Ruy Campos Dugone explores the opportunities and challenges for Latin America and the Caribbean when it comes to the expansion of the use of renewable energy. He believes adding 120 GW of clean energy by 2030 is “a feasible utopia” for the region.
February 25 (SeeNews) - Since 1970 there is great interest in using renewable energies in the 46 countries of Latin America and the Caribbean (LAC), where currently only three countries have no policies or strategies for the promotion and/or development of this energy source[i].
Combining the objectives set by the six largest economies in the region -- Brazil, Mexico, Argentina, Colombia, Chile and Peru, we see that LAC countries aim to add at least 120 GW of renewable capacity to their electrical grid by 2030.
Will it be possible to meet the LAC renewable energy objective?
First of all we should note that Latin America and the Caribbean is a fully heterogeneous geographical area where six large regional integration processes coexist, with very different interests and approaches to deal with a common challenge: how to provide affordable, reliable and sustainable electricity throughout the LAC region.
Considering that the installed capacity in the countries mentioned above is over 250 GW, with more than a half being generated by hydroelectric sources, to think that in the next 15 years LAC's goal is to add 120 GW of clean energy is a feasible utopia.
A Feasible Utopia?
At the regional level, LAC has significant power shortage not only in generation, but also in transmission and distribution. So, technically and commercially 120 GW by 2030 is potentially feasible - as long as prices are related to those handled internationally.
Nonetheless, the political, economical and social conjunctures in the different countries that form the region are very different and quite independent, so the utopian component to achieve the goal will be to ensure that all stakeholders in the region work strategically and jointly.
What to expect for solar PV in the region?
The solar photovoltaic (PV) market in LAC is being led by Chile, but it will gradually see tremendous growth in other countries in the region, especially in Brazil, Mexico, Argentina and Peru. It is estimated that the region will exceed 11 GW of PV installed capacity by 2018[ii].
Latin America and the Caribbean is the global frontier for unsubsidised solar markets. With high insulation levels (AbraPampa, Jujuy State, Argentina enjoys 2.32 MWh/cu m/per year) and growing demand, it is positioned to be one of the most attractive regions on the planet for solar development[iii] in the mid- and long term.
Taking into account 1) the studies published by USB[iv] - in collaboration with MIT[v] and IEA[vi] - where they expressed that solar could become 25% of the global installed base by 2050, and 2) the geographical conditions at the region for the development of solar energy; I would like to share my prognosis: by 2030 - at least - 30 GW of solar capacity may be commissioned in the LAC region.
To carry out this process successfully, I suggest considering some aspects of the Indian Solar Model. India has begun a transforming process to shift its energy matrix, setting by 2022 a target for 100 GW Solar Power. At the beginning, India was thinking of imposing an anti-dumping duty to foreign equipment, but it quickly understood that the local industry lacked the capacity to provide the modules for the solar projects it wanted to implement. Thus the country created a programme where a percentage of the capacity is tendered under Domestic Content Requirement (DCR), between 10% to 25%, and in the tenders where this programme is used, the customer pays a higher price per MW/h.
Renewable Energy in LAC region: Business Development
The enactment of renewable energy policies, by public entities, provides the tangible and favourable framework for the development of electricity from renewable sources; development that is carried out mostly by private companies under different modalities (JVs, SPVs, others).
The countries that have made significant progress in developing renewable energies are those who have understood and seduced the private sector, with simple and clear rules for the private companies focused on generation with clean sources. With this clean energy, each country fixed the business environment for growing their competitive industries. In Chile, for example, they ensure electricity for the Mining Sector or for the Export Fruit Sector.
Coincidentally, those countries that do not have an attractive scenario for developers and/or generating companies are the countries that have made less progress towards a clean energy generation mix.
It is critical to fix a simple, clear and friendly framework for private companies. This would be the key to achieving – or not – the 120-GW goal by 2030 for the LAC region. Other aspects that could contribute to the failure of this objective are: corruption, political crises, lack of access to capital, legal instability and currency fluctuations among others.
However, we must have in mind: High Risk is needed for High Reward!
About the author:
Ruy Campos Dugone is passionate about renewables in agriculture, especially in Latin America and India, with experience in companies like SunEdison and Kanoria Group. He is focused on promoting high value-added applications using renewable energy.
[i] Source IRENA – International Renewable Energy Agency
[ii] Source GTM Research
[iii] Source GTM Research
[iv] Union Bank of Switzerland
[v] Massachusetts Institute of Technology.
[vi] International Energy Agency