Renewable Energy forI Electricity Generation in Latin America:NSERIR the FOTOS market, technologies and DE RENOVAVEIS PARA outlook PREENCHER O ESPAÇO BRANCO
2010 Copper Connects Life TM
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EXECUTION Gilberto De Martino Jannuzzi University of Campinas – UNICAMP and International Energy Initiative – IEI, Brazil
Odón de Buen Rodríguez Energía, Tecnología y Educación, S.C. – ENTE, S.C., Mexico
João Gorenstein Dedecca International Energy Initiative – IEI, Brazil
Larissa Gonçalves Nogueira International Energy Initiative – IEI, Brazil
Rodolfo Dourado Maia Gomes International Energy Initiative – IEI, Brazil
Judith Navarro Energía, Tecnología y Educación, S.C. – ENTE, S.C., Mexico
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COPYRIGHT
© 2010 International Copper Association
DISCLAIMER
Although this document has been prepared with due care, the ICA and any other participating institution are not responsible for the information and analysis presented, which shall be credited directly to the authors of the study.
International Copper Association Latin America Av. Vitacura 2909, Oficina 303 Las Condes, Santiago Chile www.procobre.org
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Contents
1 CONCLUSIONS AND RECOMMENDATIONS ...... 1
1.1 GLOBAL FACTORS ...... 1 1.2 LOCAL POLICY DRIVERS ...... 1 1.3 PRESENT SITUATION (IN 2009) ...... 1 1.4 OUTLOOK TO YEAR 2015-2020 ...... 2 1.5 MOST COMMON POLICIES AND REGULATION ...... 3 1.6 STAKEHOLDERS ...... 3 1.7 MULTICRITERIA ANALYSIS ...... 4 1.8 GENERAL CONCLUSIONS ...... 4 1.9 RECOMMENDATIONS TO ICA ...... 5 1.10 THE TYPES OF ACTIONS/INTERVENTIONS BY ICA...... 5
2 EXECUTIVE SUMMARY ...... 6
2.1 GENERATION OF ELECTRICITY FROM RENEWABLE SOURCES SITUATION AND OUTLOOK ...... 6 2.2 THE FUTURE MARKET FOR ELECTRICITY FROM RENEWABLE NON-CONVENTIONAL SOURCES ...... 8 2.3 COPPER QUANTITY ...... 12 2.4 THE REGULATORY SITUATION, INCENTIVES AND FINANCING ...... 12 2.5 PUBLIC AGENTS, MARKET PLAYERS, PARTNERS AND INSTITUTIONS...... 15 2.6 AN ANALYSIS OF THE MOST ATTRACTIVE ENERGY MARKETS IN LATIN AMERICA ...... 18
3 RENEWABLE ENERGY IN LATIN AMERICA ...... 20
3.1 CURRENT RENEWABLE SOURCES MARKET AND TRENDS ...... 20 3.1.1 INTRODUCTION ...... 20 3.1.2 EXISTING POTENTIAL...... 20 3.1.3 PROJECTIONS ...... 23 3.1.4 ARGENTINA ...... 28 3.1.5 BRAZIL ...... 35 3.1.6 CENTRAL AMERICA...... 46 3.1.7 CHILE ...... 52 3.1.8 COLOMBIA...... 62 3.1.9 MEXICO ...... 69 3.1.10 PERU ...... 73 3.1.11 VENEZUELA ...... 79 3.2 LEGAL FRAMEWORK ...... 87 3.2.1 ARGENTINA ...... 87 3.2.2 BRAZIL ...... 93 3.2.3 CENTRAL AMERICA...... 103 3.2.4 CHILE ...... 104 3.2.5 COLOMBIA...... 108 3.2.6 MEXICO ...... 114 3.2.7 PERU ...... 115 3.2.8 VENEZUELA ...... 124
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3.3 PARTNERS AND INSTITUTIONS ...... 124 3.3.1 ARGENTINA ...... 124 3.3.2 BRAZIL ...... 126 3.3.3 CENTRAL AMERICA...... 127 3.3.4 CHILE ...... 128 3.3.5 COLOMBIA...... 129 3.3.6 MEXICO ...... 130 3.3.7 PERU ...... 132 3.3.8 VENEZUELA ...... 134 3.4 DEMAND FOR COPPER ...... 135
4 REFERENCES ...... 137
5 ANNEX ...... 158
5.1 DESCRIPTION OF MULTICRITERIA ANALYSIS ...... 158 5.1.1 METHOD AND PHASES ...... 158 5.1.2 METHOD APPLICATION EXAMPLE ...... 161 5.1.3 RESULTS ...... 170 5.1.4 CONCLUSIONS ...... 181 5.1.5 REFERENCES ...... 181
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Tables
TABLE 1: ADDITIONAL MINIMUM AND MAXIMUM INSTALLED CAPACITY PER SOURCE AND COUNTRY (MW) ...... 2 TABLE 2: ESTIMATED ADDITIONAL COPPER REQUIRED TO MEET PROJECTED ELECTRICITY DEMAND FROM RE TECHNOLOGIES YEAR 2020 (TON) ...... 3 TABLE 3: ESTIMATED POTENTIAL OF ALTERNATIVE SOURCES FOR ELECTRICITY GENERATION ...... 8 TABLE 4: PRESENT INSTALLED CAPACITY AND ESTIMATED ELECTRICITY GENERATION FROM RENEWABLE ENERGY SOURCES (MW) ...... 11 TABLE 5: MINIMUM AND MAXIMUM QUANTITY OF ADDITIONAL COPPER PROJECTED FOR 2020 (IN TONNES) .. 12 TABLE 6: LEGAL FRAMEWORKS, INCENTIVES, SUPPORT MECHANISMS, AND FUNDING ...... 15 TABLE 7: PARTICIPANTS OF THE RENEWABLE ENERGY SOURCES TECHNOLOGY MARKET ...... 16 TABLE 8: MULTICRITERIA ANALYSIS THE PROBLEM, OBJECTIVES AND POLICY MAKERS ...... 18 TABLE 9: TECHNOLOGIES AND COUNTRIES UNDER STUDY ...... 18 TABLE 10: THEORETICAL AND CURRENT HYDROELECTRIC CAPACITY IN LATIN AMERICA AND THE CARIBBEAN, 2005...... 21 TABLE 11: GEOTHERMAL ENERGY POTENTIAL...... 22 TABLE 12: WIND ENERGY POTENTIAL...... 22 TABLE 13: SOLAR ENERGY POTENTIAL (HORIZONTAL PLAN TO SURFACE)...... 23 TABLE 14: REFERENCE SCENARIO OF GENERATION AND INSTALLED POWER IN LATIN AMERICA FOR A HORIZON UNTIL 2030...... 25 TABLE 15: ALTERNATIVE POLICY SCENARIO FOR GENERATION AND INSTALLED POWER IN LATIN AMERICA UNTIL 2030...... 25 TABLE 16: PERSPECTIVES FOR CSP ACCUMULATED INSTALLED CAPACITY IN LATIN AMERICA ...... 26 TABLE 17: PERSPECTIVES FOR ACCUMULATED INSTALLED CAPACITY OF WIND ENERGY IN LATIN AMERICA ...... 27 TABLE 18: INSTALLED CAPACITY OF WIND ENERGY 2008/2009 (MW) ...... 28 TABLE 19: INSTALLED CAPACITY FOR ELECTRICITY GENERATION IN ARGENTINA (2008-2009) ...... 29 TABLE 20: BIDS FOR RENEWABLE ENERGY AND POWER TO BE CONTRACTED ...... 30 TABLE 21: REFERENCE SCENARIOS AND ENERGY REVOLUTION ...... 31 TABLE 22: PROJECTIONS OF RENEWABLE ENERGY IN BRAZIL ...... 35 TABLE 23: INSTALLED CAPACITY FOR ELECTRICITY GENERATION IN BRAZIL ...... 36 TABLE 24: ANNUAL GROWTH RATE BY SOURCE ACCORDING TO THE PDE 2019 ...... 37 TABLE 25: EVOLUTION OF INSTALLED CAPACITY PER GENERATION SOURCE (MW), 2010-2019 ...... 39 TABLE 26: LONG-TERM ELECTRICITY SUPPLY EXPANSION, PER GENERATION SOURCE (MW) ...... 40 TABLE 27: ADDITIONAL INSTALLED CAPACITY FORECASTED PER SOURCE FOR THE PNE 2030 AND THE PRELIMINARY VERSION OF THE PDE 2010-2019...... 41 TABLE 28: SCENARIOS FOR RENEWABLE SOURCES IN 2015, 2020 AND 2030 ...... 42 TABLE 29: SPECIFIC AUCTIONS FOR RENEWABLE SOURCES THAT CONTEMPLATED BIOMASS ...... 43 TABLE 30: REGIONAL DISTRIBUTION OF SURPLUS ELECTRIC POWER GENERATION CAPACITY FROM THE SUGAR CANE/ALCOHOL SECTOR BIOMASS ACCORDING TO THERMAL-ELECTRICAL GENERATION TECHNOLOGIES EMPLOYED IN EXPANSION AND RETROFITTING IN THE SUGAR CANE INDUSTRIAL SECTOR IN BRAZIL - MW 44 TABLE 31: PROJECTION OF INSTALLED CAPACITY AND ELECTRICITY GENERATION FROM SOLAR THERMAL CONCENTRATORS ...... 46 TABLE 32: INSTALLED CAPACITY USING RENEWABLE ENERGY IN CENTRAL AMERICA, 2008 ...... 48 TABLE 33: DESIGNED CAPACITY TO BE INSTALLED USING RENEWABLE SOURCES IN CENTRAL AMERICA BY 2015 49 TABLE 34: CENTRAL AMERICA HYDROELECTRIC POTENTIAL, 2008 (MW) ...... 50 TABLE 35: INSTALLED CAPACITY AND GEOTHERMAL POTENTIAL IN CENTRAL AMERICA, 2008 (MW) ...... 51 TABLE 36: PROJECTIONS OF RENEWABLE ENERGY IN CHILE ...... 52 TABLE 37: INSTALLED CAPACITY OF ELECTRICAL SYSTEMS IN CHILE (2008) ...... 53 TABLE 38: SIC INSTALLED CAPACITY (MW) ...... 55 TABLE 39: REFERENCE AND RE SCENARIOS IN CHILE...... 56
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TABLE 40: SCENARIOS AND THEIR INVESTMENT COSTS ...... 57 TABLE 41: SOLAR RADIATION IN CHILE ...... 60 TABLE 42: PRIORITY SITES FOR THE DEVELOPMENT OF WAVE ENERGY PROJECTS AND ESTIMATED ANNUAL PRODUCTION OF ENERGY FOR A WAVE PARK OF 30 MW PELAMIS (1KM2) ...... 62 TABLE 43: IDENTIFIED AREAS WITH GOOD POTENTIAL OF HARNESSING TIDAL POWER...... 62 TABLE 44: CURRENT INSTALLED CAPACITY AND PROJECTIONS FOR ELECTRICITY GENERATION IN COLOMBIA (2009) ...... 63 TABLE 45: INSTALLED CAPACITY VS. ELECTRICITY PRODUCTION WITH RENEWABLE ENERGY IN 2008 ...... 70 TABLE 46: REQUIRED CAPACITY FOR 2015 AND 2020 INCLUDING RENEWABLES IN MEXICO ...... 71 TABLE 47: CURRENT INSTALLED CAPACITY AND PROJECTIONS FOR ELECTRICITY GENERATION IN PERU (2009) 73 TABLE 48: PRE 2017 – BASE SCENARIO – INSERTION OF RENEWABLE GENERATION CAPACITY ...... 75 TABLE 49: BIDDING OF RENEWABLE ENERGY RESOURCES ...... 76 TABLE 50: INSTALLED CAPACITY IN THE VENEZUELAN ELECTRIC SYSTEM (2008) ...... 80 TABLE 51: VENEZUELA'S RENEWABLE SOURCES ESTIMATED POTENTIAL AND ACCUMULATED CAPACITY...... 82 TABLE 52: NEW DEVELOPMENTS, THEIR CAPACITY AND DATE OF ENTRY INTO OPERATION ...... 84 TABLE 53: VALUE OF SPECIAL TARIFFS FOR ELECTRIC INJECTION ...... 89 TABLE 54: SOURCES CONTRACTED BY PROINFA, POWER PER SOURCE (MW) AND NUMBER OF CONTRACTED PROJECTS PER SOURCE ...... 94 TABLE 55: ECONOMIC VALUES PER SOURCE ...... 94 TABLE 56: REGULATION AND ECONOMIC INCENTIVE: MINI-NETS VERSUS SIGFIS...... 96 TABLE 57: BILLS RELATING TO RENEWABLE SOURCES...... 98 TABLE 58: WIND AND SOLAR PHOTOVOLTAIC EQUIPMENT EXEMPT FROM ICMS...... 99 TABLE 59: SUMMARY OF PROPOSALS OUTLINED BY CGEE...... 100 TABLE 60: BILLS TO INCENTIVIZE ERNCS IN CHILE...... 108 TABLE 61: COMPENSATION FOR POWER GENERATION IN COLOMBIAN ZNI ...... 113 TABLE 62: MAXIMUM RETURN ON ADMINISTRATION AND O&M IN COLOMBIAN ZNIS ...... 114 TABLE 63: BID RER Nº 1/2010 RESULTS ...... 119 TABLE 64: ANALYSIS OF MAIN INSTITUTIONS FOMENTING ALTERNATIVE RENEWABLE SOURCES IN ARGENTINA 125 TABLE 65: ANALYSIS OF MAIN INSTITUTIONS FOMENTING ALTERNATIVE RENEWABLE SOURCES IN BRAZIL ...... 126 TABLE 66: ANALYSIS OF MAIN INSTITUTIONS FOMENTING ALTERNATIVE RENEWABLE SOURCES IN CENTRAL AMERICA ...... 127 TABLE 67: ANALYSIS OF MAIN INSTITUTIONS FOMENTING ALTERNATIVE RENEWABLE SOURCES IN CHILE...... 129 TABLE 68: ANALYSIS OF MAIN INSTITUTIONS FOMENTING ALTERNATIVE RENEWABLE SOURCES IN COLOMBIA. 129 TABLE 69: ANALYSIS OF MAIN INSTITUTIONS FOMENTING ALTERNATIVE RENEWABLE SOURCES IN PERU...... 132 TABLE 70: ANALYSIS OF MAIN INSTITUTIONS FOMENTING ALTERNATIVE RENEWABLE SOURCES IN VENEZUELA...... 134 TABLE 71: ADDITIONAL INSTALLED CAPACITY PER SOURCE AND COUNTRY (MW) ...... 135 TABLE 72: AMOUNT OF COPPER FOR EACH SOURCE POWER ...... 135 TABLE 73: MINIMUM AND MAXIMUM QUANTITY OF ADDITIONAL COPPER PROJECTED FOR 2020 (IN TONNES) ...... 136 TABLE 74: SPECIFICATION OF THE PROBLEM, SETTING OF OBJECTIVES, AND ACTORS' IDENTIFICATION ...... 162 TABLE 75: TECHNOLOGIES AND COUNTRIES IN STUDY ...... 162 TABLE 76: SCALE FOR ASSESSING LEVELS TO QUANTITATIVE CRITERIA ...... 163 TABLE 77: PROPOSED CRITERIA AND CORRESPONDING WEIGHTS AND SCALES ...... 163 TABLE 78: MINIMUM AND MAXIMUM QUANTITY OF ADDITIONAL COPPER PROJECTED FOR 2020 (IN TONNES) ...... 164 TABLE 79: VALUATION OF LEGISLATION FOR THE COUNTRIES OF STUDY ACCORDING TO SCALE...... 165 TABLE 80: VALUATION OF LEGISLATION FOR THE COUNTRIES OF THIS STUDY FROM WEIGHTS GIVEN BY TYPE OF REGULATORY TOOL ...... 166 TABLE 81: CONSOLIDATED VALUATION OF LEGISLATION FOR THE STUDIED COUNTRIES ...... 167 TABLE 82: VALUATION OF THE ACTORS PER TECHNOLOGY PER ANALYZED COUNTRIES ...... 168
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TABLE 83: VALUATION OF THE ACTORS PER TECHNOLOGY PER ANALYZED COUNTRIES FOR DIFFERENT WEIGHTS ...... 169 TABLE 84: CRITERIA AND RESPECTIVE VALUATIONS FOR A MINIMUM (LEFT) AND MAXIMUM (RIGHT) AMOUNTS OF COPPER ...... 172
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Figures
FIGURE 1: CURRENT SHARE OF ELECTRICITY GENERATION BY RENEWABLE ENERGY SOURCES IN LA ...... 6 FIGURE 2: CONTRIBUTION OF EACH COUNTRY TO THE CURRENT CAPACITY OF ELECTRICITY GENERATION FROM ALTERNATIVE RENEWABLE ENERGY SOURCES...... 7 FIGURE 3: BIOMASS: CURRENT INSTALLED CAPACITY AND PROJECTED VALUES (AVERAGE) (MW) ...... 9 FIGURE 4: WIND ENERGY: CURRENT INSTALLED CAPACITY AND PROJECTED VALUES (AVERAGE) (MW) ...... 9 FIGURE 5: SHPS: CURRENT INSTALLED CAPACITY AND PROJECTED VALUES (AVERAGE) (MW) ...... 10 FIGURE 6: GEOTHERMAL ENERGY: CURRENT INSTALLED CAPACITY AND PROJECTED VALUES (AVERAGE) (MW). 10 FIGURE 7: INSTALLED CAPACITY BY SOURCE FOR ELECTRICITY GENERATION IN 2015 AND 2019 ACCORDING TO THE PDE 2019...... 38 FIGURE 8: PARTICIPATION OF ENERGY SOURCES FOR ELECTRICITY GENERATION (% OF INSTALLED POWER) ...... 38 FIGURE 9: INSTALLED CAPACITY PER SOURCE FOR ELECTRICITY GENERATION IN 2015 AND 2020 ACCORDING TO THE PNE 2030 ...... 41 FIGURE 10: ELECTRICITY GENERATION IN CENTRAL AMERICA, PERCENTAGE SHARE PER COUNTRY, 2008 ...... 47 FIGURE 11: INSTALLED CAPACITY IN CENTRAL AMERICA, 2008 ...... 48 FIGURE 12: ELECTRICAL GENERATION SIC +SING: 1996-2008...... 53 FIGURE 13: EVOLUTION OF INSTALLED CAPACITY (MW) OF RENEWABLE SOURCES IN THE SIC BETWEEN 2015 AND 2025 FOR EACH SCENARIO ...... 55 FIGURE 14: BIDDING AREAS IN JUNE, 2009...... 59 FIGURE 15: GLOBAL DIRECT SOLAR RADIATION...... 60 FIGURE 16: INSTALLED CAPACITY OF THE MEXICAN PUBLIC SECTOR IN 2008 (MW) ...... 69 FIGURE 17:*ENERGY CONSUMPTION PER SOURCE TYPE IN 2007 ...... 81 FIGURE 18: LOCATION AND CAPACITY OF THE PPGE ENTERPRISES...... 83 FIGURE 19: MAP OF THE COUNTRY POTENTIAL USE FOR WIND ENERGY...... 85 FIGURE 20: AREAS WITH POTENTIAL FOR BIOMASS USE ...... 86 FIGURE 21: AREAS WITH POTENTIAL FOR SOLAR ENERGY USE ...... 87 FIGURE 22: REGULATIONS IMPOSED BY VIRTUE OF THE CONNECTION SYSTEM ...... 104 FIGURE 23: EXEMPTION FROM PAYMENT FOR MGNC UNITS USE OF THE TRANSMISSION SYSTEM, AS A FUNCTION OF INSTALLED CAPACITY...... 105 FIGURE 24: ANNUAL AVERAGE OF THE MARGINAL SHORT-TERM COST - SANTA ROSA BUS REFERENCE...... 121 FIGURE 25: PHASES FOR IMPLEMENTATION OF MULTICRITERIA ANALYSIS ...... 161 FIGURE 26: RANKING OF EVALUATED COUNTRIES-TECHNOLOGIES - SCENARIO 1: LOWER LIMIT AMOUNT OF ADDITIONAL COPPER ...... 173 FIGURE 27: RANKING OF EVALUATED COUNTRIES-TECHNOLOGIES - SCENARIO 2: LOWER LIMIT AMOUNT OF ADDITIONAL COPPER ...... 174 FIGURE 28: RANKING OF EVALUATED COUNTRIES-TECHNOLOGIES - SCENARIO 3: LOWER LIMIT AMOUNT OF ADDITIONAL COPPER ...... 175 FIGURE 29: RANKING OF EVALUATED COUNTRIES-TECHNOLOGIES - SCENARIO 4: LOWER LIMIT AMOUNT OF ADDITIONAL COPPER ...... 176 FIGURE 30: RANKING OF EVALUATED COUNTRIES-TECHNOLOGIES - SCENARIO 1: UPPER LIMIT AMOUNT OF ADDITIONAL COPPER ...... 177 FIGURE 31: RANKING OF EVALUATED COUNTRIES-TECHNOLOGIES - SCENARIO 2: UPPER LIMIT AMOUNT OF ADDITIONAL COPPER ...... 178 FIGURE 32: RANKING OF EVALUATED COUNTRIES-TECHNOLOGIES - SCENARIO 3: UPPER LIMIT AMOUNT OF ADDITIONAL COPPER ...... 179 FIGURE 33: RANKING OF EVALUATED COUNTRIES-TECHNOLOGIES - SCENARIO 4: UPPER LIMIT AMOUNT OF ADDITIONAL COPPER ...... 180
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Glossary
ACR Regulated Contracting Environment
AMDEE Mexican Association of Wind Energy
ANEEL Brazilian Agency of Electrical Energy
ANES National Solar Energy Association
Asocaña Association of Sugarcane Growers of Colombia
BEN National Energy Balance
BioC Biofuels
BM World Bank
CADER Renewable Energy Chamber of Argentina
CAMMESA Administrative Company of the Wholesale Electrical Market
CDE Energy Development Account
CEPEL Electric Power Research Center
CFE Federal Electricity Commission
CFEE Federal Council of Electric Energy
CNE National Energy Commission
COES SINAC Committee for Economic Operation of the Interconnected System
CORFO Corporation for Production Development
CRE Energy Regulatory Commission
CREE Regional Centre for Wind Energy
CREG Energy and Gas Regulatory Commission
CSP Concentrated Solar Power
DGER General Directorate of Rural Electrification
DR Development of renewables
ENARSA Argentina Energy
ENRE National Regulatory Authority for Electricity
EPE Energy Research Company
EPM Medelin Public Companies
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RE Renewable Energy
EREC European Renewable Energy Council
ERNC Unconventional Renewable Energy
ESMAP Energy Sector Management Assistance Program f.c. Capacity Factor
PV Photovoltaic
FAZNI Support Fund for the Electrification of Non-Interconnected Areas
FB Bariloche Foundation
FEDEI Special Fund for Inland Electric Development
FIRCO Shared Risk Trust
FNEE National Electrical Energy Fund
FONHIDRO National Fund for the Development of Hydrogen Technologies GAC German Aerospace Centre
GEA Alternative Energy Group
GEF Global Environment Fund
GENREN Bidding of Supply Contracts with Renewable Energy Sources
GLP Liquefied Petroleum Gas (LPG)
GWEC Global Wind Energy Council
ICONTEC Colombian Institute of Standards and Certification
IEA International Energy Agency
IIE Mexican Institute of Electrical Research INDECOPI National (Peruvian) Institute for the Defense of Competition and Intellectual Property Protection
INGEMMET Geological Institute for Mining and Metallurgy
INGEOMINAS Colombian Institute of Geology and Mining
IPSE Institute of Planning and Promotion of Energy Solutions for Non-Interconnected Zones
LCE Electrical Concessions Law
LPT National Program for Universal Access and Use of Electric Power - Light for Everyone
CDM Clean Development Mechanism
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MEM Ministry of Energy and Mines (Peru)
MEM Wholesale Electricity Market (Argentina, Colombia)
MME Ministry of Mines and Energy (Brazil)
NREL National Renewable Energy Laboratory
OEF Firm Energy Obligation
OSINERGMIN Supervisory Agency for Investment in Energy and Mining
OTEC Ocean Thermal Energy Conversion
PAH Small Hydroelectric Plants
PCH Pequena Central Hidroelétrica
SHP Small Hydroelectric Plant
PDE Ten Year Energy Plan
PEN National Energy Plan
PENEE National Strategic Plan for Wind Energy
PER Generation-Transmission Reference Expansion Plan
PERMER Program for Renewable Energy in Rural Areas
PNE National Energy Plan
PNER National Plan for Rural Electrification
PRE Reference Electricity Plan
Proinfa Incentive Program for Electric Energy Alternative Sources
PROURE Program for Rational and Efficient Use of Energy and Other Non-Conventional Energy Forms
REEEP Renewable Energy and Energy Efficiency Partnership
RER Renewable Energy Resources
RSU Solid Urban Waste
SEIN National Interconnected System
SEN Nation Energy Secretary
SENER Energy Department
SFCRs Grid-Connected Photovoltaic Systems
SIC Central Interconnected System
SIN National Interconnected System
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SING Grande Norte Interconnected System
UHE Hydropoewer Plant
UPME Energy & Mining Planning Unit
URE Rational Use of Energy
UTE Thermoelectric Power Plant
WISDOM Integrated Firewood Supply / Demand Mapping
ZNI Non-Connected Zone
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1 Conclusions and recommendations
1.1 Global factors
1. There is a set of global factors that have a significant influence in the economics of renewable energy development in general and for electricity production:
o Price of oil. Oil is the main source of primary energy for the global economy and its price, after a steep and fast decline in 2008, has recovered significantly in the last two years. This has a positive impact on its alternatives, such as renewable energy (RE).
o Interest rates. The main cost component of RE technology is that of investment, which is affected by interest rates, which have been at its lowest in decades.
o Cost and technology development. The cost of RE technology ($/kWh) has been coming down in the last decades, and in many contexts and market niches has become, together with the factors noted above, competitive with conventional fossil fuel based alternatives. There has been continued interest and development of some RE technologies such as wind, biomass and more recently solar photovoltaic (PV).
o Climate change negotiations. The CO2 mitigation potential of RE and the fact that two Latin American countries (Brazil and Mexico) are important actors in the global negotiations are also significant factors that favor RE deployment in the region.
