The energy transition in Latin America: Opportunities and challenges

Published: May 23, 2023

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Introduction

The energy transition towards renewable energy sources and the reduction of greenhouse gas emissions are key aspects for sustainable development in Latin America. In recent years, the region has experienced significant growth in the implementation of clean technologies, as well as a renewed commitment from countries to address environmental challenges and promote sustainable energy.

The energy transition refers to the set of changes in energy production, distribution and consumption models with the aim of mitigating greenhouse gas emissions.

The main cause of climate change is the greenhouse effect, which occurs when certain gases present in the atmosphere trap part of the thermal radiation emitted by the Earth’s surface, causing global warming.

Human activity has caused an increase in the concentration of some of these greenhouse gases in the atmosphere, especially carbon dioxide (CO₂). The objective of the energy transition is to transform the energy system by promoting renewable energy, the circular economy and other forms of emission reduction.

This movement involves raising awareness about responsible and sustainable energy consumption, as well as establishing energy efficiency guidelines through the electrification and digitization of all processes and sectors of the economy.

In this report, we will analyze the main opportunities and challenges facing Latin America in its energy transition, focusing on the implementation of renewable energy technologies and the reduction of emissions.

Opportunities

Abundant natural resources: Latin America is rich in natural resources, such as solar radiation, wind, biomass, and hydroelectric power. These resources offer a great opportunity to diversify the energy matrix and reduce dependence on fossil fuels.

Competitive Costs: The cost of renewable energy technologies, such as solar and wind, has dropped significantly in recent years. This has made these technologies increasingly competitive compared to conventional energy sources, providing an opportunity for a cost-effective transition to clean energy in the region.

Growing demand: Latin America experiences a constant increase in energy demand. The implementation of renewable energy technologies can help meet this growing demand in a sustainable way and reduce vulnerability to the volatility of fossil fuel prices.

Socioeconomic benefits: The adoption of renewable energy can generate employment and promote economic development in the region. Investment in clean energy projects can create local employment opportunities, foster innovation and attract foreign investment ¹ .

challenges

Limited infrastructure and financing: Although there have been significant advances, the lack of adequate infrastructure and limited access to financing remain significant challenges for the implementation of clean energy projects in the region. Greater investment and collaboration is required both nationally and internationally to overcome these barriers.

Regulatory and political framework: The lack of clear regulatory frameworks and stable energy policies can hinder the development of green energy projects. It is crucial to establish a favorable environment for investment and adoption of clean technologies, including tax incentives, subsidies, and fair grid connection fees.

Grid integration: Adding more renewable energy capacity to the grid poses challenges in terms of stability and demand management. Careful planning and modernization of the grid infrastructure is required to ensure a smooth and safe transition to a greater share of clean energy sources.

Public awareness and participation: Public awareness and participation are essential to foster a culture of sustainable energy in the region. It is necessary to promote education and awareness about the benefits of alternative energies and the importance of reducing greenhouse gas emissions.

The Keeling curve is a graphical representation that illustrates the variations in the atmospheric concentration of carbon dioxide since 1958 (Figure 1). Its construction is based on periodic measurements carried out at Mauna Loa, Hawaii, under the supervision of Charles David Keeling. These measurements constituted the first evidence of accelerated increases in carbon dioxide levels in the Atmosphere ² .

Energy transition: Keeling curve shows the variations of the atmospheric concentration of CO₂ with time — Figure 1. Keeling curve shows the variations of the atmospheric concentration of CO₂over time.

Carbon dioxide (CO₂) is a trace gas of great relevance in the earth’s atmospheric composition, with a current concentration of approximately 0.04% (400 parts per million). Despite its low proportion, (CO₂) contributes as a greenhouse gas.

Initiatives and efforts of Latin American countries for the energy transition

Several Latin American countries have shown a strong commitment to the energy transition and have implemented significant initiatives to promote the use of renewable energy.

Many of these achievements are due to hydropower (Figure 2), for a variety of reasons. First, hydroelectric power is still the largest source of renewable energy in the Brazilian electricity matrix, 73.6% of renewable generation is hydroelectric (67.7% of total generation), and represents about 46% of electricity generation at regional level.

Second, in addition to providing renewable energy, existing hydroelectric reservoirs provide the storage that variable generation technologies, such as wind and solar, require in order to expand. In other words, hydroelectric plants function as the virtual battery of the electrical system, and have allowed the development of other renewable sources in a sustainable way and with low emissions.

Third, hydroelectric plants provide other ancillary services (such as frequency management, reactive power, and inertia), essential for the operation of the electrical system ³ .

Energy transition: Hydroelectric power source — Figure 2. Hydroelectric power source.

Latin America presents numerous opportunities for the transition towards a cleaner and more sustainable energy matrix. The abundant natural resources, the competitive costs of renewable technologies, the growing demand for energy and the socioeconomic benefits are factors that favor the development of clean energies in the region. However, challenges remain related to infrastructure, the regulatory framework, the integration of the electricity grid and public awareness.

The efforts and initiatives implemented by Latin American countries show a solid commitment to the energy transition. Through ambitious policies, investments and goals, these countries are moving towards a more sustainable and resilient future. It is essential to continue promoting regional collaboration, investment and innovation to overcome the remaining challenges and accelerate the adoption of renewable energy in Latin America.

South American and Latin American countries are carrying out a series of innovative projects to generate alternative energies and promote the transition towards a more sustainable energy matrix.

Outstanding projects promoting the energy transition

Peru: The Intipampa solar park , located in the department of Moquegua, is one of the largest solar projects in Latin America. With an installed capacity of 260 MW, this solar park contributes significantly to the generation of clean energy in Peru and reduces greenhouse gas emissions ⁴ .

Cerro Grande Wind Farm – Uruguay: Uruguay has made significant investments in wind energy, with the Cerro Grande Wind Farm being one of the most notable examples. With an installed capacity of 50 MW, this wind farm has contributed to diversifying the country’s energy matrix and reducing CO ₂ ⁵ emissions.

Cerro Pabellón Geothermal Plant – Chile: Chile has promoted the development of geothermal energy, and the Cerro Pabellón Plant is a pioneer project in this technology in Latin America. Located in the Antofagasta region, this plant has an installed capacity of 48 MW and takes advantage of subsoil heat to generate electricity in a clean and renewable way ⁶ .

Naranjal Photovoltaic Project – Brazil: Brazil is developing the Naranjal photovoltaic project, which will be one of the largest solar parks in Latin America. With a planned capacity of 600 MW, this project will significantly contribute to the generation of solar energy in the country and will reduce greenhouse gas emissions ⁷ .

Coca Codo Sinclair Hydroelectric Plant – Ecuador: The Coca Codo Sinclair Hydroelectric Plant, located in the province of Napo, is one of the largest hydroelectric plants in the region. With an installed capacity of 1,500 MW, this plant generates clean and renewable energy from the flow of the Coca River, contributing to the reduction of emissions and the diversification of the energy matrix of Ecuador ⁸ .

Conclusion

South American and Latin American countries continue to promote investment in renewable energy and develop projects that take advantage of available natural resources, such as solar, wind, geothermal and hydroelectric, with the aim of reducing greenhouse gas emissions and moving towards an energy future. more sustainable.