The figures that set the pace of the region’s energy matrix during COVID-19

Subestación eléctrica. Hitos que marcaron la matriz de generación

The health and economic crisis resulting from COVID-19 generated a drop and transformation in energy demand. The IDB regularly monitors the impact on the electricity system through technical notes, blogs, and a data visualization tool in the Energy HUB. Learn about the milestones that set the pace of the energy matrix in Latin America and the Caribbean at the most critical moments of the pandemic.

The impact on the energy sector goes beyond the electricity sector, the publication of the report Statistical Review of World Energy It allows us to have a broader panorama to evaluate what has happened in the region, and to compare ourselves with other regions.

Regional energy information shows that pre-2020 trends have been maintained and have deepened with the COVID-19 crisis. Primary energy consumption in Latin America and the Caribbean (LAC) shows a decrease since 2018. 2020 was the year that experienced the largest drop in consumption (-9%), which is equivalent to the consumption of Argentina for one year ( 3.2 Exajoules).

This decrease is largely due to the impact that COVID-19 has had on the economies of the region, mainly on the productive and industrial supply. This led to a sharp decrease in the demand for energy in its different forms. In particular, it is observed that the countries with the greatest drop in consumption during 2020[1] they were Peru (-16.1%), Mexico (-14.5%) and Ecuador (-13.6%).

The consumption of non-renewable energy was the one that decreased the most, while the consumption of non-conventional renewable energy (solar, wind, geothermal) increased by 4%, and the consumption of hydroelectricity only decreased by 5.5% in the region. This situation gives us indications that the generation of energy with renewable sources has been more resilient against the impacts of COVID-19 in the energy sector.

Figure 1: Drop in primary energy consumption in LAC in the context of COVID-19

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The figures that set the pace of the region's energy matrix during COVID-19
Source: Own elaboration based on BP bp Statistical Review of World Energy, July 2021

Renewable energies have increased their participation in terms of total generation and installed capacity

Increase in installed renewable capacity

Although hydroelectricity is our main renewable source, in 2020 solar and wind energy show the greatest increase in installed power of renewable energies with growth of 36% and 18%, respectively. In absolute terms, they increase their stock to 20.7 GW and 34.6GW respectively. The growth rate of the installed capacity of both renewables in the last decade (2010-20) is also notable, with 64% and 33% on average per year, respectively.

In addition, it is possible to highlight the important increases that solar and wind energy have had during this last year respectively in Argentina (72%, 62%), Brazil (70%, 11%), Mexico (27%, 23%), and Chile (21%, 32%). Something that should be highlighted in particular is that the region represents 3% of the world’s installed solar energy capacity and 4.7% in the case of wind power.

Figure 2: Installed capacity of solar and wind energy in LAC

The figures that set the pace of the region's energy matrix during COVID-19
Source: Own elaboration based on BP bp Statistical Review of World Energy July 2021

Increase in electricity generation from renewables

In terms of generation, solar has shown remarkable growth at a rate of 83% on an annual average (2010-20), but with a lower increase in 2020 of 31%. Similarly, wind generation grew at an average of 42%, with a lower growth of 10.1% in the last year. The rest of non-conventional renewables (geothermal and biomass, without considering hydroelectricity) remain stable at around 1% growth.

It should be noted that as a whole, all non-conventional renewable energies show a growth of 9% compared to the previous year (which adds up to a total of 232 TWh), and contributed 15% to all electricity generation in 2020.

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In absolute terms, solar energy in particular has risen to 34.6 TWh generated during 2020, while wind energy production represents around 105.1 TWh. To have one, the generation of these two technologies is equivalent to all the electricity that Chile and Peru produced jointly in the same year.

Altogether, the production of all renewables, including hydroelectricity, has amounted to 919.4 TWh. This implies that approximately six out of every ten TWh of the electricity matrix are renewable according to the report, following the trend of the previous year. This represents good news for the region in terms of reducing greenhouse gas emissions.

What has happened to the production and consumption of non-renewable energy?

The consumption of oil, natural gas and coal in the region were those that showed a greater fall as a result of the COVID-19 crisis by 13%, 8% and 15%, respectively. Although together these resources are the main source of primary energy, in 2020 their participation decreased two percentage points, reaching 71%.

The extraction, in the case of oil, has been decreasing in the last 5 years, with a fall of 4.6% in 2020, that is, it went from 8.1 million barrels per day in 2019 to 7.7 in 2020. This drop in production, in addition to The economic crisis caused by COVID-19 is due to the high volatility of oil prices this year that affected income and investments in the sector.

Also the consumption of fossil fuels derived from petroleum, which are key inputs for transport and the industrial sector, was strongly affected, showing the largest percentage drop since when the report records the data (-12%)[2], reaching a level of consumption similar in quantity to that of the region in 2005.

Similar to oil, natural gas extraction has been declining in recent years, with a drop of ten percentage points in 2020. The report shows significant drops in Venezuela, Trinidad and Tobago and Argentina, which are among the main producers of the region. In this sense, LAC is the region with the greatest drop in extraction compared to what happened with the rest of the regions.

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Finally, for the generation of electricity in thermoelectric plants, the consumption of petroleum derivatives also decreased by 13%, followed by the lower consumption of coal and natural gas, which experienced decreases of -11% and -4% respectively. This decrease was partially offset by a greater use of renewables and, to a lesser extent, nuclear energy.

LAC, region with the greatest impact of COVID-19 on energy consumption

In both total energy consumption (-9%) and electricity consumption (-4%), LAC is the region with the greatest contraction in energy demand during 2020, even exceeding the negative impacts that Europe and North had. America (without Mexico). The general reduction in electricity consumption in LAC went from 1,661 to 1,596 TWh between 2019 and 2020. The impact of COVID-19 largely explains the drop in electricity demand, which according to a recent IDB study has average monthly impacts of decrease of 15% and weekly between 34% and 8%.

Due to lower energy consumption, it is observed that Carbon dioxide emissions in 2020 were reduced by more than a tenth (12%) compared to the previous year. This makes LAC, together with Europe, the regions that have decreased their emissions the most. This reduction can be explained by the fall in economic activity and the increase in renewable participation.

[1] Without considering Venezuela, which had a 26.3% drop

[2] It is the worst drop since 1965, since when the report records the data.

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