1.2 Local policy drivers
2. The analysis has shown that in most of the countries local issues and concerns have been important drivers to support RE policies. The list below represents the main issues and related countries where they have been influential:
o Domestic energy security . Brazil, Central America, Chile, Mexico
o Environmental concerns . Brazil, Chile
o Energy costs . Argentina, Colombia
o RE Potential . Argentina, Brazil, Chile, Mexico
1.3 Present situation (in 2009)
3. The RE sources considered in this report1 account for 2.5-5% of the total current electrical capacity of the countries analyzed2. Brazil and Peru have the highest participation, about 5% of their capacity met by RE; Argentina, Colombia nearly 4%; Mexico and Chile with 2.5%. 4. Biomass is the main source used for electricity generation amongst the technologies surveyed. About 50% of the total installed capacity of RE in Latin America is supplied from
1 Large hidroelectric plants (>30 MW) were not considered, only small hydro (<30 MW). 2 Argentina, Brazil, Chile, Peru, Colombia, Venezuela, Mexico and Central America.
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biomass. Small hydro (SHP) account currently for 37% and wind energy for 13% for the RE existing capacity. PV systems still represent an insignificant amount. 5. Biomass electricity production is particularly representative in Brazil (5.4 GW), where its installed capacity is higher than small hydroelectric plants. It is also important in Argentina (0.72 GW) and Colombia (0.18 GW). In these countries, it is very much associated with sugar (and ethanol) production and there is an increasing interest in expanding co- generation systems within this industry. 6. Currently most of the installed capacity in wind energy system is located in Brazil (1.4 GW), followed by Mexico (0.85 GW) and Argentina (0.30 GW). During 2008-2009, the countries with highest growth rates were Brazil (78%), Mexico (138%) and Chile (740%).
1.4 Outlook to year 2015-2020
7. All countries surveyed have plans to expand the generation of electricity from the alternative sources considered (Table 1). 8. Wind energy is the most promising energy technology up to 2020 considering the official energy plans, except for Brazil where biomass is expected to continue to dominate. Wind and biomass are the most important energy technologies in the countries analyzed during the next 5-10 years. 9. Wind is expected to expand significantly in Argentina, Chile and Brazil; and biomass in Brazil, Argentina, Colombia, Peru and Central America.
Table 1: Additional minimum and maximum installed capacity per source and country (MW)
Central Argentina Colombia Venezuela Mexico Brazil (2020) Chile (2020) Peru (2020) America (2020) (2020) (2013) (2020) (2015) Wind energy 6000- 7800 200 – 8000 1000 – 6122 0 - 403 9 – 100 172 1724 115 SHP 6966 1004 616 - 676 0 – 509 512 – 601 0 465 0 Biomass 8521 300 - 1000 380 – 1742 101 180 0 100 110 Geothermal energy 0 100 – 200 0 – 488 125 – 400 55 0 126 25.5 Solar PV 0 250 - 500 4 80 0 0 0 0 Oceans 0 0 0 0 0 0 0 0 CSP 195 300 0 - 970 0 0 0 0 0
Source: Upper and lower projection values extracted from official sources. See section 3.4.
10. Based on official estimates the estimated additional total copper requirement up to 2020 is expected to range from 57 to 111 thousand metric ton (Table 2). Wind power and SHP accounts for 73% of the total copper demand for both upper and lower limits. When projected biomass based electricity generation is included, these three RE technologies reach 86% and 93% of copper demand for the upper and lower projection values respectively. 11. For the lower limit of the projected power capacity, Brazil accounts for 69% of the total amount of copper, far followed by Mexico with 10%. For the upper limit, on the other hand, the copper share is better balanced: Brazil, Argentina and Chile account for 40%, 27% and 22% respectively.
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Table 2: Estimated additional copper required to meet projected electricity demand from RE technologies year 2020 (ton)
Central Argentina Colombia Venezuela Mexico Total Brazil (2019) Chile (2020) Peru (2020) America (2020) (2020) (2013) (2020) (min-max) (2015) Wind energy 15000-19500 500-20000 2500-15310 0-1010 20-250 430 4310 290 23050-61100 SHP 13930 2010 1230-1350 0-1020 1020-1200 0 930 0 19120-20440 Biomass 10230 360-1200 460-2090 120 220 0 120 130 11640-14110 Geothermal 0 0-800 0-1950 500-1600 220 0 500 100 1320-5170 energy Solar PV 0 0-4400 40 700 0 0 0 0 740-5140 Oceans 0 0 0 0 0 0 0 0 0 CSP 780 1200 0-3880 0 0 0 0 0 1980-5860
Total 39940 – 44440 4070 – 29610 4230-24620 1320-4450 1480-1890 430 5860 520 57850-111820
Source: Table 4. Note: Upper and lower projection values extracted from official sources. See item 3.4.
1.5 Most common policies and regulation
12. All countries surveyed have some kind of policy to promote RE. 13. In most cases, the main instrument is a general law with a variety of specific instruments.
o The country with the most complete and advanced policies and more specific regulation is Brazil. 14. There are also technology specific regulatory mechanisms, particularly for wind, biomass, geothermal and PV.
o This is the case in Argentina, Brazil, Chile, Colombia and Peru. 15. The specific mechanisms have a variety of forms:
o Feed in tariff and competitive bids (Brazil) o Fixed-price wheeling (Mexico) o Tax deductions and/or exemptions. 16. In some cases, the regulations (and not the specific RE law) are driving the development of RE projects.
o In Mexico, the interconnection contracts and wheeling tariffs for RE projects are the instruments driving the investments.
o Chile has rapidly introduced several regulatory measures not-technology specific to stimulate the RE market.
1.6 Stakeholders
17. The presence and activity of stakeholders related to the promotion of RE technologies was investigated. The study identified the most relevant Project developers, Manufacturers, Environmental ministries/agency, Trade associations, Industrial and commerce chambers, International Banks, Multilateral organizations, National agencies. 18. The presence of manufacturers is still very limited and practically inexistent, except for Brazil (biomass, small hydro and wind) and Argentina (small hydro and wind). 19. Project developers and local partners are more disseminated and the countries with highest numbers of these stakeholders per technology are PV (Peru and Mexico), biomass (Argentina and Brazil), small hydro (Argentina, Brazil, Peru, Colombia, Mexico and Central America), wind (Argentina and Brazil) and geothermal (Peru and Mexico).
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20. Most active trade associations: PV (Chile, Mexico and Peru), biomass (Argentina, Brazil), small hydro (Chile), wind energy (Argentina, Brazil and Mexico). 21. Most active research centers: biomass (Argentina, Brazil, Central America, Colombia), solar PV (Brazil), small hydro (Argentina, Brazil).
1.7 Multicriteria analysis3
22. Considering the future copper market (up to year 2020), existing regulation and presence of local stakeholders, the most attractive country-technology pair are (in order of importance): At the lower official market projections:
o Brazil-wind o Brazil-biomass o Brazil-small hydro o Argentina-wind o Mexico-wind o Chile-wind At the higher market projections:
o Brazil-wind o Argentina-wind o Brazil-biomass o Brazil-small hydro o Chile-wind o Mexico-wind and Argentina-photovoltaic 23. These pairs represent the most promising markets for the future considering the information collected on official electricity projections (up to 2020, and considering the lowest and highest copper demand projections), existing regulation and local stakeholders.
1.8 General conclusions
24. The following are the main conclusions that can be drawn from the study:
o Speed: the expansion of RE in the countries analyzed is moving fast. o Technology: The greatest opportunities are in wind and biomass o Countries: . Large potential w/zero growth: Venezuela, Colombia, Central America . Large potential, fast growth: Brazil, Argentina, Chile and Mexico
o Policies: there are several legal and regulatory initiatives, but not enough financial incentives and other market mechanisms
o Regulation: while Brazil has opted to create specific regulation for different RE technologies, Chile has introduced broader RE regulation. It is still early to recommend best model for stimulating RE markets.
3 Please, refer to section 5.1 for a full description of the exercise performed. This exercise was done considering the contribution of the analysis performed for the 3 components of the present study: market potential, regulation and policy framework, and local stakeholders. The purpose was to investigate the most promising pair of country-technology up to year 2020.
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o Stakeholders: Project developers are key to consolidate the market for these technologies and there is not enough critical mass of them.
o Impacts: Still to see. o Drivers: Price of oil, declining costs of technology, environmental concerns (climate change and local pollution), energy security.
1.9 Recommendations to ICA4
25. Document and promote the winners. This can be done in the form of case studies that may include:
o Country: Brazil. o Technology: Wind and biomass most promising. Small Hydro comes as a relevant second choice.
o Mechanisms (regulation): Feed in tariffs and auctions (Proinfa and regular auctions) in Brazil and regulations in Mexico. Chile (RE portfolio) 26. Become more active in those countries that have significant potential but also great uncertainties in RE development:
o Argentina Evolution of RE projects o Mexico Evolution of RE policies 27. Provide help to countries that have poor or no RE resource evaluations.
o Bolivia, Paraguay, Uruguay, Venezuela. 28. Help identify infrastructure bottlenecks, particularly transmission lines. 29. To increase the strength of the support:
o Enter into a partnership with those who know the business (project developers and manufacturers).
o Facilitate exchange with the world champions with large-scale RE integration with the grid (such as USA, Germany, Spain, China and Ireland).
o Join the other sponsors in their initiatives and invite them to ICA´s (such as IDB, WB, UNEP, USAID, and GTZ)
1.10 The types of actions/interventions by ICA.
30. All of the above can have the form of:
o Documentation. Best practice documentation to promote the winners. o Studies. RE resource evaluations and identification of infrastructure bottlenecks. o Seminars. . In countries that have high potential . In partnership with those who know the business and other international sponsors. . Bringing in the world champions with large scale RE integration with the grid (in particular wind energy and biomass)
4 This section was also based on Multicriteria Analysis (see Annex 5.1) and literature review. 28/10/2010 Renewable Energy for Electricity Generation in Latin America Page 5
2 Executive Summary
2.1 Generation of electricity from renewable energy sources situation and outlook o Latin America has a rich heritage of renewable energy resources. Historically the use of these resources in the region has been made through large hydroelectric power plants. However, there is enormous potential for wider use of new renewable energy sources: SHP, wind, solar, geothermal, are presented in this report. 5 6 o Considering only renewable sources used for electricity generation in studied countries one could observe that they participate with some 2.5 to 5% of the current installed capacity of these countries. Brazil and Peru have about 5%, Argentina and Colombia nearly 4% and Mexico and Chile with 2.5% of its current capacity. o Among the alternative sources, used biomass predominates, representing 50% of the installed capacity of all those countries, followed by SHPs (37%) and wind (13%). The capacity of PV energy installed is still insignificant.
0% 0%
13%
Wind SHP (≤ 20 MW) 50% Biomass Geothermal energy 37% Solar photovoltaic
Figure 1: Current share of electricity generation by renewable energy sources in LA
Source: Table 4. o Among the countries studied, Brazil is currently responsible for more than 70% of the installed capacity of renewables used for electricity7 generation, followed by Mexico (9%) and Argentina (7%). Colombia and Central America, account each one for 4% of current installed capacity and all other countries account for 2%, with the exception of Venezuela. The high share of biomass among alternative sources in Brazil and Argentina explains their predominance in the region. However, in other countries there is now a greater involvement of SHPs.
5 In this work large hydroelectric plants are not included among 'renewable sources', only SHPs are included in the study. 6 Argentina, Brazil, Central America, Chile, Peru, Colombia, Venezuela, and Mexico. 7 Refer to footnote (5), considered alternative sources are only: wind, SHPs, solar photovoltaic, and biomass.
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0% 2%
5% 9% 7% Central America 2% 4% Argentina Brazil Chile Colombia Mexico Peru
71% Venezuela
Figure 2: Contribution of each country to the current capacity of electricity generation from alternative renewable energy sources.
Source: Table 4 o Regarding the total hydropower potential, Mexico has explored most of its economically viable resources, reaching the rate of 87.4%, well above the region average. Brazil stands out for its large share of hydropower, but remains 58.4% of its economically exploitable capacity to be used. However, these resources are concentrated in the north of the country and there are many environmental barriers. Bolivia, Ecuador and Peru are the South America countries that still have a large availability of water resources for economically viable use, since these countries do not use even 7% of the available potential. Venezuela and Paraguay stand out in South America by using more than 50% of the economically available potential for hydroelectric generation in the region. o Geothermal energy is an important resource in Mexico and Central America, with installed capacities of 965 MW and 502 MW respectively, in 2008. In these two cases, it is the main source of electricity generation. Argentina has high enthalpy fields suitable for geothermal use for electricity generation, but there is no estimate of the generation potential. Chile is another country that has sought to develop its geothermal potential. In 2009, the Chilean Government invited bids for 20 geothermal exploration concessions. During the geothermal bidding process 59 exploration project offers were received, which granted to 9 companies the 20 concession areas. o Biomass is an energy of particular importance in Brazil, where it already surpasses SHPs. It is also relevant in Argentina and Colombia being highly associated with the ethanol-sugar industry and has growing interest for co-generation systems in those countries. o Brazil is the country with the largest installed capacity of wind power, being followed by Mexico and Argentina. Brazil, Mexico and Chile had the highest growth in wind power generation in the region between 2008 and 2009 with, respectively, 78%, 138%, and 740% . o The following table shows the estimated electric generation potentials for the studied sources. The values were found in the literature and should be analyzed carefully, because they originate from various authors and studies that have followed different approaches to these estimates.
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Table 3: Estimated potential of alternative sources for electricity generation
Solar PV Wind energy (MW) SHP (MW) Geothermal (MW) Biomass (MW) (kWh/m2.year) Argentina 1800 5000 425-480 150-2000 430 Brazil 1095-2372.5 >250000 25913 360-3000 265401 Chile 663.5-2555 6000-10,000 2600 3500-7000 1000 Peru 1900-2500; 1800 2500 1000 1000-2990 1782 Colombia 1800 21000 25000 552 47 Venezuela 1606-2445.5 45195 15000 910 340 Mexico 1640-2370 40000 32503 6500-8000 800 Central America 1725-2175 400 – 600 W/m2(4) 180003 24400-31500 635
Notes: 1Estimated potential for electricity generation from cane bagasse until 2025; 2Estimated installed power for 2020 due to lack of more data; 3small centrals (<10MW); 4small and large size; 4values for good to excellent wind regime.
Sources: Argentina: Asal et al. (2005), SEN et al. (2009), SEN (2008); Central America: Garten Rothkopf (2009), CEPAL (2007), MINAE (2007); Brasil: Garten Rothkopf (2009), Jannuzzi et al. (2008), Pigatto (2008), Ecol News (2010), Walter & Ensinas (2010); Chile: Garten Rothkopf (2009), Mocarquer (2009), Oliva (2008), UTFSM (2008b); Colombia: ESMAP (2007), UPME (2005a); Mexico: Garten Rothkopf (2009), SENER (2006); Peru: Nogueira (2010), Gamarra (2010), REEEP (2009), DR (2006b); Venezuela: Garten Rothkopf (2009), Márquez (2009).
2.2 The future market for electricity from renewable non- conventional sources o Generally speaking, all analyzed countries expect to increase their relative contribution of electricity generation from alternative renewable energy sources. The various studies analyzed have different perspectives and were carried out by agencies of national governments, international agencies, and also by NGOs. o Considering the 2015-20 horizon, one can observe a large increase of projected capacity for wind power in virtually all countries. o The installed capacity projections for the studied sources vary widely depending on the type of study. In Brazil, the largest discrepancies are found among the authors of biomass projections, ranging from 1.5 GW to 13 GW by 2015. Indications, however, are of a strong rise over the next five years and could, at least, double the 2010 installed capacity. The expected expansion of biomass for electricity generation is also high in Argentina (an increase from 50 to 100% of current capacity) and to a lesser extent in Colombia, Peru and Central America (50% over the current capacity).
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10000 9000 8000 7000 6000 2008 5000 2020 MW 4000 3000 2000 1000 0 AR BR CL PE CO VE MX AC
Figure 3: Biomass: current installed capacity and projected values (average) (MW)
Source: Table 4. o The highest projections for wind power expansion are for Argentina and Chile, although expectations vary from 10 to more than 20 times the current capacity by 2020 8 for Argentina, it is even greater for Chile (from present 20 MW to something between 1,000 and 6,122 MW). Wind generation expansion is also significant in Peru, Mexico and Venezuela (Figure 4).
4500 4000 3500
3000 2008 2500 2020
MW 2000 1500 1000 500 0 AR BR CL PE CO VE MX AC
Figure 4: Wind energy: current installed capacity and projected values (average) (MW)
Source: Table 4. o The expected expansion of SHPs is more conservative than the one observed for wind energy, and shall have a higher growth rate in Chile and Peru.
8 Argentina's goal is to meet the electricity demand by 2016 with 8% from renewable sources (Law No. 26.190/06).
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7000 6000 5000
4000 2008
MW 3000 2020 2000 1000 0 AR BR CL PE CO VE MX AC
Figure 5: SHPs: current installed capacity and projected values (average) (MW)
Source: Table 4. o Estimates of PV electricity expansion are more difficult to be identified within the studied countries. Argentina, Chile and Peru were the countries for which we could find projected values of installed capacity, showing strong growth for Argentina and Peru, as shown in Table 4. o Geothermal energy will continue to have the greatest representation in Mexico and Central America, but Argentina, Chile, Peru and Colombia have expectations for expansion.
1400 1200 1000 800 2008 2020 MW 600 400 200 0 AR BR CL PE CO VE MX AC
Figure 6: Geothermal energy: current installed capacity and projected values (average) (MW)
Source: Table 4.
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Table 4: Present installed capacity and estimated electricity generation from renewable energy sources (MW)
Installed Capacity in MW Estimated Installed Capacity in MW
Central Brazil Argentina Chile Peru30 Colombia Mexico Argentina Colômbia Venezuela Central Venezuela America Brazil (2015) Chile (2020) Peru (2020) Mexico (2010) (2008) (2008) (2009) (2009) (2008) (2020) 6 (2020) (2013) America (2008)
140447 12; 140935 13; 131000 10; 360002, 18160- Total – Interconnected systems 112455 13137 13181 37 11600-135006 - 124000 11; 130600 19; 125800 20 330003 182506
1000 11 ; 1000 10 ; 1423 12 ; 4441 49.9- - Wind energy 1436 30.56 20 0.7 18.4 0 85 70 13; 1500 17; 1600 18; 3000 19; 2400 2002, 80003 6122 26; 1000 27 145.0-403.031 172 22 1724 115 100.07 20
616 23 ; 676 24; 512.0- - SHP (≤ 20 MW) 4043 380 159 210.0 472.0 25 21 377 5566 13; 7734 12 1004 410.0-509.031 465 67525 601.06
3000 10; 3000 11 ; 7421 13 ; 3106 14; - Biomass 5380 720 166 77 134.0 0 243 687 3002, 10003 300 23; 31424; 40025 178.030,31 180.06 343 110 1900 15;5300 16; 13000 17
- Geothermal energy 0 0.675 0 0 0 0 965 502 0 11 02, 2003 130 23; 13024; 13025 125.0 400.032 55.035 126 25.5 - Solar PV 20 8 101 029 3.7 1 029 0.11 02, 5003 423, 424, 425 80.033
- Oceans' energy 0 0 0 0 0 0 0 11 02, 03 0 27 0,031 0 - Concentrated Solar Power 0 0 0 0 0 0 195 9 02, 3003 10 232425; 195 28 0 (CSP) Energy Storage Systems - 2.4 -
Notes: 1 Isolated Sistems (SEN, Fundación Bariloche, e REEEP, 2009); 2 Reference Scenario (Greenpeace, EREC, and Greenpeace International, 2009);3 Energy Revolution Scenario (Greenpeace, EREC, and Greenpeace International, 2009); 4SEN, Fundación Bariloche, e REEEP (2009); 5 Out of Service; 6 UPME (2009) and own projects' compilation; 7 Recordon (2009); 8 Stand-alone systems (Jannuzzi et al., 2009); 9 Greenpeace and ESTIA (2003);10 Reference Scenario (IEA, 2006); 11 Alternative Policies Scenario (IEA, 2006)12 13 14 ;EPE (2009) Empresa de Pesquisa Energética (EPE) and Ministério de Minas e Energia (MME) (2010); Surplus electric power generated from biomass by the sugar- cane/alcohol industry (EPE, 2007); 15 Reference Scenario (Schaeffer et al., 2000); 16 Environmental Control Scenario (Schaeffer et al., 2000); 17 Carbon Elimination Scenario (Schaeffer et al., 2000); 18 Advanced Technology Scenario (Schaeffer et al., 2000); 19 Reference Scenario (IAEA et al., 2006); 20 Shift Scenario (IAEA et al., 2006); 21 In 2009 there was a hydroelectric power plant of 25 MW installed in the electric system, but no Venezuelan regulation / legislation was found that would define a SHP; 22 According to the “Plan Piloto de Generación Eólica”; 23 Conservative Scenario (Universidad de Chile e UTFSM, 2008);24 Dynamic Scenario (Universidad de Chile e UTFSM, 2008); 25 Dynamic-plus Scenario (Universidad de Chile e UTFSM, 2008);26 Energy Revolution Scenario for 2020 (Greenpeace and EREC, [s.d.]); 27 Reference Scenario for 2020 (Greenpeace and EREC, [s.d.]); 28 Greenpeace and ESTIA (2003); 29 SFCRs; 30 Gamarra (2009); 31 DGER (2009); MEM (2009); MEM (2010); 32 MEM (2010); Artieda (2008); 33 MEM (2010); 34 Recordon (2009); 35 Bastidas (2010); Higuera (2010); 36 MEM (2009); 37 Referring only to the SIC (Universidad de Chile e UTFSM, 2008).
