This paper presents some of the results of a power system analysis for Chile. The two major Chilean electric systems are roughly modelled and optimized using a linear programming method with the option to integrate renewable energy sources like wind power, solar power, mini-hydropower and biomass-fired power and also "municipal waste". A total of four different scenarios are outlined: reference system, new production units, gas and coal price variations and a policy measure to encourage power production based on renewable energy. The objective of the scenarios was to illustrate under what conditions integration of the different energy sources in the existing production system is possible. The study shows that even under current conditions, mini-hydro and waste to energy plants are economically viable. Wind power might be interesting alternatives if policy instrument measures are applied. On the other hand, it is hard for the other energy sources to enter the system even when higher price levels of gas and coal are applied. The system is more sensitive to coal price increases than to gas price increases and this mainly encourages CO(2) emission reduction. (C) 2008 Elsevier Ltd. All rights reserved.