SANTIAGO, Sep 29 (IPS) - Pehuenche indigenous people who waged and lost an eight-year legal battle against the construction of the Ralco hydropower dam in southern Chile will be the first to receive energy supplies from a small dam certified as "environmentally-friendly".

"Two paradoxical developments" emerged this month along the upper stretch of the Bío-Bío River, Chile's biggest in terms of volume of flow, around 500 km south of Santiago, the president of the Institute of Political Ecology (IEP), Manuel Baquedano, told IPS.

"On one hand, the Ralco dam, which triggered one of the highest-profile conflicts over indigenous rights and the environment ever seen in Chile, has begun to operate, while on the other, an agreement was signed to build a green-friendly micro-hydropower plant to supply the Pehuenches in the area with electricity," he said.

The agreement, which will bring the Pehuenches -- a subgroup of the Mapuche Indians -- electricity, was signed by the Bolivariana University and the Charrúa Electricity Cooperative during a "Seminar on Green Electricity in Chile", organised this month by the IEP. The cooperative will provide the financing for the micro-dam.

"Green electricity is energy that is generated by renewable sources in a sustainable fashion -- in other words, by preserving the natural surroundings, respecting local populations, and promoting economic equity," said Baquedano. Sources of green energy are small dams, wind, the sun (solar energy), the heat from the earth (geothermal energy), organic material (biomass), and the waves (wave energy).

Other micro-hydroelectric dams already operate in Chile, but none have been specifically certified as green-friendly. The dam that will supply the Pehuenches and other people in southern Chile with electricity will be 1,200 times smaller than the huge Ralco dam that began to operate Tuesday.

The micro-hydropower plant, to be certified as environmentally friendly by the IEP, with the support of the European Green Electricity Network (EUGENE), should begin operating a year from now.

The 500 kilowatts that the small plant will generate by harnessing the flow of a river that runs into the Bío-Bío will supply around 15,000 people in the rural districts of Santa Bárbara and Bío-Bío. The mini-dam will be connected to a local grid that in turn will be linked to the central power grid. It will bring the Pehuenches electrical power, since the Ralco project did not include the building of an electricity substation for the families whose land was flooded by the dam, Baquedano pointed out.

The 570-million-dollar Ralco plant belongs to the Spanish power company Endesa. Ten percent of the more than 3,500 workers who built the dam were Pehuenche Indians. Construction began in 1995. The plant is now Chile's biggest power generator, producing 570 megawatts, which will cover about nine percent of the energy needs of the country's population of nearly 16 million.

President Ricardo Lagos drew praise from activists for excusing himself from taking part in the inauguration of the Ralco dam this week. He cited "scheduling conflicts."

Indigenous people, who number more than one million in Chile, and environmentalists opposed the project from the start, because the flooding of 45 kilometres of the Bío-Bío river valley not only meant the relocation of 92 Pehuenche families (a total of 550 people) whose ancestors have lived in the area for centuries, but also caused irreversible environmental damage to a unique ecosystem.

One of the main obstacles that Endesa had to overcome was the relocation of the indigenous families. In 1998, the company reached an agreement with 77 of the families, and 11 others eventually gave their consent as well.

But the resistance mounted by the rest, led by the elderly sisters Berta and Nicolasa Quintremán, held up the project for several years. In December 2002, Nicolasa gave in and accepted a payment of around 300,000 dollars, as well as 77 hectares of land not far from her property. Her sister and the other two families also ended up accepting the indemnification, most of which was paid by the state.

The controversial Ralco project unleashed a debate on the lack of a sustainable energy policy in Chile, the need for which was driven home this year by the restrictions of imports of natural gas from neighbouring Argentina, which is facing an energy crisis.

"Until recently, the country's only energy policy was to achieve the lowest possible production costs," civil/mechanical engineer Roberto Román, an expert on energy at the University of Chile, commented to IPS. "Attempts were not made to ensure steady, secure supplies or to keep environmental impact to a minimum. According to statistics that predate the inauguration of the Ralco plant, 65 percent of the country's energy needs are covered by imports, a proportion that analysts say could rise to 80 percent by the end of the decade.

Those figures indicate that Chile's energy supplies mainly depend on non-renewable sources: 41 percent comes from oil, 23 percent from natural gas, and 13 percent from coal. Meanwhile, 17 percent comes from the burning of wood -- a resource that is only renewable if forests and tree plantations are adequately managed. Before Ralco began functioning, only six percent of supplies came from large hydroelectric plants, which harness a renewable source of energy, but in a manner that has been widely criticised due to the environmental and social effects.

Large dams have come under fire around the world, even from World Bank experts, because the reservoirs significantly alter river valley ecosystems, through the build-up of sedimentation and the extinction of species of flora and fauna.In addition, the construction of large dams generally requires the relocation of communities, which not only lose their homes and towns or farms, but also part of their cultural heritage. The vulnerability of Chile's energy supplies was highlighted in 1997 and 1998 when blackouts were caused by drought, and once again this year, due to the problems with natural gas supplies from Argentina.

Local environmental organisations continue to insist on the need to develop renewable energy sources. In the United States, 18 million people are supplied by "green energy", and more than 100 generators have been certified as environmentally-friendly. Experts agree that the conditions for encouraging the use of alternative energy sources exist in Chile, and will receive a major boost when the law on electricity services is modified in the near future to allow substations that generate less than nine megawatts to connect to the central power grid without paying a "toll".

Baquedano said "the IEP advocates a system that will allow citizens to choose the type of electricity they want," although he said it could take five or 10 years to achieve. The first step would be to get companies not only to commit themselves to environmental practices, but to take advantage of their use of green electricity to promote themselves to consumers. "For the first time, there is a willingness to diversify energy sources, allow smaller actors to enter the market, and give renewable sources a chance, not only at the level of laws and regulations, but also by trying to come up with mechanisms for helping to finance the first pilot projects," said Román.

"The National Energy Commission's plan for future projects includes the construction of three geothermal plants, starting in 2007," he noted. The National Energy Commission and GTZ, Germany's international development agency, are working together on a project for "Renewable unconventional energy sources in Chile", which will provide support to local initiatives and stimulate private investment. (END/2004)

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