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2.3 Copper quantity
o The following table shows the estimated additional amount of copper for the countries analyzed according to the studies identified and by the technologies selected for the current report. The values shown are the minimum and maximum projections of installed capacity according to the various references found.
Table 5: Minimum and maximum quantity of additional copper projected for 2020 (in tonnes)
Central Argentina Colombia Venezuela Mexico Total Brazil (2020) Chile (2020) Peru (2020) America (2020) (2020) (2013) (2020) (min-max) (2015) Wind energy 15000-19500 500-20000 2500-15310 0-1010 20-250 430 4310 290 23050-61100 SHP 13930 2010 1230-1350 0-1020 1020-1200 0 930 0 19120-20440 Biomass 10230 360-1200 460-2090 120 220 0 120 130 11640-14110 Geothermal 0 0-800 0-1950 500-1600 220 0 500 100 1320-5170 energy Solar PV 0 0-4400 40 700 0 0 0 0 740-5140 Oceans 0 0 0 0 0 0 0 0 0 CSP 780 1200 0-3880 0 0 0 0 0 1980-5860 Total 39940 – 44440 4070 – 29610 4230-24620 1320-4450 1480-1890 430 5860 520 57850-111820
Sources: Table 71 and Table 72.
2.4 The regulatory situation, incentives and financing o The studied countries practice various types of mechanisms to promote renewable energy sources' expansion, with varying degrees of scope and effectiveness. Argentina, Brazil, Chile and Peru already have major initiatives of legislative and regulatory nature, which create initial conditions for expansion of markets for the renewable technologies considered. The breadth and depth and, consequently, these measures effectiveness vary greatly between countries. However, the fact is that there is an initial concern on the need for greater protection of new investment for these sources. The impact of this legislation is still marginal in most of the countries analyzed. o Argentina, through Law 26.190/2006, established that by 2016 8% of the country's electricity generation must come from renewable energy sources. This law recognizes the following sources to fulfill this goal: SHPs <30 MW, wind, solar, geothermal, tidal, biomass, landfill gas and sewage treatment, and biogas. It includes mechanisms for financial incentives through anticipation of taxes, and more attractive schedules for investment amortization. There are bills to offer special rates for wind power (changing from 0.15 $/MWh to 0.30 $/MWh), solar PV and CSP (from 0.9 $/MWh to 1.0 $/MWh). There are also discussions to offer subsidies on wind energy with resources of the National Electric Energy Fund (FNEE) for specific locations of wind generation. There is a program for the rural sector (PERMER - Program for Renewable Energy in Rural Areas) which has been conducting biddings for PV systems. The system operating procedures are important to discipline the insertion of energy from generation plants into the network. Argentina already has these procedures, and they have some special considerations on generation from renewable energy sources. o Brazil has a legal and regulatory framework for promotion of renewable energy sources and among the studied countries, it is the one that has been able to be the fastest to expand the market. Proinfa (Incentive Program for Alternative Sources of Electric Energy) has had an important role in creating a market for renewable energy in the country. However, presently specific auctions for alternative sources are the main incentive mechanism for these sources in the country. There was expansion of wind energy, biomass and SHP of the National Interconnected System (SIN) since these have been addressed by specific auctions and by Proinfa. This program is based on offering a premium rate for the three
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sources9 and covered a total goal of 3.3 GW (reached in 2009). Biomass had trouble to meet the pre-established goal of 1.1 GW due mainly to issues on the offered price. The wind energy is the one most expanded through this program. Another program that has national implications in the promotion of renewable energy sources was "Light for Everyone" which goal is universal access to electricity. The country has advanced in the regulation to supply electricity through intermittent generation systems such as PV, as a technical solution within the "Light for Everyone" program for isolated regions and without access to the net of the interconnected system. Currently there are economic incentives for installation of mini-networks in remote communities and thus enable the utilization of PHCs and even small plants of PV panels. However, there are no quantitative reports on the spread of these technologies within the program. The State of Ceará has created a fund for investments in solar energy (the FIES). In Brazil, there are tax incentives for some PV and wind systems, and regulation providing special rates for use of transmission systems and distribution of energy from SHPs, solar, wind, biomass or qualified co-generation. In addition, there are several bills following procedures in the National Congress that offer support, economic incentives and even the creation of a national agency for renewable energy. o Chile since the 2004 energy crisis in started to insert a number of mechanisms to foster greater participation of renewable energy sources. The two main laws created offer guarantees to small producers using renewable energy for connection to the network. In addition, the legislation introduced creates an exclusive market for non-conventional renewables through granting the right to supply up to 5% of the demand. This mechanism applies to regulated customers of utilities at the negotiated price. This provision recognizes a special treatment to renewable sources that can favor small generators who have little chance to participate in auctions. In 2008, the country has established legislation that encourages the generation of electricity from renewable sources by requiring companies that generate electricity with an installed capacity exceeding 200 MW to have a percentage of their electricity sold to distributors or free customers from non-conventional renewable sources of energy or hydroelectric power plants with capacity below 40 MW 10. There is also specific legislation for geothermal energy being discussed in the country. o The support of Peruvian legislation to the development of renewable sources generation can be seen since the 90's with the geothermal resources law, which, by eliminating taxes on equipment importation, ensuring fiscal stability and allowing accelerated depreciation, provided a comparative advantage for using this resource for energy generation. New legislation advances only came with the cogeneration activity regulation in 2006, which determined cogeneration dispatch priority when associated to production needs, establishing an important mechanism to the feasibility of surplus energy sale. One of the main laws of Peru for renewable sources establishes that the Ministry of Mines and Energy (MME) shall determine at every five years a minimum percentage share for renewable sources. In addition, subsequent regulations lay down auctions and determine the priority order of dispatch of the energy contracted in these auctions. o In Colombia, the legislation determines that the MME prepare a priority program for the development of renewable sources in remote areas of the country. However, the existing laws and regulations still are not depicted as clear and objective tools to foster greater participation of renewable sources, laws are vague, not fitted with clear incentive dispositions. o Virtually all Central American countries we have examined have legal provisions to offer financial incentives to electricity generation projects using renewable sources. In most countries, these instruments were conceived after 2007.
9 Wind, biomass and SHP. 10The requirement applies to generators that provide energy to the Central Interconnected System (SIC) and to the Interconnected System of Norte Grande (SING), whose installations were connected to the system as of January 1, 2007. The legislation states that the required percentage of 10% should be achieved gradually by increasing the volume of such energy, so that, between 2010 and 2014 it reaches 5%, increasing by 0.5% annually from 2015 onwards, reaching 10% in 2024, and ensuring that participation by 2030.
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o In 2008, Mexico introduced the "Law for usage of renewable energy and financing the energy transition" aiming to foster the use of renewable sources and to establish a national strategy for the "energy transition". Wind, PV, wave and tidal, geothermal and biomass sources are contemplated. There are also legal provisions to facilitate the interconnection of intermittent sources to the national system through contracts. o Examining Venezuela, we did not find any relevant legal provisions to promote renewable energy sources for electricity generation. o Table 6 presents a comparison of legislative efforts positions, regulations, and existent programs structured and affecting the advance of renewable sources in electricity generation. Brazil stands out presenting countless general instruments as well as specific ones for certain sources. In following are Argentina and Chile, Peru and Colombia. The classification presented considered the following criteria: the legislation nature, level of detail, availability of programs, financial incentives, and specific auctions. o Brazil had a development of laws, regulations and incentives that favored, over time, specific technologies such as biomass, and more recently wind and solar PV. Chile has demonstrated interest in applying incentives and rules for sources in a more general manner and this has also been the trend of other surveyed countries.
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Table 6: Legal frameworks, incentives, support mechanisms, and funding
Central Brazil Argentina Chile Peru Colombia Venezuela Mexico America
L/I/E, L/M, Per, PL, L/I,M , L/I, DR, DR, L-DR/I/M, L/I, L/E, F/E R L/I L/I Generation (renewable R/E, R/M DR/E Mc, Per, L/I/Per, energy sources) R/E
- Wind energy Mf, I/E, Le L/E, F, PL/E R/I, PL/IE L/I
- SHP (≤ 20 MW)* Mf, Le L/E L/I
- Biomass Mf, Le DR/I
- Geothermal energy - PL L-DR/I/E
- Solar PV F, I/E, Ep L/E, F, PL/E L/E L/I L/I
- CSP L/E, F, PL/E
Transmission and R/E Distribution
Energy Storage Systems - L/I -
Caption: (1) Legislation: DR – Regulatory decree; L – Law; PL - Bill; R: Resolution;
(2) Mechanism type: E - Economic incentive; F - Fund Mechanism; I - Incentive mechanism: M - Market creation; Mf-Feed-In Mechanism; Mc– Quotas mechanism;
(3) Other: Ep-Study for policymaking; Le - Special auctions; Per-Rural Electrification Program
Note: (*) (*) In the case of Brazil SHPs < 30 MW.
+ advanced - advanced
2.5 Public agents, market players, partners and institutions o An institutional type analysis was performed to understand the different types of actors involved in existing initiatives to promote the considered renewable sources. We attempted to classify the actors into public agents (national, regional or local), manufacturers of equipment related to renewable sources, class associations, companies dedicated to design, installation and maintenance of renewable energy sources, environmental agencies and NGOs working in the specific area, research institutes, consulting firms and funding agencies. In the main report are listed the surveyed entities. o The presence of equipment manufacturers related to the sources studied is still very low in all countries, except Brazil (biomass, SHP, wind) and Argentina (SHP, wind). o The picture looks slightly better with respect to implementers and local partners, including more specific government agencies. In this case, solar PV (Peru, Mexico), biomass (Argentina, Brazil), SHP (Argentina, Brazil, Peru, Colombia, Mexico and Central America), wind (Argentina, Brazil) and geothermal (Peru and Mexico) are relatively well positioned. o Commercial representations and civil associations related to the sources studied have been found, and it was possible to evaluate the degree of their performance in relation to disclosure activities and advocacy related to their sources through the information available,
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number of seminars, workshops and sponsored conventions. The best situations found were solar PV (Peru, Chile and Mexico), biomass (Argentina, Brazil), SHP (Chile), wind (Brazil and Argentina). o Regarding firms specialized in installing and maintaining, the best situations found were solar PV (Brazil, Colombia, Central America), biomass (Brazil), SHP and wind (Argentina, Brazil). o Research centers that can support improvements and adjustments to the most active renewable sources found were biomass (Argentina, Brazil, Central America, Colombia, Mexico), solar PV (Brazil, Mexico), SHP (Argentina, Brazil, Mexico).
Table 7: Participants of the renewable energy sources technology market
Local Installation Consulting Class Partners/ Manufacturers and Research and Funders Associations Gov’t Maintenance Engineering
Solar PV
CSP
Biomass
SHP Argentina Geothermal
Oceans
Wind
Solar PV
CSP
Biomass
SHP Brazil
Geothermal
Oceans
Wind
Solar PV
CSP
Biomass
SHP Chile
Geothermal
Oceans
Wind
Caption: Good Regular Insufficient Non-existent No information
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Participants of the renewable energy sources technology market (cont.)
Installation Consulting Local Class Manufacturers and Research and Funders Partners/Gov’t Associations Maintenance Engineering
Solar PV CSP Biomass
SHP Peru Geothermal Oceans Wind Solar PV CSP
Biomass
mbia SHP
Colo Geothermal Oceans Wind Solar PV CSP
Biomass SHP
Venezuela Geothermal Oceans Wind Solar PV CSP Biomass SHP
Mexico Geothermal Oceans Wind Solar PV
CSP Biomass
America America SHP Geothermal Central Oceans Wind
Caption: Good Regular Insufficient Non-existent No information
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2.6 An analysis of the most attractive energy markets in Latin America o From the collected and analyzed information, it was attempted to determine, from the perspective of potential expansion, the most promising countries and technologies. The current and projected characteristics of the market were considered, as well as the existence of regulation and the presence of actors in each country and for each technology. o ICA needs to define its five-year investment plan in Latin America for the renewable sources electric generation area. The use of copper was the main leveler for this analysis. The objective is, therefore, to choose within a set of potential markets, those in which the potential use of copper is both larger and more effective under ICA's point of view. Multicriteria analysis was used to organize these priorities, and more detail is presented in the main report. The following table presents the used approach.
Table 8: Multicriteria analysis the problem, objectives and policy makers
Problem Define the next five-year investment plan in Latin America for power generation from renewable specification energy sources. The use of copper is the main leveler.
To choose within a set of potential markets, those in which the potential use of copper is both Objectives larger and more effective.
Decision makers ICA LA decision makers.
o Table 9 presents the technologies listed by ICA and the countries in focus. They are the decision object-units. They are seven technologies and seven countries and an aggregate region (Central America and The Caribbean). So there are 56 alternatives (country- technology pairs) to be evaluated, each represented by a pair of acronyms. For example, BR_eo represents the wind energy in Brazil, CO_g geothermal energy in Colombia and so on.
Table 9: Technologies and countries under study
Country Acronym Technology Source Acronym
Brazil BR Wind energy eo
Argentina AR Hydraulic: SHP shp
Chile CH Biomass energy bio
Peru PE Geothermal energy g
Colombia CO Solar PV energy FV Venezuela VE Oceans energy (tides and currents) oc
Mexico MX CSP csp
Central America and The Caribbean AC
o Criteria selection and weights to prioritize: There are three axes of evaluation or criteria used for this analysis: market, regulation and actors. The market criterion represents the estimated amount of copper based on the projected additional installed capacity of the study horizon in tonnes, i.e., a quantitative criterion. The other two criteria are qualitative and represent, respectively, the degree of development and the importance of the legal framework and existing players. The considered values for the multicriteria analysis were those collected and presented in Table 78, Table 81 and Table 83. o For whichever scenario, either for the upper and lower estimated amount of copper for the next 10 years, Brazil stood out compared to others in wind, biomass and SHP modes. The
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exception is Argentina in relation to the exploitation of wind power, which also showed a significant position in the ranking, especially when one considers the upper limit of the projected amount of copper, which is second only to Brazil-wind in 3 of the 4 scenarios. o The preferable country-technology pairs from the ICA standpoint were, considering the lower level of projected amount of copper: 1. Brazil_wind
2. Brazil_biomass
3. Brazil_PCH
4. Argentina_wind
5. Mexico_wind
6. Chile_PCH o From the list above, the three first pairs stand out in comparison to others. The latter three also showed a certain prominence, but were followed relatively closely by the next ones. o Now, when one considers the amount for higher levels of copper, technologies such as solar PV in Argentina and wind energy in Chile excel. The preferable country-technology pairs from the ICA standpoint were: 1. Brazil_wind
2. Argentina_wind
3. Brazil_biomass
4. Brazil_PCH
5. Chile_wind
6. Mexico_wind and Argentina_photovoltaic
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3 Renewable Energy in Latin America
3.1 Current renewable sources market and trends
3.1.1 INTRODUCTION
Initially, we present a general analysis on the potential and current exploitation of resources related to renewable sources and results of projections for Latin America and the Caribbean.
In the following sections of this chapter, an analysis is made for each of the countries selected for the study.
3.1.2 EXISTING POTENTIAL
According to Garten Rothkopf (2009)11, Latin America and the Caribbean have a rich heritage of natural resources, both of renewable and non-renewable energy. Although the use of these resources in the region has historically been centered in large hydropower plants and fossil fuels, there is enormous potential for wider use of new renewable energy sources: SHPs, wind, solar, geothermal and the ocean.
The availability and quality of data on each of these resources vary widely, depending significantly on the nature of the resource being studied. The following analysis provides an overview of the current status of distribution of natural sources in the region.
Hidroelectricity
Regarding Table 10, some observations can be made with respect to Latin America hydropower potential. Regarding the total hydropower potential, Mexico has explored most of its economically viable resources, reaching the index of 87.4%, well above the region average. Brazil stands out for its large share of hydropower, but still remains 58.4% of its economically exploitable capacity to be used. However, the remaining resources are concentrated in the north of the country and there are many environmental barriers. Bolivia, Ecuador and Peru are the South America countries that still have a large availability of water resources for economically viable use, since these countries do not use even 7% of the available potential. Venezuela and Paraguay stand out in South America by using more than 50% of the economically available potential for hydroelectric generation in the region.
11 The report "A Blueprint for Green Energy in the Americas 2009-v2" was carried out by the firm Garten Rothkopf by request of the Inter-American Development Bank (IDB) as a product of the bank's commitment to sustainable growth in the Americas. The opinions contained in the report are not IDB opinions, and were offered to assist the bank in forming its own opinion. For the report production, analysts at Garten Rothkopf counted, according to themselves, with the support of over 300 specialists and held four major events that provided many points of view.
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Table 10: Theoretical and Current Hydroelectric Capacity in Latin America and the Caribbean, 2005.
Theoretical Current Economically Exploitable % of Theoretical % of the Economically Country Capacity Generation Capacity (TWh/year) Capacity Used Exploitable Capacity Used (TWh/year) (TWh/year)
Central America Belize 1 - 0.08 8 -
Costa Rica 223 20 6.57 2.9 32.8
El Salvador 7 - 1.41 20.2 -
Guatemala 54 - 2.50 4.6 -
Honduras 16 - 1.76 11 -
Mexico 135 32 27.97 20.7 87.4
Nicaragua 33 7 0.44 1.3 6.2
Panama 26 12 3.78 14.5 31.5
Caribbean
Cuba 3 - 0.08 2.7 -
Dominican 50 6 1.90 3.8 31.7 Republic
Haiti 4 - 0.28 7 -
Jamaica 1 - 0.08 7.8 -
South America
Argentina 354 - 34.19 9.7 -
Bolivia 178 50 1.42 0.8 2.8
Brazil 3.040 811 337.46 11.1 41.6
Chile 227 50 25.49 11.2 51
Colombia 1.000 140 37.00 3.7 26.4
Ecuador 167 106 6.88 4.1 6.5
Paraguay 130 101 51.16 39.4 50.6
Peru 1.577 260 17.98 1.1 6.9
Uruguay 32 - 6.68 20.9 -
Venezuela 320 130 77.23 24.1 59.4
Source: Garten Rothkopf (2009)
Geothermal energy
Brazil stands out in Table 11 for having the lowest potential for exploitation of geothermal source in Latin America and the Caribbean, contrary to the Caribbean, Mexico and Guatemala that stand out in the region by having high geothermal potential. In South America, except for Brazil and Venezuela, all countries have an average potential around 2.3 GW.
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Table 11: Geothermal Energy Potential.
Country Geothermal Potential (GW) Country Geothermal Potential (GW)
Central America South America Costa Rica 1.0-3.5 Argentina 2.0
El Salvador 2.2-4.1 Bolivia 2.5
Guatemala 3.3-4.0 Brazil 0.36
Honduras 0.9 Chile 2.4
Mexico 6.5-8.0 Colombia 2.2
Nicaragua 2.0-4.0 Ecuador 1.7
Caribbean Peru 3.0
Antilles 15.0 Venezuela 0.91
Source: Garten Rothkopf (2009)
Wind energy
Table 12 shows the excellent potential for generating wind energy in countries like Mexico, Argentina, Chile, Bolivia and the Dominican Republic, but many other countries in the region have good wind speeds, such as Brazil, Colombia and Jamaica.
Table 12: Wind Energy Potential.
Country Wind Speed (m/s) Country Wind Speed (m/s)
Central America South America Belize 4.8 Argentina 4.8- ≥8.8
Costa Rica 4.8-5.6 Bolivia 4.8- 8.8
El Salvador 4.8-6.4 Brazil 4.8-7.5
Guatemala 4.8-5.6 Chile 4.8- ≥8.8
Honduras 4.8-6.4 Colombia 4.8-7.5
Mexico 4.8- ≥8.0 Ecuador 4.8
Nicaragua 4.8-6.4 Paraguay 4.8-7.5
Panama 4.8 Peru 4.8-5.6
The Caribbean Uruguay 4.8-7.0
Cuba 4.8-6.4 Venezuela 4.8-6.4
Dominican Republic 5.5-9.0
Haiti 5.6-6.4
Jamaica 6.4-7.0
Source: Garten Rothkopf (2009)
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Solar energy
From Table 13 it is possible to observe the high potential for solar generation in the region. The average incidence of solar radiation in Latin America is at least twice that present in Germany, for example, a country with high penetration of PV.
These figures illustrate the potential for larger investment in solar energy for both thermal (low and high temperatures) and for PV generation.
Table 13: Solar Energy Potential (Horizontal Plan to Surface).
Country Average solar radiation (kWh/m2/day) Country Average solar radiation (kWh/m2/day)
Central America South America Belize 4.5-5.5 Argentina 2.0-7.0
Costa Rica 4.5-6.0 Bolivia 4.5-7.0
El Salvador 5.5-6.0 Brazil 3.0-6.5
Guatemala 4.5-6.0 Chile 2.0-7.0
Honduras 4.5-6.0 Colombia 3.0-6.0
Mexico 4.5-6.5 Ecuador 3.5-5.0
Nicaragua 4.5-6.0 Paraguay 5.0-6.0
Panama 4.0-5.5 Peru 3.5-7.0
The Caribbean Uruguay 4.5-5.5
Cuba 4.5-6.0 Venezuela 4.5-6.0
Dominican Rep. 5.0-6.0
Haiti 5.5-6.5
Jamaica 5.0-6.0
Source: Garten Rothkopf (2009)
3.1.3 PROJECTIONS
Some worldwide long-term projections presented below include countries of this study.
Projection of the International Energy Agency: World Energy Outlook 2006
The IEA has developed the World Energy Outlook 2006 where it projects the 2030 installed capacity and electricity generation for various sources of energy and regions worldwide. The performed analysis considers two scenarios: a reference and for alternative policies. The reference scenario assumes no new government policies will be introduced in the projection period (until 2030) in the energy sector, considering only policies that were enacted or adopted by mid 2006. That is, this scenario offers a vision of how energy markets should evolve if governments do nothing to change the trends of energy supply and demand. The alternative policy scenario considers the impact of a package of additional measures aimed at energy security and climate change. That is, it illustrates the trends of the energy market as a result of such policies and their costs. It follows the results for Latin America. The study also presents results for Brazil, which will be discussed in the section on Brazil.
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The main programs and policies considered in the alternative policy scenario for the generation sector in Brazil were: CDE, SWERA (Solar and Wind Energy Resource Assessment) and the second phase of Proinfa (IEA, 2006).
