlier, but maybe you can talk a little bit more about how your proposal relates to or contributes to UNEP’s work on energy efficiency and district heating.

[00:12:50.950] – Javier Piedra Fierro
A lot of synergy. I think that the proposal has a lot of synergy with the UNEP’s work on energy efficiency and district heating. First, we’re using the UNEP CCC methodology to bundling projects of energy efficiency. So the success of the proposal obviously is important in Chile and a new form to create project and upscale energy efficiency in municipalities. But if you lock the project with a global look like a UNEP look, this project gives the opportunity to the other countries to replicate the experience. Second, district heating is energy efficiency. This is too think about district heating institutes in Chile is think how we can be more efficient when we use the energy. If we add an insulate building project with district heating project and we have fund to do it, this is going to help the upscaling district heating technology too everybody win.

[00:13:59.010] – Vanja Elizabeth Wylie

[00:14:00.590] – Javier Piedra Fierro
And third, we have a territorial component because the first district heating project in Chile is growing in Coyhaique, in the pilot that I mentioned, the same city that we are working with buildings.

[00:14:14.270] – Vanja Elizabeth Wylie
Okay, so that’s actually quite a lot of common factors. But then when we’re talking about designing projects in this space of energy efficiency, what do you see as the main challenges and how do you think we can overcome these?

[00:14:33.030] – Javier Piedra Fierro
The questions is interesting to me because I am a mechanical engineer with some experience in management project, I can calculate the kilowatt per hours than you can say if you do something and then implement a project to make it real, I can do that. But it’s so different as I hear, because you know that the most important is not the technical calculation always necessary, of course, but the real important is watch all of the stakeholders, find the gaps that the country has, compare with another experience, et cetera. Here you can see the project with the other vision. It’s not my classic vision, this is a technical vision. Now here I’m learning how I can make a business model in Chile to ESCOs, for example, or how can convince the government that the better form to insulate one building is not only thing in one building. If you want rise up energy efficiency project in Chile, maybe you can think more, had a more bigger vision. I think I’m learning this here because it’s new for me too.

[00:16:22.040] – Vanja Elizabeth Wylie
Yeah. So basically it’s the importance of stakeholders and having all the stakeholders on board in order to successfully implement projects.

[00:16:30.490] – Javier Piedra Fierro
Yes, exactly. I’m learning a lot of the project is not only numbers, the project have a lot of gaps. It’s not too easy break or it’s not too easy identification. Indeed.

[00:16:53.510] – Vanja Elizabeth Wylie
So now with your, let’s say new learnings and having time here, what expectations do you have for the future of energy efficiency projects, your project or projects in Chile?

[00:17:09.050] – Javier Piedra Fierro
First, I’m a positive person. I think that we’re going to finish the project, of course with successful, but I know that this type of project doesn’t start one day and finish another day. You have to take time to learn. You have to take time, a lot of time to find funds. Find for example, in this project we have some funds of the government of Chile, but only a part. We need another part that we want to raise of the international funds. But we need include the private sector in the project. This is difficult, this is not easy. For example, this I think we’re going to do it, but I don’t know how time. I hope that in not three, four years, maybe less, but I know that it’s not short, it’s not easy complete all the stuff that you have to do to make that the project finish. It a good finish, has a good finish.

[00:18:39.780] – Vanja Elizabeth Wylie
Yeah. So it will take some time, but the outcome will be successful.

[00:18:43.740] – Javier Piedra Fierro

[00:18:44.390] – Vanja Elizabeth Wylie
Yeah. How do you think the collaboration with UNEP will continue in this?

[00:18:51.130] – Javier Piedra Fierro
I think that we’re starting.

[00:18:55.770] – Vanja Elizabeth Wylie
Okay, we’re at the beginning.

[00:18:59.070] – Javier Piedra Fierro
Because here, two years ago we designed a project. Okay. We talked with a lot of mayors, authorities on Chile, everybody online, everybody agree with the project. Okay, we have a part of the fund, but we need to work a lot to break the gaps that we have in Chile to make this type of project real. And I think that this is not too easy. It’s difficult because the private sector in Chile, for example, doesn’t know this class of project because they may be only in the private sector working like that, but with the public sector doesn’t exist in this type of project. We have to break a lot of gaps to find the international fund, find for example, funds from the banks of Chile that can help us to raise up the project. I think that the collaboration with UNEP will continue.

[00:20:23.990] – Vanja Elizabeth Wylie
There are a lot of opportunities continue the work. Well, Javier, it has been a pleasure to have you. Thank you so much for taking the time to sit here and talk about the project and the collaboration. And I wish you all the best in the project outcome and future endeavors.

[00:20:44.040] – Javier Piedra Fierro
Thank you Vanja, and thank you. Thank you for giving me the opportunity to talk about this project in Chile and how the energy efficiency has grown in Chile with the support of UNEP CCC.

[00:20:59.810] – Vanja Elizabeth Wylie
My pleasure.

[00:21:04.770] – Aristeidis Tsakiris
Thank you for tuning into the podcast on “District Heating and Energy Efficiency in Chile: An Example of Project Bundling in Practice”. Featuring Javier Piedra Fierro and Vanja Elizabeth Wylie. If you enjoyed the show, please feel free to share it on your social media platforms. For additional information on today’s topic, please visit the Copenhagen Center on Energy Efficiency web page. Stay connected and subscribe to receive notifications of our upcoming podcasts. We look forward to seeing you at our next episode. And always remember that “Energy Efficiency is a journey, not a destination”. Cheers.

Registered panelists

Vanja Elizabeth Wylie

Climate Accounting Analyst at UNOPS