Chile's Energy Minister Ricardo Raineri on Thursday reiterated the importance of developing large-scale power products such as the HidroAysen hydroelectric project and Castilla coal-fired project.

While Chile is looking to incorporate more alternative renewable-energy sources into its energy matrix and to acquire the technical capabilities to eventually make a production decision on nuclear energy, experts argue that large-scale coal-fired and hydroelectric energy projects also need to be developed so the Andean nation can keep up with burgeoning demand.

As the country's gross domestic product grows at a pace of about 4%-5% a year, some 10,000 megawatts of new installed capacity--roughly a doubling of capacity--will need to be added by 2020.

"It's important to recognize as a nation that our energy matrix needs to be diversified and give space to hydroelectricity, such as HidroAysen, and coal-fired projects such as Castilla," Raineri said.

The $4.4 billion Castilla thermal project--developed by a unit of Brazilian billionaire Eike Batista's EBX--would add 2,354 megawatts, and the $3.2 billion HidroAysen project--being developed in a joint-venture by Chilean power generators Empresa Nacional de Electricidad SA (EOC, ENDESA.SN) and Colbun SA (COLBUN.SN)--would add another 2,750 megawatts in installed capacity to the nation's central SIC power grid. This SIC grid runs from northern Tal Tal to the southern Island of Chiloe and supplies energy to more than 90% of the country's population.

"For us it's important to have these large power projects which will produce lots of megawatts, although they have to be environmentally friendly and they must respect the well-being of our citizens," Raineri said while attending the inauguration of a 2.5-megawatt wind farm in the southern Magallanes region.

Chilean President Sebastian Pinera's nod to environmentalists in August regarding GDF Suez's (GSZ.FR) Barrancones thermal power project--a move which essentially killed the $1.1 billion project-- threw a monkey wrench in the nation's energy sector.

The country's two largest energy projects, Castilla in northern Chile and HidroAysen in the far south, have been criticized because of alleged environmental damages they would produce and have seen their respective environmental permitting processes delayed considerably.

Castilla is being held up due to a legal dispute regarding its environmental study, while HidroAysen faces staunch opposition because of plans to lay a transmission line that would span nearly 2,000 kilometers through pristine land and plans to dam the Baker and Pascua rivers.

-By Anthony Esposito, Dow Jones Newswires; 56-2-715-8929;