The study does not present the major programs and policies considered in elaborating the alternative policy scenario for the generation sector in Latin America. According to the study reference scenario renewable energy sources, excluding large hydropower, will continue to have a marginal participation in relation to domestic energy supply by 2030 in Latin America (Table 14). Even contributing marginally, renewable alternatives showed the largest annual growth in the region between 2004 and 2015 (7.3%) in terms of installed capacity, behind only natural gas (10.0%). Looking more specifically per source, among them, all wind generation and geothermal were the fastest growing ones in this period, with annual growths of 31% and 5.3%, respectively, during the same. Solar and oceans will not contribute until 2015 to any of the two scenarios considered.
In the alternative policy scenario, renewable sources, excluding large hydroelectric, are gaining importance due to their increased participation and due to reduced generation from fossil fuels and from large hydroelectric plants (UHE). In this scenario, the renewable alternative sources shall have an annual growth of installed capacity between 2004 and 2015 of 8.5%, behind only of natural gas with an annual growth over the same period of 9.3%. Looking specifically per source there is a slight increase, as compared to the reference scenario, of the annual growth in installed geothermal power capacity in the period between 2004 and 2015. Wind generation, geothermal and biomass are the ones with the fastest growth in the period, with annual rates of 26.8% for wind generation and 5.4% for biomass and geothermal energy. One can also observe that in both scenarios solar generation arises in the region's electric matrix only in 2030, but already surpassing the geothermal source.
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Table 14: Reference scenario of generation and installed power in Latin America for a horizon until 2030.
Electricity (TWh) Capacity (GW) 2015 2030 2015 2030 Total 1303 1984 331 504 Coal 43 77 8 13 Oil 76 44 29 19 Gas 308 655 107 212 Nuclear 37 34 5 4 Hydraulic 799 1084 174 236 Renewables 40 89 8 20 (excluding hydro) Biomass 28 51 4 8 Wind 8 22 3 7 Geothermal 4 12 1 2 Solar 0 5 0 3 Ocean 0 0 0 0 Source: IEA (2006)
Table 15: Alternative policy scenario for generation and installed power in Latin America until 2030.
Electricity (TWh) Capacity (GW) 2015 2030 2015 2030 Total 1243 1715 321 447 Coal 31 45 7 8 Oil 69 35 29 18 Gas 274 473 100 170 Nuclear 37 44 5 6 Hydraulic 786 1009 170 218 Renewables 47 110 9 27 (excluding hydro) Biomass 34 56 6 9 Wind 8 32 3 11 Geothermal 4 13 1 2 Solar 0 8 0 5 Ocean 0 0 0 0 Source: IEA (2006)
Forecast for Concentrated Solar Thermal: CSP 2009 outlook
ESTELA et al. (2009) present scenarios elaborated for CSP technology.
The CSP future potential was made considering both technical and economic potential. The outlook is based on some assumptions to model how the industry will proceed under different market conditions, which will influence the development of concentrated solar energy industry. Three scenarios were devised: the reference scenario, and the moderate and advanced scenario.
The reference scenario is the most conservative. It is based on projections from the World Energy Outlook 2007 of the International Energy Agency and considers existing policies and measures, but includes assumptions such as: the continuation of reforms in electricity and gas markets, liberalization of energy markets by reducing customs barriers and the recent policies aimed at fighting environmental pollution. The scenario assumes a growth rate of 7% for 2011, dropping to just 1% in 2015 and remaining at this level until 2040.
After the 2040, the scenario assumes no significant increase in CSP. The moderate scenario considers all policies already under way or planned in the world that supports renewable energy. It assumes that renewable energy targets and CSP set by many countries will be met and considers an increase of investors' confidence in the sector, resulting from a
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positive outcome of negotiations on the climate change in the UNFCCC COP-15 in Copenhagen, Denmark, in December 2009.
In the moderate scenario, the growth rates of concentrated solar energy are substantially higher than the reference scenario, starting at 17% per year in 2011 and increasing to 27% per year in 2015. The growth rate remains at 27% per year in 2020, falling to 7% in 2030, 2% in 2040 and 1% after 2050. The advanced scenario is the most ambitious. It assesses how far the concentrated solar power industry could grow in case of a "CSP vision". In this scenario, all policies in favor of renewable energy, in accordance with the recommendations of the industry, were selected and combined with the political will to realize them. It is also assumed a rapid and coordinated increase of the network's ability to collect solar energy from CSP plants in ideal sites and export it to industrialized countries and emerging economies with high and growing demand for electricity. The purpose of this scenario is to show what the concentrated solar energy sector could achieve with the proper political commitment. In the advanced scenario of concentrated solar energy the expected growth rate starts at 24% per year in 2010, drops to 19% in 2015, 7% in 2030, 5% in 2040 and subsequently the growth rate will increase around 3% annually.
Within these scenarios, Latin America will play a marginal role compared to the rest of the world (Table 16). The average share is 2.5% and 3.3% for 2020 and 2030. In this study, assumptions for scenarios' elaboration are presented only as a whole without providing further information on obtaining these scenarios for Latin America.
Table 16: Perspectives for CSP accumulated installed capacity in Latin America
Latin America World
Advanced Moderate Reference Advanced Moderate Reference
2020 (MW) 2298 2198 121 84336 68584 7271
2030 (MW) 12452 8034 339 342301 231332 12765
Source: ESTELA et al. (2009)
Projection for wind energy: Global Wind Energy Outlook 2008
In Greenpeace, GWEC and GAC (2008) three scenarios were prepared for the growth of wind energy in the world: the reference scenario, and the moderate and advanced scenario.
The reference scenario is based on the World Energy Outlook 2007 of the International Energy Agency and considers existing policies and measures, but includes assumptions such as: the continuation of reforms in electricity and gas markets, liberalization of energy markets by reducing customs barriers and the recent policies aimed at fighting environmental pollution. IEA projections extend until 2030, but the GAC extrapolated them until 2050. The scenario assumes a growth rate of 27% for 2008 decreased to 10% in 2010 and 4% in 2030, leveling off at around 1% in 2035.
The moderate scenario considers all policies already under way or planned in the world that supports renewable energy. It assumes that renewable energy targets and wind energy set by many countries will be met and considers an increase of investors' confidence in the sector, resulting from a positive outcome of negotiations on the climate change in the UNFCCC COP- 15 in Copenhagen, Denmark, in December 2009.
In the moderate scenario, projected growth rates for wind energy are substantially higher than the reference scenario, starting at 27% per year in 2008, decreasing to 19% in 2010
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and 11% in 2020, reaching 3% in 2030 and 1% after 2040. The advanced scenario evaluates how the wind energy industry could grow in the case of a "wind energy vision". In this scenario, all policies in favor of renewable energy, in accordance with the recommendations of the industry, were selected and combined with the political will to realize them. The purpose of this scenario is to show how far the wind energy sector could go with proper political commitment. In the advanced scenario the expected growth rate starts at 27% per year in 2008, drops to 22% in 2010, 12% in 2020, 5% in 2030 and subsequently the growth rate will increase around 1% annually.
For the reference scenario, the share of Latin America in global installed capacity in 2020 and 2030 remains marginal: 1,4% and 1,6% respectively (Table 17). On the other hand, for moderate and advanced scenarios, Latin America increases its participation in relation to the world total, passing to represent 9.3% and 8.5% in 2020 and 2030, respectively, due to a jump of installed capacity in Latin American countries. The study does not mention which countries are the main responsible for this growth, but highlights the current market wind energy situation for two countries in particular: Mexico and Brazil. It is noteworthy that the assumptions made for the elaboration of scenarios are not specifically presented for each region or country.
Table 17: Perspectives for accumulated installed capacity of wind energy in Latin America
Latin America World
Advanced Moderate Reference Advanced Moderate Reference
2007 (GW) 0.537 0.537 0.537 94 94 94
2020 (GW) 100 50 5 1081 709 352 2030 (GW) 201 103 8 2375 1420 497
Source: Greenpeace, GWEC, and GAC (2008) GWEC published in February 2010, the additional installed capacity in 2009 for various countries, and here is the information for Latin America countries (GWEC, 2010a).
Brazil, Mexico and Chile had the highest growth in wind power generation in the region between 2008 and 2009 with, respectively, 77,7%, 138%, and 740%.
Data on the installed capacity of wind power in Brazil shows a growth (78%) higher than the world average (31%) in 2009. However, smaller than Latin America (95%) largely due to considerable growth in Mexico (138%), Chile (740%) and Nicaragua, which went from 0 MW in 2008 to 40 MW in 2009. Brazil alone accounts for nearly half of the installed wind capacity in Latin America (1,274 MW)12.
Table 18 shows the growth of wind power installed capacity between 2008 and 2009 for Latin America and the Caribbean.
12 However, Brazil accounts for only 0.38% of the worldwide installed wind capacity, while countries like China and India already account for 15.9% and 6.92%, respectively.
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Table 18: Installed capacity of wind energy 2008/2009 (MW)
End of 2008 Expansion in 2009 End of 2009 Growth (%)
Brazil 341 264 606 77.7%
Mexico 85 117 202 138%
Chile 20 148 168 740%
Costa Rica 74 50 123 67%
Nicaragua 0 40 40 -
Latin America and The Argentina 29 2 31 7% Caribbean Colombia 20 0 20 0%
Uruguay 20 0 20 0%
Jamaica 22 1 23 5%
Caribbean 35 0 35 0%
Other* 6 0 6 0%
Total 653 622 1274 95%
World Total 120550 37466 157899 31%
Notes: * Others = Cuba, Peru.
Source: GWEC (2010b)
3.1.4 ARGENTINA
The electricity market
Potential and Installed Capacity
By the end of 2008, Argentina presented a total installed capacity of 26,225 MW participant of the wholesale energy market (Mercado Eléctrico Mayorista, MEM), which concentrates the main generators of the country. Many of the renewable energy generators are not MEM participants, since the installed capacity of solar PV source is located primarily in rural communities and most wind generators do not sell their energy in the market.
The installed capacity from renewable sources by 2009, excluding large hydropower plants is 1,141.23 MW (Table 19).
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Table 19: Installed capacity for electricity generation in Argentina (2008-2009)
Solar Total (MW) Solar PV Wind Biomass Geothermal SHP Hydro Thermal Nuclear Thermal MEM
Installed Capacity 0.67 (out of 10 - 30.56 720 380 0 10156 15064 1005 26225 (2008/2009)1 service)
Steam turbine 4438
Gas turbine 2901
Combined Cycle 7488
Diesel 238
Additional 200.02, 02, 5003 02, 3003 3002, 10003 02, 2003 1001 02, 03 capacity (2020) 8000.03
Source: 1SEN et al. (2009) and CAMMESA (2009a); 2Reference Scenario (Greenpeace et al., 2009);3Energy Revolution Scenario (Greenpeace et al., 2009)
The Nation Energy Secretary published in 2009 the study "Renewable Energy: diagnosis, barriers and proposals" (SEN et al., 2009) aiming to present a diagnosis of renewable sources in the country and identify economic, institutional, financial and regulatory barriers that could affect the development of projects from these sources in the country, and also to identify strategies, actions and instruments to facilitate the removal of these barriers. The sources' potential listed below is based on the diagnosis presented in this study.
The "Atlas Eólico del Potential del Sur Argentino", estimates in 5 GW the wind energy potential technically usable in southern Argentina, where admittedly stands much of the national potential (SEN et al., 2009, p.13). However, it should be noted that there are projects for implementation of wind farms whose aggregate nominal output exceeds this value, which, therefore, must be seen as a lower limit.
According to SEN et al. (2009), on the solar potential of the country, 11 of the 23 Argentine provinces have an average annual solar radiation higher than 5 kWh/m2.day, the lower limit for the use of PV systems according to the document. The main application of these systems in the country is for electrification of isolated areas through the PERMER project. The total installed capacity in 2007 is 10 MWp (p.11), while in 2002 it was 4.5 MWp (SEN, 2004).
The accessible biomass resource and potentially available reaches 148 Mt, as estimated for Argentina by the WISDOM13 project. The use of biomass residues currently supplies 720 MW, mainly in sugar mills. Asal et al. (2005) indicates that there is a potential for electricity generation from biomass source of 430 MW, using mainly wood and agro-industrial residues, but despite the large potential there are still major barriers to their use.
Argentina has high enthalpy fields suitable for geothermal use for electricity generation, such as Copahue-Caviahue, Domuyo, Tuzgle and Valle del Cura, but there is no estimate of the generation potential (although there is a statement that it is possible for a project to reach 150 MW (SEN et al., 2009, p. 17)).
The SHPs installed capacity in the country is 380 MW and government studies indicate a potential between 425 and 480 MW.
13 WISDOM (Woodfuel Integrated Supply / Demand Overview Mapping) is a Project of the “FAO Wood Energy Programme” for the survey of agroforestry resources in various locations around the world.
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Expansion Plans and Considered Projects
Argentina has a goal to meet electricity demand in 2016 with 8% from renewable sources (Law No. 26.190/06). Under that same law, it is required to elaborate a federal program for the development of renewable energy, but by April 2010 there was yet no announcement of the program elaboration. Therefore, to date, there are no official projections (at least available) that indicate the scenario envisioned for the planning horizon14.
What is currently official are renewable sources bids that are being undertaken by the state owned company ENARSA to reach the 8% target under the program GENREN15 (Table 20). The results of the bidding were announced only in July 2010, indicating slowness by the Argentine government, which also announced that new bids will be made for technologies such as wind, biomass and thermal with biofuels, due to low offer of new developments or even none for some sources (urban solid waste, geothermal, solar thermal and biogas) (SEN, 2010a; ENARSA et al., 2010). It is important to highlight that the bidding does not set a deadline for an operation start. The operating date must be specified by the entrepreneur at the time of the offer.
Thus, from the nine sources covered, only four had signed contracts, despite new bids for the other sources being established, except biomass, as mentioned, ,. There is the possibility of new bids for the latter source, along with wind source and biofuels, according to ENARSA et al. (2010).
Table 20: Bids for Renewable Energy and Power to Be Contracted
Main Bid (MW) Complementary Bids (MW)
Source: EE 01/2009 EE 01/2010 EE 02/2010 EE 03/2010 EE 04/2010 To be contracted Offered Contracted To be contracted
Wind 500.0 1182 754.0
Thermal with biofuels 150.0 110.4 110.4
Urban solid waste 120.0 0.0 120.0
Biomass 100.0 54.4
SHP 60.0 10.6 10.6 Geothermal 30.0 0.0 30.0
Solar Thermal 25.0 0.0 25.0
Biogas 20.0 14 20.0
Solar PV 10.0 27.5 20
TOTAL 1015 1398.9
Source: ENARSA (2009); ENARSA (2010a); ENARSA (2010b); ENARSA (2010c); ENARSA (2010d).
There are unofficial long-term scenarios as from Greenpeace, 2009, with a 2050 horizon. This study formulates a scenario with great change in the country's energy matrix with the main objective of reducing greenhouse gases emissions by the energy sector. It forecasts
14 There is a report prepared by SEN (2004) that envisions some future values of installed capacity for some renewable sorces. Because it is former to Law No. 26.190/06, these were not considered in this work, but a summary of SEN (2004) is enclosed. 15 GENREN (Licitación de Energía Eléctrica a Partir de Fuentes Renovables) is the name given by the govenment to this series of bids.
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a participation of 64% of the installed capacity provided by renewable sources in 2020, while in the reference scenario this figure would be 38% (Table 21).
As it can be noted by the difference between these two scenarios, the energy revolution scenario assumes a fast and structural change of the energy matrix in the period of 2010 - 2020, especially for wind energy, the base source for preparation of this scenario.
Given the significant amount of wind projects offered in the GENREN program first bid (over 1.4 GW), a growth of 8 GW of installed wind capacity in the 2010's cannot be discarded. Even though, it would be necessary the conjunction of several favorable factors to achieve this projection, including the strong support of government and expressive actuation of private entrepreneurs outside the biddings' framework, what turns installation of 8 GW in ten years something difficult to achieve, even if a generation capacity in the same order of magnitude is likely. However, this can change with the successful implementation of the Diadema project, which foresees the installation of 16 GW (see next section), although there is no indication in this direction. On the other hand, Recordon (2009) foresees an installed wind capacity in Argentina of almost 1 GW in 2020.
Table 21: Reference Scenarios and Energy Revolution
GW 2005 2010 2020 2030 2040 2050
Reference Scenario
Total generation 25 30 38 47 57 69
Renewable 10 12 14 17 19 21
Hydraulic 10 12 14 16 18 19 Wind 0.0 0.0 0.2 0.4 0.6 0.8
PV 0.0 0.0 0.0 0.1 0.1 0.2
Biomass 0.1 0.1 0.3 0.5 0.7 0.8
Geothermal 0.0 0.0 0.0 0.0 0.0 0.0
Solar Thermal 0.0 0.0 0.0 0.0 0.0 0.0
Oceans' energy 0.0 0.0 0.0 0.0 0.0 0.0 Participation (%) 39.1 38.8 37.5 36.4 33.5 30.4
Energy Revolution Scenario
Total generation 25 30 38 44 53 67
Renewable 10 13 24 33 43 60
Hydraulic 10 12 14 14 16 17
Wind 0.0 0.1 8 13 19 28
PV 0.0 0.0 0.5 0.9 1.4 2.1
Biomass 0.1 0.1 1 3 5 8
Geothermal 0.0 0.0 0.2 1 2 3
Solar Thermal 0.0 0.0 0.3 0.4 0.9 1.8
Oceans' energy 0.0 0.0 0.0 0.0 0.1 0.3
Participation (%) 39.1 41.3 63.9 74.1 81.8 89.4
Source: Greenpeace et al. (2009)
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Renewable Sources
Wind energy
As a first step for the development of wind energy in the country, the Argentine wind map was elaborated (Sistema de Información Geográfica Eólico), which identified a large potential mainly in Patagonia and on the Atlantic coast near Buenos Aires (CREE et al. 2006). Thus, the main projects are concentrated in these regions whose potential can reach at least 5 GW.
The official wind source development program is the PENEE- "National Strategic Plan for Wind Energy (Plano Estratégico Nacional de Energia Eólica)", presented by SEN (2005), aiming to install 300 MW in three years (the plan was released in 2005).The first project, Vientos de la Patagonia I, should have been completed in 2006 but in February 2010 only the first 1.5 MW Impsa wind turbine was in operation. The first phase of the project aims to homologate this generator and another model of NRG Patagonia, and then install 60 MW using these generators (CADER, 2009).
The main existing projects, apart from Vientos de la Patagonia, are:
• Vientos de la Patagonia II, to be implemented in Santa Cruz and presently under study.
• Pico Truncado Wind Farm, with 600 to 900 MW. Announced in 2009 and to be developed by the Spanish group Guascor Wind, it is expected to start operations in 2013/2014, although further news on the project development are required.
• Arauco Wind Farm, in La Rioja, with 12 Impsa generators of 2.1 MW, to reach 25.2 MW. Operation start is scheduled for 2010 and the first turbine is already mounted.
• Malaspina, in Pampa, with 40 Vestas V-80 wind turbines of 2 MW - Operation in 2010/2011.
• Vientos Del Secano, with 50 MW. The operation is scheduled for the end of 2011. The design and environmental impact studies are already completed and PEPSA, the park operator has already obtained permission to join the wholesale energy market MEM.
• Diadema, with 6.3 MW. Developed by CAPSA/CAPEX, the project would be the initial step for the installation of a giant wind farm (16 GW) focused on hydrogen generation (AAEE, 2010a). Despite the scale of the project, the project is temporarily suspended (CADER, 2009).
• Projects in the bidding EE 01/2009, totaling 1,182 MW, mainly in the Patagonian provinces of Chubut, Rio Negro, Santa Cruz and Buenos Aires. From the projects mentioned above, only Malaspina (80 MW) was offered in the bidding (and selected).
• Gastre, with 1,350 MW. Developed by Generadora Eólica Argentina SA (GEASA), the project will have 675 wind turbines and requires the construction of a 500 kV transmission line with 300 km (EVWIND, 2009).
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According to SEN et al. (2009, p. 13), the capacity of wind projects under development in the country is estimated in 2.8 GW. The main projects identified together with those offered in the bidding EE 01/2009 total 1,323.5 MW 16.
It should be noted that the projects candidate in the bidding are not necessarily in implementation phase. According to the Interamerican Development Bank, two more projects are in early stages of study, Arenas Verdes (120 MW) and Pampa Alta (30 MW), in the framework of the Centrais Eólicas do Sul program, with the bank financing for realization of initial studies (IADB, 2010).
In the EE 01/2009 bidding, 17 projects were selected totaling 754 MW, representing 254 MW more than the power that would be originally contracted. The winners, listed in the institutional analysis, were IMPSA (155 MW), Emgasud (180 MW), Isolux (200 MW), International New Energies (50 MW), Patagonia Wind Energy (50 MW), Energías Sustentables (20 MW ) and Sogesic (99 MW) (ENARSA et al. 2010; SEN, 2010a). All projects are located in Patagonia, except the ones from Sogesic, which are in the province of Buenos Aires.
Solar PV & CSP
Under the PERMER program (Programa de Energías Renovables en Medio Rural), the Argentinean government carries out bids for the supply of complete PV systems. In stages I and II shall be established, for centralized purchasing, contracts for the supply of 862.11 kW (stage I, with 9 lots) and 1,050.48 kW (stage II, with 10 lots), according to SEN (2010b, 2010c).
For large-scale applications, SEN et al. (2009) mentions the launch of a bid in 2009 for a PV solar park of 1.2 MW in San Juan and bidding EE 01/2009 which is part of the project GENREN, for contracting 10 MW of solar PV and 25 MW of CSP (ENARSA, 2009).
In bidding the EE 01/2009 of project GENREN, solar PV plants of 20 MW nominal power have been contracted, twice the power that would be originally contracted. Four companiesshould implement the projects: Energías Sustentable, ldyl, International New Energy and Generation Eólica, with 5 MW each (ENARSA et al., 2010).
In relation to the solar PV plant in San Juan, effectively, Valente (2010) indicates contracting of COMSA Argentina (part of the Spanish COMSA) to build the plant. According to complementation by Pastor (2009), several technologies shall be used (amorphous silicon, mono- and polycrystalline) to assess their suitability.
Furthermore, Diário de Salta (2009) mentions the launch of a generation project with solar concentration for an initial 1 MW in the province of Salta, though there are no further more recent indications.
Biomass
The main Argentine biomass resource used is sugar-cane bagasse. The identified projects' survey indicates a potential of 422 MW (SEN et al., 2009). Projects for the conversion of sugar mills total 156 MW, mainly in Tucuman and Salta (p.15). Asal et al. (2005) have found a great potential for agro-forestry residue use, and the recovery of forest-industrial residues would be made according to the gasification and combustion technology, if maintained the technological trend of the projects identified in this study.
16 Except for the megaprojects of Dladema (Phase II), and Pico Gastre Truncated, which would expand the wind installed capacity in Argentina to more than 17 GW.
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The GENREN program included bidding for power plants fueled with municipal solid residue (120 MW), biogas (20 MW), biofuels (150 MW) and 100 MW of non-specified biomass, totaling 390 MW.
In the EE 01/2009 renewable energy bidding, 54.4 MW in projects were offered using biomass resources, but none for the use of urban solid waste (RSU). For this reason, the supplementary bid EE 02/2010 MSW, specific for RSU, was launched to hire 120 MW. As for contracting, a nominal power of 110.4 MW was contracted for thermal electric generation from biofuels, with four projects, three from the company Nor Aldyl (76.4 MW) and one from company Emgasud (34 MW) (ENARSA et al ., 2010).
