The Regulation and Policy of Latin American Energy Transitions

Lucas Noura Guimarães

• Publisher: Elsevier Science
• Year: 2020
• Print ISBN: 9780128195215
• eBook ISBN: 9780128195659
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

The Regulation and Policy of Latin American Energy Transitions examines the ongoing revolution within the energy landscape of Latin America. This book includes real-world examples from across the continent to demonstrate the current landscape of energy policy in Latin America. Itfocuses on distributed energy resources, including distributed generation, energy efficiency and microgrids, but also addresses the role of less common energy sources, such as geothermal and biogas, as well as discusses the changing role of energy actors, where consumersbecome prosumers or prosumagers, and utilities become service providers. The legal frameworks that are still hampering the transformation of the energy landscape are explored, together with an analysis of the economic, planning-related and social aspects of energy transitions, which can help address the issue of how inequalities are affecting and being affected by energy transitions.The book is suitable for policy makers, lawyers, economists and social science professionals working with energy policy, as well as researchers and industry professionals in the field. It is an ideal source for anyone involved in energy policy and regulation across Latin America.- Reviews key legal and policy features defining success and failure within the diverse Latin American energy transitions- Provides clear descriptions and comparisons of current and potential future policy frameworks in Latin America across differing social, economic, geo-political and policy contexts- Analyzes the potential role of new technologies and practices in developing the region's energy economy- Poses key regulatory challenges and possible means to finance the envisioned transitions

Part 1

Changing the energy landscape: policy and economic issues

Outline

• Chapter 1 Is there a Latin American electricity transition? A snapshot of intraregional differences
• Chapter 2 Using market mechanisms for a reliable energy transition in Latin America
• Chapter 3 Assessing the macroeconomic effects of sustainable energy transitions in Costa Rica and Chile: a multisectoral balance-of-payments-constrained growth approach
• Chapter 4 Energy (and climate) challenges in South America: what planning for what transition?
• Chapter 5 Prompting an energy transition: how policy entrepreneurs passed Peru’s first renewable energy legislation for the grid
• Chapter 6 The challenges and contradictions of Peru’s Proyecto Masivo de Energía Solar

Chapter 1

Is there a Latin American electricity transition? A snapshot of intraregional differences

Lucas Noura Guimarães^1,2, ¹EDP Brasil, São Paulo, Brazil, ²Brazilian Institute of Energy Law Studies, São Paulo, Brazil

Abstract

This chapter analyzes to what extent it is possible to speak of a Latin American electricity transition, given the intraregional and inner-country differences in terms of availability of renewable energy sources, intended nationally determined contributions, and existent electricity matrixes. The subcontinent has not managed to diversify away from fossil fuels and climate-sensitive hydropower, in order to guarantee an environmental-friendly energy security. The Latin American countries find themselves in different stages of market developments, have scattered and diverse renewable energy sources, and seek different electricity transitions within different time frames. This chapter shows that Latin American countries still have a lot to grow in terms of grid interconnection and energy exchange, developments of which might build common ground for a Latin American electricity transition. In the pursue of economic development fueled by renewable energy sources, the region needs to avoid the “transition-related renewables curse,” being paramount to analyze from which diversification stakeholders are talking about, so the maintenance and growth of the renewables’ share in the electricity matrixes of countries are not hampered.

Keywords

Latin America; energy transition; electricity transition; intraregional differences; diversification; renewable energy sources; grid interconnection

1.1 Introduction

As the introduction of this volume has presented, energy transitions happen worldwide and have many different drivers, motivations, issues, and risks, being an analysis of climate change and its impacts on the power sector of Latin American and the Caribbean (LAC) countries only one of the possible approaches. Given the huge variety and complexity of energy transition studies,¹ as well as the lack of literature on LAC energy transitions, this chapter focuses merely on shedding some light on the relations between climate change and the power sector in LAC, in order to verify to what extent it is possible to speak of a Latin American electricity transition.

