Five things you should know about the energy sector in Latin America and the Caribbean

Chile_cosas que debes saber sobre energia

18 million people do not have access to electricity in Latin America and the Caribbean. In the year 2030, there should not be a single citizen of Latin America and the Caribbean without electricity. This figure is equivalent to the population of Nicaragua, Costa Rica, and Honduras, or close to the total population of Ecuador.

18 million people do not have access to electricity at night and cannot keep their food refrigerated, or can access other services. The region, however, has made significant progress in the last decade to increase the rate of electrification.

97% of the population has electricity coverage

According to data published in the Energy Hub, the region increased its coverage from 52% in 1970 to 97.2% in 2019. An achievement that, without a doubt, has transformed the lives of the inhabitants of the region. As a result, Latin America and the Caribbean has become one of the regions with the highest electricity coverage in the world.

In the last 20 years, subregions such as Central America, increased the coverage rate from 70% to 92%, at the same time that they have increased the installed capacity of hydroelectric and photovoltaic solar energy.

The access gap in the region continues to be significant and one of the challenges it faces is the geographic dispersion of those who do not have this service. It is estimated that around 4.5 million homes do not have electricity, and of these, two thirds are located in rural areas, as shown in the following graph published in the Energy Hub.

Graph-estimation of housing without electricity.
Energy Hub

Investment to achieve universal access to electricity

To close this gap, the region would need around US $ 13 billion of investment in order to bring electricity to the 18 million people who do not have this service..

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However, if the goal of universal access is to be reached by 2030, and considering the demand associated with population growth, both urban and rural, it is estimated that investment needs in electrical infrastructure will amount to US $ 25 billion.

For example, Haiti is the country with the lowest electricity coverage (38.6%), and it is estimated that to close this gap by 2030, around US $ 4.8 billion is required. In the case of Brazil, the most populous country in the region, an investment need of US $ 8.3 billion is estimated. With this investment, the country will be able to close the access gap in the coming years. The current access rate is 99.75%

Installed capacity and electrical matrix

58% of electricity generation in Latin America and the Caribbean comes from renewable sources. This 58% renewable is made up of 77% electricity from hydroelectric plants, followed by wind and solar generation that together add up to 13%, 9% biomass, and 1% geothermal.

In terms of generation, solar has shown remarkable growth in the last decade, at an annual average rate of 83%. Similarly, wind generation has grown an average of 45%. The rest of non-conventional renewables (geothermal and biomass) remain stable around a 1% increase. Therefore, it should be noted that as a whole, all non-conventional renewables contribute 13% of the entire 2019 electricity matrix.

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Countries like Paraguay, for example, depend almost entirely on hydroelectric energy (100% of installed capacity). And others like Brazil, Guatemala or Costa Rica, have more than 60% of installed capacity.

Currently, the region has about 200 GW of installed hydroelectric power capacity, of which 25 GW have been added in the last 5 years. Although hydroelectricity is our main renewable source of installed power (45%), solar and wind energy show the highest annual growth in installed power in the last decade, with 69% and 36% respectively. With satisfaction we highlight that 10 out of every 100 MW of installed capacity come from these sources.

Graph-Evolution of installed electricity capacity in Latin America and the Caribbean
Energy Hub

On the other hand, the demand for electricity in Latin America and the Caribbean increased 72% in the last 20 years. This electricity has allowed our region to have an increasingly renewable supply of energy, which has fostered our growth and economic development. This electricity consumption mainly benefits the industrial sector (43%), followed by residential consumption (27%), and commercial and services (21%).

Electricity integration, in this sense, plays an important role, since it allows the generation of progress and energy in a more sustainable way to meet the growing demand of the countries.

Electricity integration of Latin America and the Caribbean

Regarding electrical integration and its trade, the data that we have compiled in the Energy Hub gives us information on some notable events.

For example, electricity flows between groups of LAC countries are heterogeneous. In the first place, the largest electrical interconnection in the region between Paraguay, Argentina and Brazil and its subsequent connections with Uruguay and Chile stands out, with a total of 46 thousand GWh on an annual average.

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This is followed by the interconnections of Central America (SIEPAC) with 2.2 thousand GWh and that of the Andean zone with 1.6 thousand GWh. All these interconnections generate a commercial value of more than 2 billion dollars a year.

The interconnection in the region that has achieved the highest growth in electricity trade in the last decade is Central America (SIEPAC), with an average annual growth of 32%. SIEPAC is the first interconnection initiative in the region, which has had the support of the IDB for more than two decades. SIEPAC has a transmission system of 1800 km, completed in 2014.

The IDB has also been supporting the creation and consolidation of three other integration initiatives: SINEA, SIESUR, and Arco Norte. Dince Central America to the Southern Cone, the electrical integration of the countries facilitates commercial exchange at the appropriate times and, at the same time, it supports energy security, strengthens electrical systems and creates more competitive markets.

To learn more about these and other data, we invite you to visit the Energy Hub, the digital meeting point that collects, integrates, disseminates and promotes the generation of data and information on the energy sector in Latin America and the Caribbean in a single place. The Energy Hub contributes to the creation of knowledge that will allow us to face the energy challenges of the region with current and accurate information more quickly and clearly. This knowledge helps decision makers to improve the quality of life of the inhabitants of Latin America and the Caribbean.

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