Small Hydroelectric Plants
Argentina is developing the Small Hydroelectric Program, which aims to conduct studies to identify potential sites and promote the development of small-scale hydropower projects. Thus, by identifying the many advantages of small hydroelectric (less required resources, benefits of distributed generation, simplified authorization procedure), SEN (2008) indicates a potential of 425 MW (with 80% concentrated in 35 projects - from a total of 116).
A survey by SEN et al. (2009) based on previous work (SEN, 2008) indicated the existence of 480 MW in projects or identified potential for small hydroelectric exploitations (the Argentine term for SHP). These are primarily located in isolated communities of the south, which increases their interest due to increased competitiveness. However, only 30 MW are under development, and in many cases it is still required the preparation of project and environmental impact studies. Thus, the report estimates that it is possible to incorporate 100 MW in ten years.
The sketches of the "Plan of Action of Small Hydroelectric Exploitations" include only the completion of an inventory of existing projects and facilities, examination of federal and regional laws and the "selection and promotion of more feasible projects" (SEN, 2008, p.25) - vague objectives for a national plan of action. Thus, the best estimate is still the one prepared by SEN et al. (2009) of 100 MW in ten years. On bidding EE 01/2009, 10.6 MW of SHP projects were offered, below the tender contracting limit for the source (60 MW), and all five projects were contracted (ENARSA et al., 2010).
Geothermal energy
The existing geothermal exploitations in Argentina are used until now only for heat recovery.
As for electricity generation, the GENREN program included 30 MW in bidding EE 01/2009 and in the Copahue geothermal field a plant is planned with an additional 30 MW, totaling 60 MW (Sen et al., 2009). However, in the bidding, no project has been offered.
Additionally, the bidding process for the Copahue plant in the Las Melizas geothermal field, has already been finished, with the Canadian company Geothermal One being selected. The company shall also build the transmission line for the project, which will generate 230 GWh per year (Neuquén, 2010 ). In addition, the company Andina Geothermal signed a contract with the state company Energía Provincial Sociedad del Estado to build a geothermoelectric plant of 5 MW in the Valle del Cura field, with operations scheduled for 2011, if the geothermal resource is found appropriate (San Juan, 2009).However, it should be noted that the proposed deadlines for implementation of the project are ambitious, and delays must not be discarded.
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Energy Storage
Currently, Argentina has an experimental plant for producing hydrogen through wind source, the Pico Truncado (2.4 MW) plant. As mentioned, there is a project for generation of hydrogen through Diadema's 16 GW giant wind farm, but progress is uncertain. According to SEN et al. (2009) in Argentina electrolyzers are not manufactured to produce hydrogen, and only academic research groups exist.
Generation integration and interconnection
No specific information was found on how to connect the generation from renewable sources to the basic network, nor on the need to expand the network in order to interconnect plants, since there is no Argentine medium or long term plan, at least available, for the electric system expansion (even if only indicative).
Nevertheless, it is possible to preview that if important projects like Diadema's power plant (16 GW) are constructed, it will be necessary to expand the basic network at the highest transmission system voltage (500 kV), since Argentine potential wind energy is concentrated, as indicated above, in Patagonia.
3.1.5 BRAZIL
The electricity market
Table 22: Projections of Renewable Energy in Brazil
(MW) 2015 2017 2019 2020 2025 2030 2040 2050
CSP 195 1 1000 2, Solar PV 2000 3 29000 2 ; 3000 2; 3000 3; 4111 6 ; 30000 3; Biomass 4170 4 8521 5 27400 7 40900 7 7421 5 ; 3106 6 13900 7 6829 6 ; 20700 7 1000 3 ; 10002; 6000 7 ; 4000 2; 16600 8; Wind 1423 4; 4441 5 ; 1423 4 6041 5 7800 8; 15000 7 ; 44000 7 116000 7 10200 9 3000 8; 2400 9 63009 5000 3 ;
Geothermal 0 3 0 3
Oceans 0 3 0 3 6066 5; SHPs 5566 5; 7734 4 6966 5 3330 10 7769 10 7734 4
Notes: 1 Greenpeace and ESTIA (2003); 2 Reference scenario (IEA, 2006); 3 Alternative policies scenario (IEA, 2006); 4 EPE (2009a); 5 EPE and MME (2010);6 Surplus electric power generation from biomass of the sugar-cane/alcohol industry (EPE, 2007a); 7 Energy Revolution Scenario (Greenpeace and EREC, 2007); 8 8Reference scenario (IAEA et al., 2006); 9 Shift scenario (IAEA et al., 2006); 10EPE (2007b)
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Potential and Installed Capacity
At the end of 2008, Brazil had an electricity generation installed capacity of 103,962 MW (ESE, 2009b) and a renewable sources installed capacity, excluding large UHEs, of 5207 MW (ESE, 2009a). Table 23 shows the installed capacity in Brazil per source in 2008.
Table 23: Installed Capacity for Electricity Generation in Brazil
Year 2008
(MW) Solar PV Solar Thermal Wind Biomass SHP Hydroelelectric1 Thermal2 Nuclear Total
Total - - 1436 5380 4043 83169 18427 2007 103962
Notes: 1 The National Energy Balance 2009 does not break apart the installed capacity by type of hydropower for electricity generation, which is supposed to include SHPs; 2 The National Energy Balance 2009 does not break apart the installed capacity by type for thermal electricity generation, which is supposed to include biomass power plants.
Source: EPE and MME (2010)
Preliminary results of the National Energy Balance (Balanço Energético Nacional-BEN) 2010 indicate that generation through renewable sources increased by 5.5% in 2009 over the previous year, being hydroelectricity one with the highest growth. With the increased use of UHE, at the expense of thermoelectric power plants (Usina Termoelétrica de Energia-UTE), electricity from renewable sources has increased from 85.1% in 2008 to 89.8% in 2009. The domestic offer of electricity from hydroelectric, wind and biomass presented, respectively, increases of 5.8%, 4.7% and 17.5% over the previous year. The reduction in electricity generation through fossil sources reached 30.6%, standing out natural gas (-53.7%) and petroleum derivatives (-17.1%) (EPE, 2010).
Expansion Plans and Considered Projects
In Brazil there are two types of official projections: one for medium term and a long-term one. The medium term is the Ten Year Energy Plan (Plano Decenal de Energia-PDE), updated annually with a planning horizon of 10 years and major planning study of the Federal Government for the sector. The long term is the National Energy Plan (Plano Nacional de Energia-PNE), with 25 years horizon, with the first one published in 2007 with the horizon until 2030, and the next shall be published in 2010 or 2011 with horizon until 2035.
The country also has the Incentive Program for Alternative Sources of Electrical Energy (Programa de Incentivo às Fontes Alternativas de Energia Elétrica-Proinfa), whose first phase determined contracting of 3,300 MW by Eletrobrás, equally distributed among 3 generation sources: wind, biomass and SHPs. After two public calls - the first public call held in October 2004 and in December 2004 ended the biomass projects qualification process for the second public call - were contracted 1,101.24 MW, 1,422.92 MW and 685.24 MW, respectively, of SHPs, wind, and biomass thermal plants, which according to Law no. 11,943 as of May 28, 2009, shall come into operation until December 30, 2010 (it is noteworthy that the deadline was initially set to December 30, 2006). Once the goal of the first phase is achieved, the program envisages a second phase in which these alternative sources must meet within 20 years, 10% of national annual consumption of electricity. However, the second phase of Proinfa is now
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discarded by Eletrobrás17, being specific auctions for alternative sources considered more appropriate for the promotion of such sources in the country.
For the purposes of this paper, the recently published PDE 2010-2019 is used, as presented below.
TEN YEAR ENERGY EXPANSION PLAN 2019
The Energy Research Company (Empresa de Pesquisa Energética-EPE) has recently published the PDE 2019. PDE is the actual document to level the expansion in the comprised period. The plan contains an integrated view of the demand and supply expansion of various energy sources for the period between 2010 and 201918.
A relevant aspect to be highlighted regarding the generation expansion within the horizon of the PDE 2019 is the indication of resumption of renewables in the energy matrix from the year 2014 instead of fossil fuels (Figure 8). The share of wind source, biomass and small SHP in installed capacity of electricity generation in 2019 shall be 4.17%, 5.10% and 3.62% and in 2010 shall be 1.28% , 4.78% and 3.6%, which indicates the increase in installed capacity for wind generation in the period.
The installed capacity annual growth rate of SHPs, UTE and wind plants is, respectively, 6.6%, 6.64% and 25.33% between 2010 and 2015 (Table 24). The installed capacity foreseen for 2015 of wind farms, biomass thermal and SHPs are, respectively, 4,441 MW (3.15% share), 7,421 MW (5.27%) and 5,566 MW (3.95%). Figure 7 presents these contributions for 2015 and 2019.
Table 24: Annual growth rate by source according to the PDE 2019
Source: Period 2010-2015 Period 2015-2019
SHP 6.60% 5.77%
Biomass 6.64% 3.52%
Wind 25.33% 88.00%
17 In the chapter on policies and programs to encourage renewable alternatives further details about Proinfa will be presented. 18 The plan incorporates the results of auctions to buy energy promoted untill December 2009 and deals only with the National Interconnected System (Sistema Interligado Nacional-SIN), incorporating the isolated systems that will be interconnected within the study horizon.
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Figure 7: Installed capacity by source for electricity generation in 2015 and 2019 according to the PDE 2019
Source: EPE and MME (2010)
Figure 8: Participation of energy sources for electricity generation (% of Installed Power)
Source: EPE and MME (2010)
Table 25 shows the installed capacity evolution for different power generation sources throughout the study period (2010-2019).
For the Plan period (2010-2019), it is forecasted the entry of 33.53 GW of UHEs, 1.4 GW of nuclear generation, 9 GW of UTE (except thermonuclear) and 10.67 GW from renewable sources, an additional total of 54.62 GW. The plan started from an installed capacity of 112.45 GW at the end of 2010.
Looking specifically at renewable sources, it can be noted that the Plan envisages an installed capacity of nearly 11 GW from biomass, SHPs and wind power in 2019. Wind power will have 5,241 MW in 2017, well above the 1,423 MW capacity foreseen by the PDE 2007- 2017 for the same year. It is noteworthy that between 2011 and 2012, there is a growth forecast of 125.7% in wind power installed capacity due to the entry into operation of the 1.8 GW contracted in the 2nd Energy Reserve Auction held in December 2009 and with the operation start scheduled for 2012. For 2019, the PDE 2019 forecasts 6,041 MW wind generation installed capacity, which is quite shy since the plan forecasts an annual growth of only 400 MW
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after entry into operation of the 1.8 GW contracted in the first specific auction for wind energy. The Alternative Energy Sources Auction 2010 (A-3 and Reserve), held in August, 25 and 26, 2010, resulted in contracting 2892.2 MW of installed capacity (712.9 MW of biomass, 131.5 MW of SHP and 2047.8 MW of wind) with startup scheduled for 2013. However, the PDE projections are less optimistic, since it foresees an increase of only 400 MW and 350 MW, respectively, for wind power and biomass between 2012 and 2013. However, for SHP, between 2012 and 2013 it is expected an increase of 400 MW in installed capacity, what exceeds the contracted capacity in the last auction. It is also worth mentioning that solar generation is not addressed in the PDE 2019 horizon.
Table 25: Evolution of installed capacity per generation source (MW), 2010-2019
Source: 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Hydro (a) 83169 85483 86295 88499 89681 94656 100476 104151 108598 116699
Uranium 2007 2007 2007 2007 2007 3412 3412 3412 3412 3412
Natural gas 8860 9356 9856 11327 11533 11533 11533 11533 11533 11533
Coal 1765 2485 3205 3205 3205 3205 3205 3205 3205 3205
Fuel oil 3380 4820 5246 8864 8864 8864 8864 8864 8864 8864
Diesel 1728 1903 1703 1356 1149 1149 1149 1149 1149 1149 Process gas 687 687 687 687 687 687 687 687 687 687
SHP 4043 4116 4116 4516 5066 5566 5816 6066 6416 6966
Biomass 5380 6083 6321 6671 7071 7421 7621 7771 8121 8521
Wind 1436 1436 3241 3641 4041 4441 4841 5241 5641 6041
Total (b) 112455 118375 122676 130774 133305 140935 147605 152080 157628 167078
Note: (a) Includes the estimate import of Itaipu UHE not consumed by the Paraguayan electric system. (b) Does not consider self-production, whereas for energy studies, this is represented as a load reduction.
Source: EPE (2010).
NATIONAL ENERGY PLAN 2030
The PNE 2030 study, published in 2007, was made by the EPE together with the Research Center for Electric Energy (Centro de Pesquisas de Energia Elétrica -CEPEL) and other Ministry of Mines and Energy (Ministério de Minas e Energia –MME) participants (being coordinated by MME's Secretariat of Energy and Development Planning). The PNE 2030 considered four energy scenarios: A, B1, B2 and C, each one having a different annual rate of GDP growth, energy and electricity consumption.
From the PNE 2030 capacity information for SHPs, alternative wind farms, and thermal units (RSU and sugarcane biomass) can be obtained, respectively, 1,769 MW, 1,382 MW and 1,821 MW in 2015, and 7,769 MW, 4,682 MW, 7,871 MW in 2030.
Thus, the installed capacity of renewable sources in the Brazilian electricity matrix shall have a share of 3.64%, -1.29% of SHP, 1.01% wind and 1.33% of bioelectricity - in 2015 and 9.04%, - 3.45% SHP, 2.08% wind and 3.50% of bioelectricity - in 2030. The increase in installed capacity between 2005 and 2015 for SHPs, wind farms and alternative UTE (RSU and sugarcane biomass) will be 1,191 MW, 1,353 MW and 1,565 MW, representing 2.79%, 3.17% and 3 67% of additional capacity over the forecast period. The increase in installed capacity between 2005 and 2030 for SHPs, wind farms and alternative UTE (RSU and sugarcane biomass) will be 7,191 MW, 4,653 MW and 7,615 MW, representing 5.50%, 3.56% and 3 82%
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of additional capacity over the forecast period. That is, it can be observed that SHPs will have a more important percentage share in the additional installed capacity between 2005 and 2030 in relation to the period between 2005 and 2015.
The installed capacity expansion until 2030 including the 2005-2015 and 2015-2030 periods are presented in Table 26.
Table 26: Long-Term Electricity Supply Expansion, per Generation Source (MW)
Installed Capacity Source: 2020 2030
Hydroelectric 116100 156300
Thermal 26897 39897
Natural gas 14035 21035
Nuclear 4347 7347
Coal 3015 6015
Others : 5500 5500
Alternatives 8783 20322
SHP 3330 7769
Wind centrals 2282 4682
Sugar cane 2971 6571 biomass
RSU 200 1300
Importation 8400 8400
TOTAL 160180 224919 Source: EPE (2007b)
Table 27 presents a comparison between PNE 2030 and PDE 2019. Despite the short- term sector planning presented by the PDE 2008-2017 has taken distance from the long-term planning (PNE 2030), the PDE 2010-2019 resumed participation of renewable sources in the Brazilian electric matrix, particularly after 2013, when fossil sources stagnate and generation expansion of will be based solely on hydro, biomass and wind sources.
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Table 27: Additional installed capacity forecasted per source for the PNE 2030 and the preliminary version of the PDE 2010-2019.
PDE 2010-2019 PNE 2030 (MW) (MW)
Source: 2005-2015 2015-2030 2005-2030 2010-2019
Hydrelectric1 30900 57300 88200 33530
Thermal2 7645 15500 23145 10423
Alternative thermal3 1565 6050 7615 3141
Total thermal 9210 21550 30760 13564
Wind centrals 1353 3300 4653 4605
SHP 1191 6000 7191 2923
TOTAL 42654 88150 130804 54622
Notes: 1 Grande size; 2 Natural gas, coal, nuclear and others; 3 Sugar-cane biomass, solid waste.
Source: EPE (2009a), EPE and MME (2010), EPE (2007b)
Although the corresponding ten-year periods are different (2005-2015 in the case of PNE 2030 and 2010-2019 for the PDE), for comparison purposes, it is important to notice an increase in the participation percentage of alternative sources in relation to the total installed capacity expansion forecasted by the plans. In the PNE 2030, biomass thermals, wind and SHPs plants have an installed capacity in 2015, respectively, of 1,821 MW, 1,382 MW and 1,769 MW, well below the expected installed capacity foreseen by PDE 2019 for the same sources in the same year (5,566 MW for SHPs, 7,421 MW for biomass, and 4,441 MW for wind sources).
In the PNE 2030, alternative sources (biomass thermals, wind, and SHPs) account for 9.63% of the planned expansion between 2005 and 2015. In the PDE 2010-2019 these sources' share represents 19.53% of the planned expansion between 2010 and 2019. Figure 9 presents the percentage, per source, of installed capacity for electric generation in 2015 and 2020 according to the PNE 2030, and shows that the PNE 2030 projected for 2015 a higher large sized hydroelectric installed capacity than expected to the same year by the PDE 2019, while renewable sources have a much lower percentage share.
Figure 9: Installed capacity per source for electricity generation in 2015 and 2020 according to the PNE 2030
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NON-OFFICIAL PROJECTIONS
There are several studies showing projections for the national energy matrix pointing out that it is possible to increase the share of renewable sources and, at the same time, have a more efficient use of electricity. Table 28 summarizes works' information: The World Energy Outlook 2006 (IEA, 2006), Brazil - A Country Profile on Sustainable Energy Development (IAEA, 2006) and energetic [r]evolution - Perspectives for a global sustainable energy (EREC and Greenpeace, 2007), which point to the possibility of a greater use of renewable sources in cases where there is a concentration of efforts (policies, legislation, mechanisms, fiscal and economic incentives, among others) for their promotion.
Table 28: Scenarios for renewable sources in 2015, 2020 and 2030
Shift Scenario (GW) Reference Scenario (GW) Alternative Policies and Energy Revolution Scenarios (GW)
2015 2020 2015 2020 2030 2015 2020 2030
Biomass N.A. N.A. 3** N.A. 5** 3** 13.9*** 5**; 20.7***
Wind 2.4* 6.3* 3*; 1** 7.8* 4** 1** 6*** 5**;15*** Geothermal N.A. N.A. 0** N.A. 0** 0** 0*** 0**; 0***
PV N.A. N.A. 0** N.A. 0*** 1** 0** 2**;1*** CSP N.A. N.A. 0** N.A. 0***
Ocean N.A. N.A. 0** N.A. 0** 0** 0*** 0**; 0***
Source: * IAEA (2006); ** IEA (2006); *** EREC and Greenpeace (2007)
Note: N.A.= not available
Renewable Sources
Wind energy
In the first Alternative Sources Auction, held in June 18, 2007, no wind project has been contemplated (eight projects attended the event, but were not considered able to participate). In the second Reserve Power Auction, specific for wind power, held in December 14, 2009, 1,805.70 MW were contracted, with operation startup scheduled for 2012. In the second Alternative Sources Auction, held in August, 25 and 26, 2010, 2,047.8 MW in wind projects were contracted, with operation startup scheduled for 2013.
The Brazilian Wind Power Potential Atlas, launched in 2001, and prepared when the existing largest turbines were near 2 MW, while they presently exceed 6 MW, highlighted a potential of 143 GW. However, according to preliminary results of the new Brazilian wind atlas, still under development, the Brazilian wind potential exceeds 250 GW (Ecol News, 2010).
SHP (≤ 30 MW)
In Brazil, the main incentives given for insertion of SHPs in the Brazilian electrical matrix were given by Proinfa and by the alternative sources auctions. Proinfa contracted a power of 1,191.24 MW, which deadline for operation start is December 2010. In the 1st and 2nd Alternative Sources Auctions were hired, respectively, 96.74 MW and 131.5 MW in SHPs, with startup set for 2010 and 2013. The SHPs' installed capacity in 2010 is 4,043 MW (EPE and MME, 2010).
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Biomass
The country has a great potential in using biomass for electricity generation, especially from sugar cane bagasse. The PNE 2030 recognizes this potential and forecasts a greater participation of this source in the electric matrix.
According to Walter and Ensinas (2010), considering the necessary assumptions regarding the evolution of sugarcane crushing and the need for new power plants until 2025, the potential to generate electricity from sugar cane bagasse amounts to 26,540 MW in 2025
Proinfa played an important role in the early establishment of an electric energy generation market for from biomass. Nonetheless, the source did not reach the 1,100 MW forecasted by the program after the end of two public calls, 685.24 MW were contracted.
Some explanations have been suggested: the economic situation that the market was living at that time, the very attractive values prevailing in the international sugar market, making mill owners prefer to invest in a business that was already technologically dominated, instead of getting under Proinfa; the economic value established for biomass was considered relatively low; uncertainty among investors, with regard to how much investment would be needed to produce the energy to be delivered to the network; the requirement that the entrepreneurs meet all the criteria presented in to license each source, i.e., submit documents for legal, fiscal, economic, financial and technical homologation19, among others (Martins, 2010).
However, the 1st Energy Reserve Auction and the 2nd Alternative Sources Auction have contracted a potential above the Proinfa initial provision, ensuring greater insertion of the source in the national electricity matrix, as shown in Table 29.
Table 29: Specific auctions for renewable sources that contemplated biomass
Type Date of completion Entry into operation Contracted power (MW)
1st Alternative Sources Auction 18/Aug/2007 2010 541.9
2009 229.5 1st Reserve Auction 14/Aug/2008 2010 2149.9
2nd Alternative Sources Auction 25-26/Aug/2010 2013 712.9 (A-3 and Reserve)
Technological advances have increased the prospect of greater efficiency in the use of bagasse and straw for electricity generation. The greatest potentials are in the existing plants retrofitting steam generation plants, still concentrated in steam turbines operating at 22 bar/320°C (systems that only enable self-sufficiency in electricity supply) and 42 bar/420°C (which allow the generation of a modest electric surplus). It is verified that the national most modern systems of steam turbines currently sold to the sugar cane industry are turbines operating with steam input at 65 bar and 490 °C and with condensation systems, controlled extraction and back pressure (CGEE, 2010).These systems allow the production of surplus electricity.
The reasons often given by the area experts for low utilization of retrofits is the high rate of return on investment applied in the sugar-alcohol sector, often preferring to invest in new
19 The difficulties of attaching numerous certificates especially regarding labor aspects, considering the large number of formal and informal manpower associated directly or indirectly to agricultural and industrial production of sugar and alcohol, are cited as a factor in the lack of interest by the sugar cane industry (Martin, 2010).
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plants than do the retrofit the existing ones. Regulatory issues, tax and information aspects are also considered.
In the second Alternative Sources Auction there were no retrofits contracting, a source where lies the great bioelectricity potential. To some experts the shy biomass results in the second Alternative Sources Auction entails from persistent connection to the net, finance and taxation problems, which, in turn, lead to a dismantling of the national industry of goods and equipment for bioelectricity (PCH Portal, 2010).
The PNE 2030 considers that the technology most likely to be used for electricity generation using sugar cane biomass is the steam cycle with backpressure turbines, more efficient than the current steam cycle used. However, the operation still uses this technology, restricted to the period of sugar/ethanol production (during the harvest). The cycle with condensation and extraction, which is independent of the harvest period (but requires access to major water sources) shall gain ground from 2020 onwards, but will remain a minority. With these assumptions, it is estimated a surplus generation capacity of 6,830 MW in 2030, "of which 2,480 MW associated to the processing capacity of 2005" (ESE, 2007b, p.186).
For RSU, the estimate is 17.55 GW likely to be installed until 2030. Thus, "It was considered that the energy exploitation of RSU would be a large scale alternative after 2015" (EPE, 2007b, p.189). The potential of the rice sector is 200 to 250 MW at current production level, and silviculture (forestation) falls between 1,434 and 2,867 MW.
