(Reuters) - Energia Austral, owned by global miner Xstrata Copper and Australia's biggest energy retailer, Origin Energy, sees its Chilean hydroelectric power projects and transmission line requiring capital expenditures of up to $3.6 billion, company executives told Reuters in an interview on Tuesday.
Capital expenditures were upwardly revised from a previous estimate of between $3 billion and $3.2 billion.
The three generation units, which will have an installed capacity of over 1,000 megawatts, are seen coming online in 2020 or 2021 instead of 2019 as previously planned, said Adam Favero, Chile country manager for Origin (ORG.AX).
Earlier on Tuesday, Origin acquired a 51 percent interest in Energia Austral from Xstrata (XTA.L). Favero was referring to the Cuervo, Blanco and Condor generation units planned in Chile's southern Aysen region.
"Given the high energy demand growth of Chile over the next years .... We believe Chile offers many opportunities among its natural renewable resources, and hydropower is a very important component of that," said Favero.
Chile, the world's top copper producer, is suffering from years of underinvestment in its shaky energy grid, and desperately needs to reform electric transmission lines and energy generation to keep up with growing demand.
The government estimates that to keep up with rising energy demand, some 8,000 megawatts of new installed capacity will need to be added to the current 17,000 megawatts in the nation's power matrix.
Chilean environmental groups and residents have gone to court to challenge many energy projects, from hydroelectric plants to coal-fired thermoelectric ones.
Energia Austral expects all three generation units to have their environmental permits by the end of 2014 and to hand in the environmental impact study for the transmission line during the first half of 2013 and have approval 15 to 18 months later. A feasibility study, which will include a definitive capital expenditure figure, will be ready by 2016.
Energia Austral's general manager Alberto Quinones said that the company also expects additional benefits from its agreement with the HidroAysen mega hydropower project to share land for planned transmission lines in southern Chile.
Around half of Energia Austral's capital expenditures will be spent on the nearly 800 kilometer (497 miles) transmission line, Quinones said, adding "synergies with HidroAysen will be considered."
The $3.5 billion HidroAysen project, a joint venture between leading generator Endesa Chile END.SN and partner Colbun COL.SN, has been the target of massive protests on concern over its effects on the country's pristine Patagonia region.
Favero believes Energia Austral will help spur economic activity in the remote Aysen region, which has seen a recent spate of protests as residents complain of high energy prices and seek a bigger slice of Chile's economic success.
"We have been monitoring the situation very closely," Favero said. "We believe the project offers a lot of benefits for the region, specifically job-creation opportunities."