Hydroelectric power is clean, inexpensive and may continue to be used in Chile, where new energy projects are needed to cut electricity costs, Energy Minister Maximo Pacheco said Monday.

Chile lacks oil and gas resources, forcing it over the years to rely on hydroelectric power plants, which are increasingly being challenged by communities and environmentalists.

"(The) impact produced by lack of investment in adequate infrastructure in the sector affects the economy's growth and makes it more difficult to deal with poverty," Pacheco said at a seminar.

Chile's economy, according to a Central Bank report released on Monday, grew just 1.9 percent in the second quarter, compared to the same period in 2103, due mainly to lower investment.

Socialist President Michelle Bachelet's administration has prepared a long-term plan for the energy industry aimed at reducing the current power generation shortages that have resulted in high electricity prices.

The high cost of electricity has affected both consumers and businesses, especially mining companies, which account for nearly half of Chile's gross domestic product (GDP) and have seen production costs soar.

The Bachelet administration wants to diversify Chile's energy mix, focusing on hydro, natural gas and unconventional renewable energy sources, such as solar, wind and geothermal, all energy sources widely available in the South American country.

Unconventional renewable energy sources could account for about 20 percent of the energy produced in Chile by 2025, officials said.

The government, however, will have to stimulate investment in the energy industry to achieve its goals. EFE