Table 30 illustrates the capacity to generate surplus electricity from sugar cane/alcohol biomass industry in accordance to the PNE 2030.
Table 30: Regional distribution of surplus electric power generation capacity from the sugar cane/alcohol sector biomass according to thermal-electrical generation technologies employed in expansion and retrofitting in the sugar cane industrial sector in Brazil - MW
2015 2020 2030
Capacity to generate surplus electricity 3106 4111 6829
North 5 6 10
Northeast 494 654 1087
Southeast 1962 2597 4315 South 210 278 462
Mid-west 434 575 955
Source: EPE (2007a, p.188)
Geothermal energy
From Jannuzzi et al. (2008) is obtained that geothermal sources in Brazil are found between 400 and 1,500 meters deep and that the absence of volcanic regions in the Brazilian territory explains the low temperatures of the sources.
A survey by the Institute for Technological Research of São Paulo shows that Brazil hides underground an energy potential estimated at 3 GW. A source such as the one at Presidente Prudente (63 º C at 1400 meters deep) can reach 5 MW (Jannuzzi et al., 2008).
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However, given the low temperatures, its main use in the country will be in direct applications20. No other study was identified by the team on this subject in Brazil.
Solar PV
The use of PV systems in Brazil is largely applied in isolated areas without access to the electric network. Much of the existing systems in the country were installed through the Program for Energy Development of States and Counties (Programa para o Desenvolvimento da Energia nos Estados e Municípios -PRODEEM), in existence since 1994 and linked to the MME, for applications in water pumping, street lighting and collective energy systems (schools, clinic and telephone stations, community centers).
Systems in operation connected to the network between 1995 and January, 2010, totaled only 171.32 kWp, being mostly for research purposes (Zilles, 2010).The work group established in 2008 under the MME is finalizing a set of public policy proposals for creating a market for PV systems connected to the network.
Despite the PNE's 2030 consideration that solar PV will remain restricted to isolated systems, except if a significant drop in installation prices occurs, the elaboration of the PNE 2035 is already considering solar PV as a source that will get some penetration in the plan horizon.
While there are no national policies in this direction, some States are taking their own initiative, as is the case of Ceará. It was granted by the Brazilian Agency of Electrical Energy (Agência Nacional de Energia Elétrica-ANEEL) the construction in Tauá (Ceará) of the first plant to generate solar PV21 for commercial use in the country with 5 MW of power, greatly increasing the installed capacity of Grid-Connected PV Systems (Sistemas Fotovoltaicos Conectados à Rede-SFCRs) in Brazil (Souza, 2010).
In the chapter on incentive institutions for renewable sources and in the chapter on incentive policies, this initiative will be approached once again, since the plant will benefit from the creation of the Investment Fund on Solar Energy (FIES - Fundo de Investimento em Energia Solar) by the Government of the State of Ceará.
Ocean energy (waves and tides)
In Brazil ocean energy is still an incipient area. There are few investments and low priority in the sector, but there are important seminal initiatives underway, such as the installation of a tidal power plant at Pecém's breakwater of the Multiple Utilities Terminal, of the Industrial Complex and Harbor (Pecém-Ceará) with expected installed capacity of 100 kW The plant shall operate for three years for assessing the technology that takes advantage of wind regularity and frequency of waves on the coast of Ceará for energy generation (IAC, 2010).
20Direct use is with heat exchange pump, system generally used for heating homes and commercial buildings. That is, the Brazilian potential for indirect use of geothermal energy (as for electricity generation) is minimal. 21 The plant will have, initially, a capacity of 1 MW, involving investments of about R$ 10 million, with support from the Interamerican Development Bank (IDB), and will be expanded to 5 MW. Initially, MPX foresaw for a 50 MW solar power plant, costing $ 250 million, which was considered expensive by investors. According to the company, expanding to 50 MW will depend on the cheapness of the equipment. In an attempt to reduce equipment costs, the State Government is working to attract manufacturers of solar panels to Ceará and plans to create a center for solar energy in the region of Inhamuns (Souza, 2010).
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The sector may take advantage of cross-sector knowledge of the national oil and gas industry. However, it is still not known the Brazilian potential for the exploitation of energy resources on the national coast, there are only preliminary figures, which give 114 GW of wave power, but there are no estimates for Brazil's energy potential from currents (Jannuzzi et al., 2008).
Concentrated Solar Power (CSP)
This is a technology that has been receiving substantial investment in some countries in the world with specific conditions of solar irradiation, as is the case of Spain, the United States and countries in northern Africa.
In Brazil it is incipient. It is expected the construction of the solar thermal power plant of Coremas (Paraíba), with a generating capacity of 50 MW. In the chapter on incentive institutions for renewable sources this initiative will be addressed again.
Brazil does not have any official projection on generating electricity from solar concentrators.
Study by Greenpeace projects for 2015 and 2020 the installed capacity and annual electricity generation for the country by CSP, since incentivized (Table 31). The scenario made by Greenpeace and Estia is based on improvements to the CSP technologies and on an increasing number of countries supporting this technology. However the study does not provide more detail on the assumptions adopted for the preparation of scenarios.
Table 31: Projection of installed capacity and electricity generation from solar thermal concentrators
Latin America Brazil Chile
MW MWh MW MWh MW MWh
2015 390 975000 195 487500 195 487500
2020 1940 4850000 970 2425000 970 2425000
Source: Greenpeace and ESTIA (2003)
The work consists of five parts: fundamentals of solar thermal electricity; technology, costs and benefits; the global solar thermal market; the future of global thermal electricity and policy recommendations.
3.1.6 CENTRAL AMERICA
In Central America, where there still is a significant fraction of the capacity to generate electricity from hydroelectric plants, the recent years' growth has been based on plants that rely on fossil fuels (imported fuels) which became an economic problem with their prices increase. This impact on prices was precisely the motor of a search for diversification strategies that just outlines a few changes.
An important factor in this scenario, mainly in Central America, is a regional interconnection project, called SIEPAC, which consists of a regional electric transmission system that will strengthen Central America power net and that will connect with Mexico22.
This project will modify the terms and the generation logic in the region because it will allow the implementation of relatively large projects in countries that will not depend on their
22 http://www.eprsiepac.com/descripcion_siepac_transmision_costa_rica.htm
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local markets to develop, enabling them to be designed and built for larger markets. Thus, some hydroelectric projects in countries like Nicaragua can find, through the SIEPAC, demand to justify them.
The electricity market
Potential and Installed Capacity
Central America is a region where the use of renewable energy for electricity generation has always been higher than the use of fossil fuels, but the increasing participation of these made the capacity of centrals operated with fossil fuels to exceed the hydroelectric production
In 2008, electricity generation in the region reached 39.399 GWh, of which 63% came from the exploitation of the main renewable sources: hydro, biomass, geothermal and to a lesser extent, wind. Other 37% were generated using hydrocarbons (CEPAL, 2009).
In the analysis by country, there are significant differences: Nicaragua and Honduras have a high dependence on the use of oil for electricity generation, which is higher than 60%. El Salvador, Guatemala and Panama, use fossil fuels to generate electricity at a rate that varies from 35% to 45%. On its turn, Costa Rica depends on the plants that operate on fossil fuels to generate only 7% of its electricity (CEPAL, 2009c).
The share in total production by country shows that Costa Rica and Guatemala are the countries with the largest electricity generation with 24% and 20% respectively, followed by Honduras with 17%, Panama with 16%, El Salvador with 15% and finally, Nicaragua with 8% (Figure 10).
Nicaragua Costa Rica 8% 24% El Salvador 15%
Panamá Guatemala 16% Honduras 20% 17%
Figure 10: Electricity generation in Central America, percentage share per country, 2008
Source: CEPAL (2009)
With regard to installed capacity, in 2008 Central America had 10,223 MW installed, being 46% supplied by thermoelectric plants using fossil fuels, 42% by hydroelectric, 5% by geothermal, 7% employing co-generation and 0.7% using wind turbines (Figure 11).
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6,7% 0,7% Thermopower plants (fuel oil, diesel, coal) 4,9%
Hydropower plants 45,8%
Geothermal plants 41,9%
Cogeneration (sugarcane bagasse)
Wind power plants
Figure 11: Installed capacity in Central America, 2008
Source: CEPAL (2009)
With regard to the installed capacity using renewable sources, more than 84% are hydro, around 7% are biomass and a little less than 5% are geothermal. A relatively minor amount derives from wind power plants, which are all installed in Costa Rica (Table 32).
Table 32: Installed capacity using renewable energy in Central America, 2008
Installed capacity using renewable energy, 2008 (MW) Total Country Renewable Hydroelectric Geothermal Wind Biomass Solar Total Sources
Costa Rica 1524 166 70 20 0 1780 2447
El Salvador 486 204 0 109 0 799 1441
Guatemala 776 44 0 351 0 1171 2251
Honduras 522 0 0 80 0.11 602 1581
Nicaragua 105 88 0 127 0 320 880
Panama 870 0 0 0 0 870 1623
Total 4283 502 70 687 0.11 5542 10223
Source: CEPAL (2009)
Expansion Plans and Considered Projects
To meet the future demand several options are considered: gas turbines, medium- speed engines, combined cycle and coal thermoelectric plants. As renewable energy sources hydraulic and geothermal units are considered (CEAC, 2009).
The design capacity of renewable sources in the region, according to each country official sources, is just over 1,000 MW, of which 77% employ hydropower, 10.5% employ wind power, 10% comes from biomass and the remaining 2.5% from geothermal sources (Table 33).
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Table 33: Designed capacity to be installed using renewable sources in Central America by 2015
Designed capacity using renewable sources by 2015 (MW) Country Total Hydroelectric Geothermal Wind Biomass
Costa Rica N.A. N.A. N.A. N.A. N.A.
El Salvador(1) 33 14 N.A. N.A. 47
Guatemala (2) 325 1.5 15 N.A. 341.5
Honduras (3) 409 N.A. 100 110 619
Nicaragua 12 10 N.A. N.A. 22
Panama 60 N.A. N.A. N.A. 60
Total 839 25.5 115 110 1089.5
(1) Design capacity (2008). Statistical Report of the Administrator of the Wholesale Market in http://www.infoiarna.org.gt/media/file/areas/energia/legislacion/Politica%20Energetica%202008-2015.pdf;
(2) Design capacity according to the Electric Power National Commission in http://www.cnee.gob.gt/PET/ ;
(2) Design capacity as the National Electric Power Company in http://www.enee.hn/PDFS/plan_exp_2008_2022.pdf
Renewable Sources
Wind energy
Costa Rica and Nicaragua are the only countries that in late 2009 had wind power generation: respectively, 95.6 MW and 40 MW (CEPAL, 2009).
In terms of wind energy development potential in the region, estimates made by the programs of Resource Assessment of Solar and Wind Energy (Solar and Wind Energy Resource Assesment, Global Environment Facility) and by the United Nations Environment Program indicate that there is an area of 12,969 km2, with moderate wind potential, with the exception of Nicaragua, where there is a considerable wind power potential of more than 400 W/m2 (CEPAL, 2007).
SHP
In end of 2008, the installed capacity of hydroelectric power in Central America was 4,270 MW, which produced about 42% of the region electricity (CEPAL, 2009).
In the region there is still significant potential for hydropower generation, which was estimated at 22,000 MW, of which only 19% have been explored so far, i.e., there are still almost 18,000 MW that could be used (Table 34).
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Table 34: Central America hydroelectric potential, 2008 (MW)
Country Installed Potential To be developed
Costa Rica 1524 5802 4278
El Salvador 486 2165 1679
Guatemala 776 5000 4224
Honduras 522 5000 4478
Nicaragua 105 1760 1655
Panama 870 2341 1471
Total 4283 22068 17785
Source: CEPAL (2009) and CEPAL (2007)
Panama, Costa Rica and Guatemala are the countries that are in better position to generate hydroelectricity, as they have a higher number of hydroelectric projects under construction, concession, licensing and with completed feasibility studies. El Salvador began construction of a hydroelectric project of medium capacity, while Honduras and Nicaragua have good expectations, due to recent calls for tender, concessions and contract awards (CEPAL, 2009).
Biomass
In Central America there is a significant use of biomass for electricity generation, particularly with sugar cane bagasse. In 2008, this type of energy was used to generate 1.662 GWh in an installed capacity of 685 MW (CEPAL, 2009).
In terms of potential, it is estimated that there are 27 plants that could produce 1,200 GWh (CEPAL, 2009). By its turn, a study on the supply and consumption of biomass has been done in Costa Rica, which showed a potential capacity of 635 MW for electricity generation (MINAE, 2007).
Geothermal energy Although to a lesser extent, Central America has played an important role in the development of geothermal energy in the world. El Salvador uses geothermal energy to generate electricity since 1975 and today it is an important alternative source of electricity generation in the region, representing approximately 5% of total installed capacity and generating 8% of energy in the region.
According to various studies, the estimated geothermal potential of Central America is about 3,000 MW, of which only 15% were used (Table 35). In a large part, its relatively low use is explained by high operating costs and the financial risks it entails23. It also faces limitations and environmental constraints, as is the case of Costa Rica, where only 69 MW are operated, while having a potential of nearly 870 MW (CEPAL, 2009, CEPAL, 2007).
23 By one side, the relatively small size of the possible uses and, on the other, the high fixed costs and uncertainty associated to exploitation, raise the price of their possible development.
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Table 36: Installed capacity and geothermal potential in Central America, 2008 (MW)
Country Installed Potential To be developed
Costa Rica 166 235 69
El Salvador 204 333 129
Guatemala 44 1000 956
Honduras 0 120 120
Nicaragua 88 1200 1112
Panama 0 40 40
Total 502 2928 2426
Source: CEPAL (2009) and CEPAL (2007)
Solar PV and CSP (Concentrated Solar Power)
Although it is an obvious resource for electrification of areas without electricity in the region, Central America has a reduced installed capacity. Specifically, it is reported that Guatemala has 3 MW, Honduras 1 MW and Costa Rica 220 kW (CEPAL, 2007).
However, its usage potential is good. Estimates made by the solar and wind program (Solar and Wind Energy Resource Assesment, Global Environment Facility) of the United Nations Indicates that the values of insolation in the region are in the range of 4-7 kWh/m2 per day (ECLAC, 2007).
In turn, market studies from the World Bank for PV systems in rural areas of Honduras and Nicaragua, have identified potentials of 51 MW and 34 MW, respectively. Likewise, it is estimated that the region may have potential for rural solar applications of nearly 250 MW (CEPAL, 2007).
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3.1.7 CHILE
The electricity market
Table 37: Projections of Renewable Energy in Chile
(MW) 2015 2020 2025 2030 2040 2050
10 2;10 3;10 4; 550 5; 970 8; 0 210 2 ; 210 3; 476 1; 650 5; 1014 6; 974 7; CSP 750 5; 011 1000 5; 011 195 8 11 250 4 011
100 2 ; 100 3; 4643 5; 1930 9; 507 6; 779 Solar PV 42, 43, 44 37145; 011 5804 5; 011 8357 5; 011 150 4 7; 011
3802; 4203; 4612; 5013; 4761; 26935; 1286 9; 3880 5; 4972 5; Biomass 3002; 3143; 4004 6454; 17425; 903 4 100011 100011 100011 100011
2404 10;1905 1; 3302; 9983; 178715; 235745; Wind 61225; 100011 5 9 6 12004 12245 ; 2894 ; 6224 ; 300011 300011 200011
8102 ; 9403 ; 43710; 9521 ; 15505; 28949; 4417 5;1000 Geothermal 1302; 1303; 1304 4885; 011 2725 5; 011 14004 20276; 011 11
Oceans 0 11 5 5 ; 389 7;0 11 100 5;0 11 250 5; 0 11
14212; 16533; SHPs 6162 ; 6763; 6754 4761; 10136 18504
Notes: 1UTFSM scenario (Plataforma Escenarios, 2010); 2Conservative scenario (Universidad de Chile et al., 2008); 3Dynamic scenario (Universidad de Chile et al., 2008); 4Dynamic-plus scenario (Universidad de Chile et al., 2008); 5Energetic Revolution scenario (Greenpeace and EREC, 2009); 6Chile Sustentable scenario (Plataforma Escenarios, 2010); 7Ecosystems scenario (Plataforma Escenarios, 2010); 8(Greenpeace and ESTIA, 2003); 9Mainstream scenario (Plataforma Escenarios, 2010); 10Universidad Adolfo Ibáñez scenario (Plataforma Escenarios, 2010); 11Reference scenario (Greenpeace and EREC, 2009).
Potential and Installed Capacity
The Chilean electric matrix has an important share of fossil fuels, which accounts for 60% of the national energy matrix (CNE and GTZ, 2009, p.25).
Chile has four interconnected electrical systems. In December 2007 the Great Northern Interconnected System (Sistema Interconectado do Norte Grande -SING) owned 28% of the installed capacity in the country and attended to only 5.8% of the population, being its generation predominantly thermal and focused on the mining industry. In the same year, the Central Interconnected System (Sistema Interconectado Central -SIC) had 71% of the installed capacity in the country and attended 90% of the population; the Aysen electrical system corresponded to 0.4% of the national installed capacity and the Magallanes electrical system corresponded to 0.6% of the national installed capacity.
The Chilean energy sources are very limited. Own oil covers less than 10% of the country needs, coal is of low quality, and the significant hydropower reserves are away from Santiago, the main load center of the country (Barroso et al., 2009, p.18). All these features have made the Argentinean natural gas, a cheap and abundant alternative, resulting in an energy integration protocol signed in 1995 between the two countries (Barroso et al., 2009).
This situation increased the Chile's dependence on Argentina's natural gas. The scenario was complicated irreversibly since 2004, when the Secretariat of Energy of Argentina passed Resolution 659/2004, which authorized natural gas to supply mainly domestic market in
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detriment of exports, thereby triggering a series of restrictions that would affect Chile (Universia, 2007).
In August 5, 2005 the Argentine government imposed a rationing reducing by 59% the total volume of gas exported to Chile. In May 17, 2007 restrictions reached their most critical point reaching 64% of total exports, which resulted in a reduction of 14.1 million cubic meters of product, while the daily imports from Chile were at 22 million cubic meters (Universia, 2007).
Due to the energy crisis experienced in Chile during the years of 2004 and 2005 a reform in the electricity sector for regulation of generation and transmission segments was made. The high share of hydroelectricity and reductions in Argentine natural gas have created a risky environment for investment in new generation capacity, mainly due to the volatility of the spot market.
Figure 12 shows the evolution of the main sources of power generation in the SIC and SING, including natural gas.
Figure 12: Electrical generation SIC +SING: 1996-2008.
Source: CNE (2008, p.44)
The installed capacity of renewable sources, excluding large hydropower plants, was 345 MW in late 2008 and accounted for 2.63% of national installed capacity (Table 37).
Table 38: Installed Capacity of Electrical Systems in Chile (2008)
(MW) 2008
Solar PV Solar Thermal Wind Biomass SHP ( <20 MW) Hydro Thermal Total
Total - - 20 166 159 4784 8007 13137
Source: IEA (2009, p.138)
Expansion Plans and Considered Projects
In spite of Chile not having government expansion plans including projections for generation from renewable alternative sources, the government, through the National Energy
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Commission (Comisión Nacional de Energía-CNE), has published studies on the integration of renewable electricity sources into the Chilean market, on the wind and solar energy potential in the regions of Arica and Parinacota, Tarapacá and Antofagasta and on the biomass and forest biomass potentials in the country.
The main regulatory mechanism for encouraging renewable sources in Chile is based on the quota system and was created by Law 20.257. This law stipulates that 10% of the energy sold in the SIC and SING in 2024 are derived from renewable alternative energy sources. The new government's target, although without any official policy to such end, is to achieve 20% of the total energy capacity from renewable sources by 2020, implying annual installation of 500 MW of clean energy in the next decade (ACERA, 2010)
Following are some studies done by NGOs, foundations and academic institutions, in which are presented projections and scenarios for renewable and alternative sources in Chile.
POTENTIAL CONTRIBUTION OF NON-CONVENTIONAL RENEWABLE ENERGY AND ENERGY EFFICIENCY OF THE ELECTRICAL MATRIX, 2008 - 2025
The study carried out by Studies and Research Energy Program of Public Affairs at Chile University and Nucleus Industrial Electronics and Mechatronics of Center for Energy Innovation at the Technical University Federico Santa María estimates the potential of unconventional renewable energy sources (energías renovables no convencionales-ERNC) in Chile between 2008 and 2025 considering the electricity market operation under the current regulatory framework and a market economy environment. The provisions of the new ERNCs law establishing mandatory targets for generation companies were considered, which should ensure that, from 2010 onwards, 5% of the electricity supplied to distributors and customers comes from ERNCs, increasing the percentage by 0,5% per year from 2015 till 10% in 2024 (Universidad de Chile et al., 2008).
The study developed three scenarios: conservative, dynamic and dynamic-plus. Each one had different assumptions about the price of energy and its increase. Table 38 presents the economic and technically feasible capacity in the SIC according to the scenarios developed for the period between 2015 and 2025.
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Table 39: SIC Installed Capacity (MW)
2015 2020 2025
Sources Scenarios
Conservative Dynamic Dynamic-plus Conservative Dynamic Dynamic-plus Conservative Dynamic Dynamic-plus
SHP 616 676 675 1065 1198 1281 1421 1653 1850
Geothermal 130 130 130 355 485 500 810 940 1400
Wind 118 298 440 218 618 800 330 998 1200
Biomass 300 314 400 380 420 645 461 501 903
Solar 10 10 10 110 110 140 210 210 250
PV 4 4 4 20 20 30 100 100 150
Total 1178 1432 1659 2148 2851 3396 3332 4402 5753
Source: Own development (Universidad de Chile et al., 2008)
Figure 13 shows the share evolution of each source in the SIC according to the developed scenarios and shows the gain of importance mainly of geothermal, solar PV and CSP sources.
Figure 13: Evolution of installed capacity (MW) of renewable sources in the SIC between 2015 and 2025 for each scenario
Source: Own development (Universidad de Chile et al., 2008)
ENERGY [R]EVOLUTION - A FORECAST OF A ENERGY SUSTAINABLE CHILE
The study is based on two scenarios: the reference and energy revolution (Greenpeace and EREC, 2009).
The Energy Revolution scenario was built in order to stabilize emissions in the energy sector in Chile until 2020 and reduce emissions by 21% in 2050. The Energy Revolution scenario is characterized by significant efforts for energy efficiency in order to fully exploit its potential, and use all cost effective renewable sources to generate heat, electricity and produce biofuels.
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Table 39 illustrates these scenarios, where one can observe a considerable share of renewables growth in total installed capacity for electricity generation in the Energy Revolution scenario, reaching 96.3% of the total installed capacity by 2050. In contrast, in the reference scenario the share of renewable sources in the total installed capacity by 2050 is 37.29% and it can be observed a share reduction of renewable sources starting in 2010. The study foresees a contribution of 40.74% and 72.41% of installed capacity from renewables by 2020, respectively, in the reference and Energy Revolution scenarios.
Ocean energy is the only alternative and renewable source that does not appear on the horizon by 2050 in the Energy Revolution scenario. In spite of solar PV and CSP energy not appearing until 2050 in the reference scenario, the participation of both is anticipated for 2020 in the Energy Revolution setting. During the period, wind energy is the fastest growing renewable source in participation.
Table 40: Reference and RE scenarios in Chile.