It is well known that Latin America—and South America specially—is a region of the Earth with plenty of natural resources. Water, wind currents, solar irradiation,² and geothermal heat³ are abundant and widely scattered around this portion of the Earth. Besides that, there is a considerable amount of land for biomass, not to mention the vast reserves of fossil fuels—oil in Venezuela, gas in Argentina, and the presalt layer along the Brazilian coast. Due to that configuration, 56.6% of the power generation is delivered to the region’s grid by means of renewable energy sources (Inter-American Development Bank, 2017a,b,c). Studies show that this number can reach 100% in the subcontinent (Barbosa et al., 2017; Inter-American Development Bank, 2017a,b,c; Gils et al., 2017; Zapata et al., 2018; Blazqueza et al., 2018; Hansen et al., 2019).⁴

Nevertheless, when compared to the United States and the European countries, LAC countries consume less electricity,⁵ which has direct impact on the region’s development. This feature, detailed analysis of which goes beyond the scope of this chapter, can be attributed to political, economical, and technological reasons. Along the past century, LAC countries often lacked the political will,⁶ the economic environment, and/or the technological know-how to explore its natural resources in their full potential. The untapped potential for wind and solar energy, as well as biomass and geothermal⁷ energy, is still huge,⁸ even if environmental restrictions are taken into consideration.⁹

Once seen as a development problem in the past, this “delay” in the promotion of adequate investment in renewables is now considered by scholars, stakeholders, and public agents. The so far unexplored renewable potential is the free ticket to the LAC electricity transition, given that it can, at the same time, promote economic development, social welfare and avoid jeopardizing the environment.

Studies show that between 2016 and 2040, power generation is expected to grow in LAC countries an average of 2.73% yearly (from 1429.67 to 2657.50 TW h) (Lee et al., 2018). Coupling this growth with the exploitation of the untapped potential of renewables is of paramount importance to achieve an environmental-friendly electricity transition. The constant reduction in the costs of renewable energies, making them a less expensive source of new electricity than the least cost fossil fuel alternative (International Renewable Energy Agency, 2019), can help guarantee this coupling.

But when analyzing in more detail the climate and geography of LAC countries, considering the lack of regional integration, as well as their electricity matrixes, one might come to ask if there is really “a” Latin American electricity transition. Let alone geography and climate, despite the overall abundance of renewable energy sources, not all countries are “blessed by God” in this matter—specially the highly oil-dependent countries in the Caribbean region. Besides that—except the SIEPAC project¹⁰ and apart from the political efforts in regional flora¹¹—LAC countries cannot be considered energy integrated, neither in the physical nor in the market-based aspects.

Moreover, taking each country’s intended nationally determined contributions (INDCs) as example, proposed within the scope of the Paris Agreement and transformed into nationally determined contributions automatically after the ratification of the agreement,¹² it is easy to see that not all LAC countries depart from the same starting point—nor are walking the same energy transition path. The same result is achieved when considering the different degrees of energy market development for each country of the region.¹³

On the other hand the benefits of a largely integrated energy grid—one that crosses national borders and interconnects different types of energy matrixes and energy systems—are well documented in the literature (Liu, 2016; de Castro et al., 2016; Breyer et al., 2015; Czisch, 2005). Despite adding complexity to the grid operation, the larger the grid, the greater the flexibility and the options to meet power demand at optimal economic and technical conditions. That said, it should also be investigated in what measure an interconnected region allows for a unification of the electricity transition discourses and processes of LAC countries.

The main purpose of this introductory chapter is to use scholars’ literature and international organizations’ reports and assessments to verify to which degree it is possible to see LAC countries as a whole, when it comes to study, analyze, and interpret the respective countries’ pathways to set in motion their electricity transitions.

This chapter is divided into five sections. After Section 1.1, there are four more sections that are as follows:

• • Section 1.2 provides an overview of the LAC countries’ starting points regarding their state-of-the-art electricity matrixes;
• • Section 1.3 covers the LAC countries’ different energy paths, taking the INDCs related to the power sector as an example;
• • Section 1.4 takes a broader approach and examines the possibilities to regionalize the Latin American electricity transition, despite the solo efforts of each country; and
• • Section 1.5 brings the conclusion of the chapter.

1.2 Different starting points: assessing the electricity matrixes

As widely known, the main goal of the Paris Agreement is to strengthen the global response to the threat of climate change by keeping the global temperature rise this century well below 2°C above preindustrial levels and to pursue efforts to limit the temperature increase even further to 1.5°C.

How this will be achieved is left entirely to each country’s sovereign decision. It is true that the Paris Agreement promote a long-term goal for adaptation, that is,

to increase the ability to adapt to the adverse impacts of climate ch...

Table of contents

• Cover image
• Title page
• Table of Contents
• Copyright
• Dedication
• List of Contributors
• Author biographies
• Foreword
• Foreword
• Disclaimer
• Introduction
• Part 1: Changing the energy landscape: policy and economic issues
• Part 2: Energy transition taking shape: Regulatory issues
• Part 3: Boosting energy transition: socio-technical issues
• Index