GW 2010 2020 2030 2040 2050
Reference Scenario
Total generation 17 27 37 48 59 Renewable 8 11 14 17 22
Hydroelectric 8 9 11 13 16
Wind 0 1 2 3 3
PV 0 0 0 0 0
Biomass 0 1 1 1 1
Geothermal 0 0 0 0 1 Solar Thermal 0 0 0 0 0
Oceans' energy 0 0 0 0 0
Participation (%) 47.05 40.74 37.84 35.42 37.29
RE Scenario
Total generation 18 29 37 44 54
Renewable 8 21 30 40 52 Hydroelectric 8 9 9 9 9
Wind 0 6 12 18 24
PV 0 4 5 6 8
Biomass 0 2 3 4 5
Geothermal 0 0 2 3 4
Solar Thermal 0 1 1 1 1 Oceans' energy 0 0 0 0 0
Participation (%) 44.44 72.41 81.08 90.90 96.30
Source: Greenpeace and EREC (2009)
ENERGY MATRIX 2010-2030
With the aim of contributing to a realistic and serious discussion around the Chilean energy matrix, Empresas Eléctricas A.G., Fundación AVINA-Chile, Fundación Futuro Latinoamericano, Fundación Chile and Universidad Alberto Hurtado have organized the
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seminar "Energy Matrix 2010-2030. Building scenarios, innovating and breaking paradigms: discussion for a energy-electrical vision for Chile "(Plataforma Escenarios, 2010).
The seminar's key input is the discussion of different scenarios for electricity generation in 2030, resulting in the scenarios: Chile Sustentable, Ecosystems, Mainstream Renewable Power, Universidad Adolfo Ibanez and Universidad Técnica Federico Santa María, all centered in the Chilean SIC and prepared respectively by NGOs Chile Sustentable and Ecosystems, by the English group Mainstream Renewable Power and universities Universidad Adolfo Ibáñez and Universidad Técnica Federico Santa María.
During the seminar the "Plataforma Escenarios Energéticos-Chile 2030" was launched, for the joint construction and open discussion of different scenarios for electricity generation in 2030 (EI, 2010).
Table 40 summarizes the scenarios prepared by the aforementioned institutions, in which one can observe a considerable variation in installed capacity by source in function of the assumptions made for each scenario.
Table 41: Scenarios and their investment costs
Installed capacity per scenario (MW)
Universidad Adolfo Universidad Federico Sources Mainstream Ecosystems Chile Sustentable Ibáñez Santa Maria
Wind 2404 (onshore) 2894 (onshore) 779 (onshore) 6335 (onshore) 1905 (onshore)
2027 Geothermal 437 (hydrothermal) 1608 (steam) - 952 (hydrothermal) (hydrothermal)
PV - 1930 779 507 -
CSP - - 974 1014 476
Oceans - - 389 (tides) - - 1168 (ethanol Biomass - 1286 760 (BIGCC25) 476 CCGT24)
Hydro ERNC - - - 1.013 476,22 (<20MW)
Total investment costs (MUS$ )
16808.15 28747.78 14567.78 16958.098 16744.25
Source: Plataforma Escenarios (2010)
Renewable Sources
Wind energy
The proven potential of wind energy in Chile is 6,000 MW (Mocarquer, 2009), but one can find a wind potential of up to 10,000 MW (Oliva, 2008).
Between 2008 and 2009, Chile had the largest increase in installed capacity for wind generation in Latin America and the Caribbean, corresponding to 740% (increased from 20 MW in late 2008 to 168 MW in late 2009). Its wind generation installed capacity falls only behind Brazil and Mexico in late 2009 (GWEC, 2010a). Despite the relatively low participation of wind
24 CCGT: Natural Gas Combined Cycle.
25 BIGCC: Integrated biomass gasification by combined cycles.
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energy in Chile, the expectation is that there is a significant increase in installed capacity for wind generation, since the country is identified as a key driver for wind power generation in Latin America (Gautier, 2010 ).
In CNE and GTZ (2009), it is possible to obtain the approved environmental impact studies for wind projects totaling 1,344.35 MW (as of August 31, 2009).
SHP (≤ 20 MW)
The potential for exploitation of hydropower generation through SHPs in Chile is still very little studied since large projects have been prioritized (Oliva, 2008).However, the proven and known potentials by the CNE in July, 2009, were 2,600 MW (Mocarquer, 2009).
In CNE and GTZ (2009), one obtains that the approved environmental impact studies for generation of electricity from SHPs amounted to 258.41 MW in August 31, 2009, reflecting the small use of this source in the country.
Biomass
In July 2009 biomass had a known and proven potential of 1,000 MW by CNE (Mocarquer, 2009), but in 2007 the installed power plants for electricity generation from biomass and in operation totaled only 190.9 MW (UTFSM, 2008a ). All plants installed until this year used black liquor from the pulp and paper industry, or forest residues as fuel.
The environmental impact studies approved for electricity generation from biomass amounted to 112.6 MW in August 31, 2009 (CNE and GTZ, 2009).
Biomass sources that have the highest gross exploitation potential in Chile are biogas, industrial waste and forest management of native forests (UTFSM, 2008a). However, the main difficulty pointed for the resource use is its distributed location and transportation. As for electricity generation, biomass competes with other uses such as biofuel production (UTFSM, 2008a).
Geothermal energy
Geothermal Power, in July 2009, had a known and proven potential of 2,000 MW according to the CNE (Mocarquer, 2009). However, studies show that the Chilean geothermal potential could reach between 3,500 MW and 7,000 MW (MCH, 2010a).
The Government of Chile, through the Ministry of Mines, started a bidding in June 2009 to grant concessions of 20 geothermal exploration areas. Figure 14 illustrates the areas that participated in this bidding, totaling 766,800 hectares. During the geothermal bidding process 59 exploration project offers were received, which granted to 9 companies the 20 concession areas. The process ended in August 24, 2009 (AreaMinera, 2009). More recently, in January 2010, another public bidding process was held awarding the grant of 17 areas for geothermal exploration to 7 groups.
According to MCH (2010a), Chile could account with at least 500 MW of installed capacity to generate electricity derived from geothermal energy by 2014.
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Figure 14: Bidding areas in June, 2009.
Source: Ministerio de Minería (2009)
Solar PV and CSP
Chile has 50% of its territory located in the sunbealt, i.e., it is located between 35 degrees north latitude and 35 degrees south latitude (UTFSM, 2008b, p.38).Figure 15 Figure 15 illustrates the direct solar radiation in the world and shows that Chile has one of the world's highest potential for solar CSP energy (as this technology only uses direct solar incident energy).
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Figure 15: Global direct solar radiation.
Source: UTFSM (2008b, p.39)
Table 41 presents the global solar radiation in various regions of the country.
Table 42: Solar Radiation in Chile
Solar Radiation Solar Radiation Solar Radiation Region [kcal/(m2 day)] [kWh/(m2 day)] [kWh/(m2 year)] I 4554 5.3 1933.2 II 4828 5.6 2049.5 III 4346 5.1 1844.9 IV 4258 5.0 1807.5 V 3520 4.1 1494.2 VI 3676 4.3 1560.4 VII 3672 4.3 1558.7 VIII 3475 4.0 1475.1 IX 3076 3.6 1305.7 X 2626 3.1 1114.7 XI 2603 3.0 1105.0 XII 2107 2.5 894.4 RM 3570 4.2 1515.4 Antarctica 1563 1.8 663.5
Source: UTFSM (2008b, p.44)
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From Table 41 one obtains that Region II (Antofagasta region) is the one with the country's highest levels of global solar radiation and is where they are located most of the initiatives for of PV plants26 development.
In December 2009 the Chilean government has presented the base of the bidding contest for the establishment of a 500 kW PV plant in San Pedro de Atacama, Region II (Antofagasta) and a CSP27 plant around 10 MW, which shall connect to the SIC or SING, in the Great North of Chile28. The event was attended by over 130 representatives from national and international companies (CNE, 2009b). The company that wins the tender for building the PV plant will be the one that requires the lowest subsidy, since the plant size is preset, and the winner of the bid to build the CSP plant will be the one that provides a greater energy production for the total amount of subsidy available. Subsidies amount to US$15 million for both plants provided by the Corporation for Production Development (Corporación de Fomento de la Producción- CORFO) and the remaining funding will be provided by the private sector (CNE, 2009b). PV and CSP plants should be operational in 2010 and 2012, respectively, (CNE and GTZ, 2009, p.172).
In August 2009 the Spanish firm Solar Park entered in the "environmental impact evaluation system" (SEIA) the environmental impact statement (DIA) of the project "Calama Solar I", a 9 MW PV solar plant with investment of US$ 40 million near to Calama, Region II (Antofagasta) (mch, 2009).The project has received environmental approval and currently the company Solarpack is negotiating with local investment funds its incorporation as partner. The company aims to develop six other projects in the country, which will total 60 MW of installed capacity in the coming years (mch, 2010b).
In January 2009 the Korean group Daekyeonsolar announced its interest to invest US$ 1,350 million in Chile for building a solar PV park with a capacity of 150 MW in the area of Copiapo, Region III (Atacama), and a factory to produce the required technology . The project would be developed in three years and the environmental study would be delivered in February 2009 (Portal Energía, 2009).
Study by Greenpeace projected an installed capacity for 2015 and 2020, respectively, of 195 MW and 970 MW (Greenpeace and ESTIA, 2003).The study does not provide further details on the assumptions adopted for the preparation of scenarios.
Ocean energy (waves and tides)
The Inter-American Development Bank (IDB) has commissioned Garrad Hassan to develop a preliminary study of marine (tidal and wave) energy in the Chilean coast. Table 42 shows the locations to be prioritized in the case of developing wave energy projects in Chile and has some of its features, included the local potential for use of waves. The work performed has not identified a site along the central coast and northern Chile with a high potential of harnessing tidal power, however, the geography of southern Chile is quite favorable. In particular, the inland sea of Chile has the shape and size sufficient to allow the occurrence of amplification of tides creating a higher elevation of the same. The phenomenon of the Chacao
26 The solar PV generation has a broader application than the CSP, because it leverages the global solar radiation (direct and diffuse) unlike solar CSP that uses only the direct solar radiation. 27 The basis of the bidding for the CSP plant establishment can be seen at CNE (2009a). 28 The Great North includes the Region of Arica and Parinacota, the Region of Tarapacá, and the Region of Antofagasta and is characterized by a desert climate because of the presence of the Atacama Desert and its extreme aridity.
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Channel is the result of a large tidal elevation difference between the Pacific Ocean and the Gulf of Ancud (Chile's inland sea top). On Table 42 it is possible to identify the Puerto de Corral and Puerto Montt as prime locations for harnessing wave energy in Chile.
Table 43: Priority sites for the development of wave energy projects and estimated annual production of energy for a wave park of 30 MW Pelamis (1km2)
Average distance for Estimated production of Closest electrical Average waves local Region O&M Base closest substation energy for a wave park of 30 networks potential (kW/m) (km) MW (GWh / year)
V Puerto Ventanas 6 220 kV 36 52.98
V Puerto San Antonio 16 66 kV - 110 kV 36 52.98
VIII Puerto San Vicente 13 66 kV - 220 kV 45 66.22
VIII Puerto de Coronel 10 66 kV - 220 kV 45 66.22
X Puerto de Corral 17 66 kV - 220 kV 50 73.58
X Puerto de Montt 27 66 kV - 110 kV - 220 kV 52 76.53
Source: Garrad Hassan (2009, p.22)
Table 43 identifies the main areas with potential for improving the generation from the tidal flow and identifies the Chacao Canal and the Strait of Magellan as the main areas for the harnessing of tidal power in Chile.
Table 44: Identified areas with good potential of harnessing tidal Power.
Potential zones Coordinates Site width (km) Site length (km) Peak flow (m/s)
Canal Chacao 41 45.5 S; 73 60.5 W 2-5 10 3.5-5
Canal Apaio 42 40 S; 73 08.2 W 2 2 ~1.8
Golfo Corcovado 43 00 S; 73 17.04 W 4 10 ~2
Boca de Gusto 43 23 S; 73 36 W 5 25 ~1.8 Chiloe SE Ápice
Canal Darwin 45 24 S; 74 17 W ~0.5 ~2 2
Angostura Inglesa 48 57.8 S; 74 25.5 W <1 1-2 1.9
Canal Gabriel 54 07 S; 70 55 W 0.5-1.5 25 2.1
Primera Angostura 52 34 S; 69 40 W 3 14 ~4 (Estreito de Magallanes)
Source: Garrad Hassan (2009, p.43)
3.1.8 COLOMBIA
The electricity market
Potential and Installed Capacity
Table 44 shows the capacity for the Colombian National Interconnected System (SIN) and non-interconnected zones (ZNI), but it should be noted that there are differences between the estimates for the installed capacity in Colombia, even among official sources.
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Table 45: Current Installed Capacity and Projections for Electricity Generation in Colombia (2009)
(MW) ZNI SIN
Solar PV Geothermal Wind Biomass SHP1 Hydro Conventional thermal Total
Natural FO and Coal Minors Total gas Diesel
Current capacity 1 0 18.4 35.02 / 134.03 472.0 8525.0 2757.0 984.0 621.0 83.4 4445.4 13495.8 (2009)
Projection 511.7; 18166.0- 55 49.9;1004 1805 12354.0 3127.07 1134.0 831.0 83.4 4965.4 (2020) 600.76 18255.1
Notes: 1 According to the Colombian definition plants with capacity below 20 MW; 2 Includes cogeneration from coal (indústrias Coltejer) and natural gas (indústrias Papeles Nacionales) due to the aggregation of data from reference; 3 Ingenio Providencia (2009); 4 Recordon (2009); 5 Nominal Power (not effective power); 6 Accounted registered but non-started projects; 7 Termocol plant of 210 MW is dual (gas/liquid fuels).
Source: XM ([s.d.]) (Effective Power); Chacon (2009); UPME (2009a) and own projects compilation.
The importance of conventional sources of electricity generation in the SIN can be seen, accounting for more than 95% of installed capacity, despite the significant growth of cogeneration between 2009 and 2008 (42.9%) (XM, [s.d.]). The largest variations in installed capacity data occur with the PV capacity, for which there are various estimates for earlier periods, and for cogeneration, due to the dynamism of the sector and form of accounting. Thus, for example, Asocaña (2010) reports the entry into operation in 2009 of the Engenho Providencia cogeneration plant, with 40 MW, but the actual installed capacity accounted for in the SIN is only the one that exceeds the plant's own consumption.
ESMAP (2007) conducts a survey of the generation potential from renewable energy sources in Colombia. However, the report indicates that studies of potential generation are insufficient and difficult, and besides access to these studies is not always possible, despite the Colombian potential being important with respect to the use of solar, wind and hydro energy.
The Colombian government, through the Energy and Mining Planning Unit aims to contract the preparation of a development plan for non-conventional sources of energy, according to UPME (2010), indicating that the sources with the best known resources are wind, solar and geothermal energy. Moreover, the Colombian government had already ordered a study on different scenarios for the inclusion of renewable sources in the Colombian generating park (Rincón, 2007), and it has published the National Energy Plan 2030, which features a section on renewable sources (Fundación Bariloche, 2010).
For wind energy, ESMAP (2007) indicates a potential for installation of 21,000 MW in the department of Guajira, with annual average winds above 6 m/s at a height of 50m, while the Colombian Atlas of Wind and Wind Energy indicates strong winds also in the departments of Magdalena, Atlántico, César, Bolívar, Chocó, Meta and Casanare (UPME, 2006). Additionally, UPME (2008) studied the inclusion of up to 1,400 MW in the Colombian system.
According to ESMAP (2007), the average daily solar radiation in Colombia is 4.5 kWh/m2, reaching up to 6 kWh/m2 in Guajira. The Colombian solar radiation atlas confirms the high level of solar radiation, also highlighting the department of Guajira, in case of wind energy (UPME, 2005a). Two main regions concentrate the highest Colombian solar potential radiation
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with daily averages of at least 5.0 kWh/m2, the one made up by the departments from Bolivar to Guajira, and another in the northeast region (the departments of Arauca, Casanare and Vichada), and this data is confirmed by Fundación Bariloche (2010).
As for hydropower, the existence of 25 GW potential SHPs is indicated in ESMAP (2007), while UPME (2009a) lists 12 registered SHPs projects, totaling over 127 MW of power. As for UPME (2005b), it indicates that the hydraulic potential studies are considered high when compared to expectations of demand growth, reaching up to 90 GW, while UPME (2007a) states that the inventory of hydroelectric developments of more than 100 MW sets the potential for new developments not yet started at 87 GW.
The potential for geothermal power exploitation is less well known. UPME has drawn a map of soil temperature at 3 km deep covering part of Colombian territory. According to this map, the area with the best potential is a diagonal band stretching from the department of Nariño, in the southwest, until Santander, even though the department of Cordoba also presents a comparable potential, with areas that reach temperatures of up to 370° C (UPME, [N.A.]). ESMAP (2007) indicates that OLADE in conjunction with IPSE have identified three areas with high potential for geothermal exploitation in Colombia, Azufral, Cerro Negro-Tufiño and Paipa.
On the other hand, the state of Colombian potential biomass studies is more advanced than the geothermal potential. UPME (2003) conducts a study of Colombian biomass potential, being therefore, one of the earliest studies of potential available, which indicates a gross energy potential of more than 16 GWh/year of primary energy. Crops and residues with potential for diesel production totaled almost 0.66 GWh/year, those that enable the production of alcohol 2.6 GWh/year and those suitable for combustion 11.8 GWh/year. Clearly, the crops and residues that could create direct combustion are most suitable for generating electricity, but one cannot rule out the use of ethanol or diesel for this purpose. Additionally, residues of natural forests account for 0.7 GWh/year while residues of planted forests reaches a potential of more than 0.4 GWh per year. Comparatively, the demand of the Colombian national interconnected grid in 2009 was a little above 54.5 GWh (electric) (XM, [N.A.]), thus indicating the importance of biomass potential, although it is necessary to consider that the potential for electric generation is necessarily smaller than the primary energy potential. In addition, ESMAP (2007) indicates that Colombians landfills would present the potential for 47 MW of installed capacity.
As UPME (2010) indicates, there is little information about the potential for generating electricity from ocean energy. Nogueira (2010) states that "500 MW would be available on the Pacific coast" in tidal energy, while the power of the waves of the coast is 30 GW. (Parra, 2003) conducted a study on the potential energy of the oceans, primarily by analysis of five sites for generation using the OTEC technology (ocen thermal energy conversion), concluding that the most suitable location for the deployment of the technology is the island of San Andrés, with conditions comparable to other global locations where the technology will be firstly commercially viable. As for the generation from tides, the paper analyzes the potential of Bahia Málaga and concludes that with modifications on the input channels it could receive 70 MW to 100 MW power plant, but with environmental impacts. For power generation from the waves, the study concludes from the analysis of the waves of the Caribbean coast that it would be possible in Colombia only with the development of technology and improvement of efficiency. Finally, the study indicates the data insufficiency of "hydrodynamics and wave climate of the Colombian coasts," though offset by the availability of international databases (p.101).
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Expansion Plans and Considered Projects
Under Law No. 143/1994, the Energy and Mining Planning Unit of the Colombian Ministry of Mines and Energy should develop the National Energy Plan and the Plan for Expansion of the electric sector, which would be indicative to the private sector. Originally, the projects identified in these plans should be mandatorily developed by the Government if there were no interest from the private sector, but after some modifications introduced by Law No. 1.151/2007 the government should carry out the projects only if they are "financially and fiscally sustainable" (art. 18).
Thus, the National Energy Plan (PEN), with a 20-year horizon and the Generation- Transmission Reference Expansion Plan (PER), with a 15-year horizon are the guide for the expansion of Colombian interconnected system, providing strong indications for the electrical sector. In June 2010 the most recent versions were the PEN 2006-2025 and PER 2010-2024 (the latter in a preliminary version). Nevertheless, estimates of the integration of renewable energy in the energy matrix are rare, and even the UPME tries to address this characteristic seeking third party elaboration of a development plan that includes future scenarios (UPME, 2010).
In the PEN for 2025 base case (the only one developed) the demand for electricity is expected to grow 3.3% per year until 2025, the report considers a limit of 200 MW wind power and 3,900 MW hydroelectric installable by 2025 (UPME, 2007b). In this case, hydroelectricity retains a share of almost 75% in the energy matrix, even in the sensitivity analysis, while wind power generation is still of little significance (less than 0.1%); other renewables were not analyzed. Nevertheless, the PEN 2025 identifies the non-conventional sources and the rational use of energy as a crosscutting theme and aims to identify "barriers and obstacles to distributed generation, in order to facilitate its development" (p. 163). The Plan also focuses the electrification of non-interconnected zones (ZNI) with funds from the Financial Support Fund for the Electrification of Non-Interconnected Areas (FAZNI) and the use of local energy resources in accordance with the traversal theme, indicating also the FAZNI underutilization and listing drawing up plans to use non-conventional energy sources and implementating the regulatory changes necessary and for direct subsidies for rural energization as a strategy. Thus, given the base case and the recommended strategies developed by the PEN 2025, this report clearly indicates that in the medium term the development of generation from renewable energy sources in Colombia will take place mainly in ZNI.
This focus on isolated systems is supported by PER 2024. This Plan elaborates three scenarios of electricity demand by 2031, with an annual growth rate of demand in the period 2008-2024 between 4.2% (high scenario) and 2.1% (low scenario) (UPME 2009a). The PER 2024 identifies 8,500.5 MW of possible projects for large hydroelectric, 2,884.6 MW coal UTEs, 2,520.5 natural gas UTEs, 127.9 MW in SHPs, 44.9 MW cogeneration and 20 MW wind power plants. Additionally, among the projects under development and considered for the Plan one has only 4 SHPs adding 39.7 MW with startup scheduled for the end of 2010. As other generation projects from renewable sources were not considered, the two scenarios of the Colombian generating park expansion analyzed by PER 2024 includes only the installation of SHPs in the period 2010-2024.
The PER 2024, in its preliminary version, examines in less detail than PER 2023 the inclusion of renewable energy sources in the Colombian energy matrix. On PER 2023, one of the scenarios developed is precisely the one seeking a greater input of these sources in the period 2009-2023, with the inclusion of 20 MW wind farms in 2012, 98 MW cogeneration from
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biomass between 2009 and 2011 and 188 MW in SHPs between 2011 and 2018 (UPME, 2009b). Clearly, the power considered is still low when compared with the installed capacity of over 13 GW by the end of 2009, but would represent a breakthrough in renewable generation alternatives in face of the PER 2024. Moreover, as mentioned, the PER 2022 analyzes the inclusion of up to 1,400 MW in the SIN (UPME, 2007a), therefore occurring a gradual decrease in the analysis of wind power insertion in the Colombian system through consecutive plans. However, the PER position should change in the future with the publication of Resolution No. 18-0919/2010 establishing a participation of non-conventional sources of energy in the SIN by 3.5% in 2015 and 6.5% in 2020 and in the ZNI, with 20% in 2015 and 30% in 2020 (MME, 2010).
Independent studies on Colombian energy scenarios are scarce. Rincón (2007) conducted an analysis of the influence of the introduction of some incentive mechanisms on renewable sources generation capacity, concluding that due to the Colombian system of remuneration per availability, geothermal and biomass technologies are more competitive than solar PV and wind power, which depend on the availability of intermittent resources. Nevertheless, the study also concludes that there are significant regulatory barriers and inherent risks in a policy of renewable sources integration for the power sector balance, and suggest that the best solution would be to let market mechanisms add this renewable energies to the Colombian electric matrix.
Fundación Bariloche et al. (2007) conducted a study of the state, weaknesses, strengths and potential of the rational use of energy and of non-conventional energy sources in Colombia. The strategies proposed by the report referring to non-conventional sources include the improvement of inventories of small scale energy projects, simplification of procedures of the Clean Development Mechanism, and inclusion of the environmental costs of energy sources in the wholesale energy market. Nevertheless, the study's focus is clearly the rational use of energy, which occupies most of it.
More importantly, in the second half of 2010 was published the National Energy Plan 2030, representing the only known study to conduct a longer-term assessment about the energy scenario in Colombia, including renewable sources (Fundación Bariloche et al., 2010). Unfortunately, the study does not present proposals for expansion of the national electricity park beyond 2017, and in addition the study recommends a reduction in the hydropower participation to a range of 60-65% in 2030. A positive point of the study is the continuous insistence on energy sources diversification, which although capable of causing a growing share of fossil fuels also provides major support to the development of renewable sources to generate electricity. To achieve this goal, some indicated proposals are: to prepare studies for an investment portfolio, application of the load availability mechanism and rules and incentives for renewable sources and internalization of conventional sources environmental costs.
Renewable Sources
Wind energy
As indicated in Table 44, the effective installed wind power plants capacity in Colombia in 2009 was 18.4 MW, corresponding to the Jepírachi wind farm. The nominal installed capacity of this park is 19.5 MW, which came into operation in 2004 and was built by Empresas Publicas de Medellin (EPM) with CDM resources, (EPM, [N.A.]).
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EPM performs a wind measurement program in the department of Guajira, but as indicated by ESMAP (2007) the company resists disclosing the results. Additionally, the Colombian government published in 2006 the Atlas of Wind and Wind Energy of Colombia (UPME, 2006).
According to UPME (2009a), the only wind project registered with UPME was Jouktai, under the responsibility of Colombian generator ISAGEN in conjunction with the company Wayuú, with 31.5 MW and that will count with CDM resources, but it is worth noting that registration of projects is not compulsory (ISAGEN, 2010). The company also conducts studies of other areas in partnership with Spain's Iberdrola (ISAGEN, [N.A.]). In addition, IPSE (2009a) indicates the deployment of 200 kW of wind turbines for ZNI, backed by diesel generators and LPG, with startup in 2011.
The oil company Ecopetrol stated to study a wind power project with 2 MW power (Higuera, 2010). On forecasts of the wind installed capacity, Recordon (2009) indicates that the wind installed capacity in Colombia in 2020 will be approximately 100 MW, in contrast with the Generation-Transmission Reference Expansion Plan 2010-2024 that, as mentioned, does not foresee the inclusion of wind power plants to the interconnected system in the analyzed period (UPME, 2009a). However, the minimum contribution in 2020 of non-conventional sources of energy established by Resolution No. 18-0919/2010 shall probably alter predictions (refer to analysis of laws and regulations) (MME, 2010).
Solar PV & CSP
As seen, the determination of solar PV capacity installed in Colombia is not simple due to the variations between estimates, while electricity generation from concentrated solar power is non-existent.
According to UPME (2009a) there are no generation projects recorded in the SIN, and institutional analysis indicates that although there are manufacturers of PV modules in the country, they are of low capacity, and power and engineering companies operate mainly in installation of low power systems, isolated or not. The IPSE (2009b) indicates the development of midsize projects for PV generation (combined with generation from diesel, LPG and wind) in the ZNI, with 10 groups of 12.5 kW each, totaling 125 kW of power, and Ecopetrol oil company was considering installing 2 MW PV energy for its own use (Higuera, 2010).
Thus, for the development of PV generation in the Colombian SIN, there are no actors dedicated to manufacturing equipment and to implement large projects, such as for generation from concentrated solar power. On the other hand, development in ZNIs shall be higher, with 16 projects registered and under analysis (IPSE, [N.A.]).
Biomass
Biomass is an energy source that has a better perspective of development in Colombia, especially for the development related to the exploitation of sugar cane bagasse for cogeneration and biomass wastes for generation on a smaller scale. The Ingenio Providencia (2009) states that in 2009 the installed capacity in its Colombian mills was 134 MW.
Asocaña (2010) indicates that the cogeneration plant of Ingenio Mayagüez with 37 MW is scheduled to start operations in the first half of 2010, while Ingenio Providencia's plant (40 MW) began operations in 2009, with both projects listed in (UPME, 2009a).
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Additionally, two projects for using landfill gas are being devised to raise funds from the CDM, Bucaramanga (2 MW) and Doña Juana (2.4 MW) (CDM, 2010; CDM, 2009c), in addition to other projects burning biogas listed in CDM ([N.A.]) being capable of adaptation for energy generation. Another project to use biogas in Cañavelero is a candidate (2.09 MW) as well as a palm biomass gasification project (500 kW) (CDM, 2009b; CDM, 2009a). Additionally, many microprojects can be installed by academic players and NGOs detailed in the institutional analysis.
Small Hydroelectric Plants
According to UPME (2007a) a study conducted by the Colombian government in some departments, to survey sites for hydroelectric developments between 10 and 100 MW, identified 12 potential sites of up to 20 MW (and 27 up to 30 MW). Projects up to 30 MW totaled 516 MW of power, mostly concentrated in the departments of Tolima and Huila.
UPME (2009a) indicates the development of 4 small hydroelectric developments between 12/2010 and 2018, totaling 184 MW, but just 46.9 MW if one considers projects with power below 30 MW:
• Amaime, 19.9 MW - operation in 12/2010
• El Manso, 27 MW - operation in 01/2011
• Amoyá, two groups of 39 MW each - operation in 07/2011
• Amoyá, two groups of 30 MW each - operation in 12/2014
In the period 2019-2023 the Plan does not consider the entry into operation of other smaller projects, although there are 127.9 MW of hydroelectric power smaller than 20 MW, indicating that these could be built by 2024.
Geothermal energy
There was no geothermoelectric generation plant installed in Colombia until June 2010. The institute INGEOMINAS produced a geothermal map of Colombia to a depth of 3 km (UPME, 2005b).
Nogueira (2010) reports that in 2003 a drilling of one exploration well in the area of the volcano Nevado del Ruiz was made, which according to UPME (2005b) presents hydrothermal manifestations with temperatures between 150° C and 250° C. The company ISAGEN supported by Colciencias, INGEOMINAS and the National University of Colombia has started a project in the area, with preliminary studies in 2008-2009. In 2010-2011 further studies will be held on the site, and a 50 MW geothermoelectric plant could start operation in 2013 (Bastidas, 2010). The oil company Ecopetrol may also implement a prototype for generating geothermoelectric (Higuera, 2010).
Energy Storage
As indicated in Table 44, large hydroelectric plants account for over half of the installed generation capacity in Colombia. One does not find major development projects or research in new electricity storage technologies in Colombia, despite some academic groups working with hydrogen, such as GEA (GEA, [N.A.]).
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Generation integration and interconnection
Most large power plants in Colombia are connected to the transmission net at 230 kV, and this transmission network has a mesh profile in the central region (around the capital Bogota) and a radial profile in other regions like the northern peninsula, while places as the Amazon are not part of the interconnected system (UPME, 2009b; Millán, 2009). Thus, the installation of generation plants from renewable sources away from major transmission routes can be greatly hampered, since the generator must bear the costs of connecting to the network regardless of the energy source, as described in the laws and regulations' analysis.
3.1.9 MEXICO
The electricity market
In Mexico, where the capacity development of renewable energy generation has traditionally been based on hydroelectric plants, the growth of electric capacity in the last 20 years has been based on combined cycle power plants that run on natural gas, although it has recently emerged a clear interest to promote renewable energy, particularly wind power. However, the high idleness of the national electric system (above 40%), accentuated by the economic crisis of 2009 led to the postponement of proposed new plants development.
Potential and Installed Capacity In Mexico, hydrocarbons have the highest participation in primary energy supply, 73.1%, while the renewables contribution is 24% (Figure 16).
3% Combined cycle & gas turbine
24% 38% Thermopower plants (fuel oil and diesel)
9% Coal thermopower plants
26% Renewable energy (including large hydro)
Nuclear power plants
Figure 16: Installed capacity of the Mexican public sector in 2008 (MW)
Source: SENER (2009)
The installed capacity of electric power utility in 2008 generated 235,871 GWh: 48.8% (115.105 GWh) from combined cycle plants and gas turbines, 18.7% (44,107.5 GWh) from fuel oil and diesel power plants, 8.9% (20,992.5 GWh) from thermal coal; 16.5% (38,919 GWh) from hydroelectric, 3.1% (7312 GWh) from geothermal energy and wind, and the remaining 4.2% (9907 GWh) from nuclear (SENER, 2009).
As for renewable energy, 24.2% of installed capacity from the electric power sector (public service) in 2008 corresponded to technologies that use renewable sources of energy, with large hydroelectric power plants providing the largest weight.
The installed capacity of electric power utility in 2008 generated 235,871 GWh: .
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Table 46: Installed capacity vs. electricity production with renewable energy in 2008
Type of plant Installed capacity in 2008 (MW) Generation (GWh)
Wind 85 255 Biomass 243 n.a.
Large hydros 11343 38919 Small hydros (SHPs) 377
Geothermal 965 7057
Total 12770 46231
Source: SENER (2009)
The installed capacity of renewable sources, including large hydropower, generated 46.231 GWh in 2008, representing almost 20% of total electricity generation in the country in that year (Table 45) (SENER, 2009).
Expansion Plans and Considered Projects
The high idleness of the national electric system (above 40%), accentuated by the economic crisis of 2009 led to the postponement of proposed new plants development.
This situation led to an electrification processes based on extensions of the power net, although this has occurred unevenly in Mexico and Central America, since in Mexico and Costa Rica electrification levels are close to 100%, while the other, as is the case of Nicaragua, have less than 65%.
The Mexican government plans reflected in the so called Planning of the Electricity Sector (jointly developed by SENER and CFE, the national electricity company) and states that generation will grow at a rate of 4.1% per year (almost the same as consumption), indicating a reduction in the percentage of thermo power plants and gas turbine engines, although there is a concept of "free" generation that does not specify the type of technology to be used.
Thus, in addition to a possible expansion of the Laguna Verde Nuclear Power Plant, large hydroelectric plants, combined cycle plants, the internal combustion and coal generation will continue to participate in nearly the same proportion as today (SENER, 2009).
Moreover, the Law for Utilization of Renewable Energy and Energy Transition Funding forecast that units operating with renewable energy will reach, in 2012, an 8% share of national production of electric energy, without considering the contribution of large hydroelectric plants. However, the Power Sector Projection for 2009-2024 shows that in 2015 the proportion of renewable resources will reach only 7.7% of capacity. In addition, if one takes into account the hydroelectric power plants over 30 MW, would have an increase of 24.2% in 2008 to 27.7% at the end of the period.
Thus, the estimated capacity of public service plants operating on renewable energy would be comprised, mainly, of SHPs followed by wind and geothermal plants. For its part, the Power Sector Projection for 201529 finds that the "free" generation will be on renewable energy, so that the installed capacity of such plants by the year 2015 shall be 2,775 MW (Table 46).
29 On page 125 of the "Forecasting for the Electric Sector 2009-2024," published by the Department of Energy in 2009, is reported: Among the strategies to diversify electricity generation sources, projects Sureste I-IV are scheduled, which correspond to the free capacity that could be achieved through wind-
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Table 47: Required capacity for 2015 and 2020 including renewables in Mexico
Type of plant Estimated capacity in 2015 (MW) Estimated capacity in 2020 (MW)
Wind 506 1809
Small hydros 842 842
Geothermal 211 1091
Free (Renewable) 1216 5118
Total 2775 4307
Source: SENER (2009)
On the other hand, facilities for electricity production from self-producers show a strong growth. The installed capacity of plants operated with self-sufficient30 renewable energy has grown significantly and is expected to have significant growth in the near future. Particularly in the Isthmus of Tehuantepec, the main area of wind projects development, wind generation capacity should increase by 1,491 MW between 2009 and 2012 (SENER, 2009).
To these one must add other plants of smaller capacity and various technologies in different parts of Mexico.
Renewable Sources
Wind energy
In late 2009, Mexico had 202 MW of wind power and about 570 MW under construction (AMDEE, 2010).Of these, most projects aimed at self-production.
In terms of development potential, studies of the National Renewable Energy Laboratory (NREL), the National Association of Solar Energy (ANES), the Mexican Association of Wind Energy (AMDEE) and the Electrical Research Institute (IEE) have quantified a potential higher than 40,000 MW by using wind power in the country, particularly in the Isthmus of Tehuantepec and the peninsulas of Yucatan and Baja California (SENER, 2006).
As noted earlier, the installed capacity of wind power plants from self-producers has increased significantly, outlining a remarkable growth in the near future, since it predicts an increase of 1,500 MW between 2009 and 2012 (SENER, 2009).
SHP
In Mexico, hydroelectric plants are mainly used to meet peak demand, i.e., they are designed to operate a few hours a day.
electric technology with total capacity of 1,216 MW, thereby contributing to the expansion of the renewable energy to public service park. In addition, other projects that may contribute to the diversification of production are: Oriental I and II in Veracruz (1,400 MW) and Noreste II and III in Sonora (1,400 MW). In this context it is important to note that in the Third Report on the Work of the Ministry of Energy was published the recent evolution participation of primary energy sources used to generate electricity, which provides for the composition of the generation park consistent with the indicators and targets in the Energy Sectorial Program 2007-2012". 30 As self-sufficiency is considered "the generation of electricity for own consumption, where and when such power is intended to meet the needs of individuals or entities and is not inconvenient for the country.”
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This is reflected in the difference between their contributions to installed capacity versus their energy generation. Thus, although hydroelectric plants represent about 23% of installed capacity, they generate only 16.5% of the country's electricity.
In 2008 the installed capacity of hydropower plants was 11,720 MW, 11,343 MW of which corresponded to large power plants and the remaining 377 MW to several small plants that operate in the states of Jalisco, Veracruz, Durango, Colima, Michoacán and Guerrero (SENER, 2009).
It is a considerable Mexico's potential for this alternative source of generation. The Ministry of Energy, in the document Renewable Energy for Sustainable Development in Mexico, reports that Mexico has a hydroelectric potential capacity of 53,000 MW, of which 3,250 MW would correspond to small plants with less than 10 MW (SENER, 2006).
Biomass
By the end of 2008, the Energy Regulatory Commission (CRE) had approved 224 MW for hybrid systems (fuel oil - sugar cane bagasse) and 19 MW for electricity generation from biogas (SENER, 2009).
In Mexico, it is significant the technical potential of bioenergy to generate electricity, since it is estimated at just over 800 MW with the use of municipal solid waste from ten cities: the Federal District, Guadalajara, Puebla, Netzahualcóyotl, Tijuana, Ecatepec, Mérida, Acapulco, Ciudad Juárez and Tlalnepantla (SENER, 2006).
However, their development depends on political and institutional contexts of municipal governments, which have only three years in office to implement the projects.
Geothermal energy
Mexico is a important country in the world's geothermal energy scene, ranking third in the world with a geothermal production capacity of 965 MW up and running that generated just over 7,000 GWh in 2008 (SENER, 2009).
The Federal Electricity Commission estimated that the geothermal potential can be 2.5 times higher and add 2,400 MW to the current capacity (SENER, 2006)
Solar PV and CSP (Concentrated Solar Power)
In Mexico, there are conditions for the use of solar energy for electricity generation on isolated systems, as well as for net-connected installations. With an average insolation of 5 kWh/m2, the country's potential is one of the largest in the world.
Over the past ten years, mainly with funds from the World Bank and the consignation of agricultural-cattle production (FIRCO), the installed capacity of PV systems in Mexico increased from 7 MW to 15 MW, generating more than 8,000 MWh per year for rural electrification stand- alone systems, water pumping and refrigeration (SENER, 2006).
More recently, there have been small-scale applications of systems connected to the network and there are already regulations that allow them under the concept of "net energy"31. In particular, there is a housing project in the north of the country where the PV systems
31 Net amount of energy refers to the balance between energy received and delivered. Note that in the case of Mexico, the balance may be zero but never negative, i.e., the concessionaire never has to pay the owner of the photoelectric facility.
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installed according to this arrangement was facilitated by an interconnection agreement that CRE has put in place (BC 2007).
One estimates that by the end of 2013 there will be a potential of 25 MW obtained by use of solar energy through PV systems for use in isolated rural communities (SENER, 2006).
3.1.10 PERU
The electricity market
Potential and Installed Capacity
The Peruvian National Interconnected System (SEIN) had 5,941 MW of installed capacity in 2008, while the isolated systems had 1,216 MW, or 17.1% of total installed capacity of Peru in 2008 of 7,158 MW (MEM, 2009a). In 2009 the installed capacity of SEIN was 6,000.6 MW according to COES SINAC (2010a), and in relation to renewable energy sources this system relies on large scale only on hydroelectric power, as indicated by Table 47. Gamarra (2009 ) indicates 3.7 MWp PV installed in Peru, about 1 MW in wind energy (0.7 MW for electricity generation), 210 MW of SHPs and 77 MW from thermal cogeneration from sugar cane bagasse.
Despite not having published a document assessing the state of electricity generation from renewable energy sources in Peru, the Peruvian government has gradually implemented a policy for supporting this type of generation, even conducting informational presentations, but more importantly implementing incentive mechanisms like biddings.
Table 48: Current Installed Capacity and Projections for Electricity Generation in Peru (2009)
(MW) Non-Interconnected SEIN
Solar Conventional Solar PV Wind Biomass SHP32 Geothermal Wind Biomass Hidro33 Total PV thermal
Coal Total
Current capacity 3.7 0.0 77 210.0 0.0 0.7 0.0 0.0 2954.4 141.87 3046.2 6000.6 (2009)
Projection 408.84 – 142.7- 6441.4- 5506.2- 11638.6 – 2.758 77 125.0-400.0 80.0 101 141.87 (2020) 509.01 400.7 6990.4 6746.2 13427.6
Source: MEM (2009a); COES SINAC (2010)a; Gamarra (2009); OSINERGMIN (2010b); DGER (2009); MEM ([s.d.]); MEM (2010a); Artieda (2008).
An estimate of the potential of renewable sources for generation is given by Nogueira (2010). Additionally, the Peruvian government has developed the Solar Energy Atlas and Wind Energy Atlas and conducted a national survey of hydropower potential (MEM, [N.A.], MEM 1979, MEM, 2003). Some of these results can also be seen in DR (2006a).
According to MEM ([N.A.]) Peru has some sites with excellent wind conditions for the development of wind power. The departments of Ica, Ancash, La Libertad, Cajamarca,
32 Hydroelectrics smaller than 20 MW 33 Includes SHPs
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Lambayeque and Piura present locations with annual average winds above 7 m/s, and there are places where this average is above 8 m/s and even 10 m/s. Nogueira (2010) reports that the wind potential is 450 to 5000 kWh/m2/year, thus confirming the existence of places with excellent conditions for the development of wind power. REEEP (2009) indicates that the potential for generating electricity from wind power in Peru is 19 TWh per year, while DR (2006b) considers feasible the inclusion of at least 2.5 GW of wind installed capacity on land by 2020.
According to Nogueira (2010) Peru has a high solar potential due to low cloud cover and its equatorial location, and analyzing the Solar Atlas of Peru it is clear that coastal regions are those with the highest levels of solar radiation, usually with annual averages above 5.5 kWh/m2/day even reaching values between 6.5 and 7.0 kWh/m2/day in the south, in the departments of Tacna, Moquega, Arequipa and Ica. However, it should be noted that Nogueira (2010) indicates a potential slightly lower, with radiation in the range of 4-5 kWh/m2/day, and radiation greater than 5 kWh/m2/day in the Peruvian highlands, while Gamarra (2009) confirms the initial values, though clearly based on the Atlas. Despite these differences, it is clear that Peru has high levels of solar radiation suitable for generating electricity.
The energy potential of agricultural, livestock, agro-industrial and urban residues in Peru comes to 1.31 Mtep (15.25 TWh) per year, while the wood potential energy reaches 66 Mtep (767.58 TWh) per year (Nogueira, 2010). However, one must distinguish this energy potential from the potential for generating electricity. Gamarra (2009) indicates significantly higher potential, since although the wood potential is about the same, the livestock residues annual potential is of around 18 TWh, agricultural residues 8 TWh, and urban residues 3 TWh, while the use of rice hulls has a potential of 0.71 TWh and sawmills residues 0.37 TWh per year. Also according to Gamarra (2009), the exploitation of sugar cane bagasse has a potential to generate 5 TWh per year.
Nogueira (2010) shows no potential for geothermal power in Peru, showing only the most promising locations for using this energy:
• Chain of volcanic cones (south)
• Puno and Cuzco (southeast)
• Cajamarca and La Libertad (Northwest)
• Callejón de Huaylas, Churrin and Central (North-Central)
A map with these locations can be seen in DR (2006a), where one realizes that these areas are still too wide to establish a specific location for the installation of a geothermal recovery. Gamarra (2009), in addition to name these already mentioned places, indicates the possibility of installing power generation with capacity between 1,000 and 2,990 MW.
The Peruvian government has developed in the 1970s in partnership with the German government a study of the hydroelectric potential of the country (MEM, 1979). Although it considers only the most powerful plants, of at least 30 MW, except for isolated systems projects (which in that time covered an area larger than the current one), the report identified 163 projects with a capacity of up to 100 MW, with a large amount below 30 MW, and 114 with power between 100 MW and 300 MW. The total hydroelectric potential identified was 58,937 MW, a potential mentioned again in 2009 by Gamarra (2009) and that could generate up to 400 GWh per year, while Nogueira (2010) indicates a potential of 33.2 TWh per year. Despite this latest assessment seeming small, it should be noted that this would amount only to the proven
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potential, with the possible and likely potential being much higher. Gamarra (2009) still mentions that the potential for units of 10 MW or less is 1 GW, with 21% already exploited.
Expansion Plans and Considered Projects
As mentioned, the Peruvian government has not yet published a study on the development of renewable energy in the country, but in 2010 it published a call to hire a consultant for the "Development of a Institutional Strengthening Study, Development of Mechanisms for Promoting Renewable Energy (RE) and Biofuels (BioC), and dissemination of its results ", valid until June 17, 2010, (MEM, 2010a).
In 2009 the Ministry of Energy and Mines of Peru (MEM) published the Electricity Reference Plan 2008 - 2017 (PRE, 2017), indicative and updated every two years, considering the development of renewable non-conventional energy (MEM, 2009a). In the same year, tenders were published for the "Bidding for the Supply of Electricity with Renewable Energy Resources", with the award for the first bid made on February 12, and for the second on July 23, 2010 (OSINERGMIN, 2009; OSINERGMIN , 2010a).
As indicated, the ERP 2017 includes consideration on the inclusion of renewable energy sources in the electric matrix due to the Peruvian government policy. Although considering that renewable sources of energy are not viable in the short term and that they still shall have a high cost in the medium term, the document states that the objective of long-term generation expansion is to "maximize the utilization of the country's hydropower potential complemented by thermal generation and renewable resources", so they are considered an alternative, but not the main driver.
In the PRE 2017 base scenario, it is considered the inclusion until 2017 (medium-term) of wind generating capacity (450 MW), geothermal (125 MW) and SHPs up to 20 MW (143 MW), totaling 718 MW, according to Table 48. Although the document still draws optimistic and conservative demand scenarios, the inclusion of renewable generating capacity does not change.
Table 49: PRE 2017 – Base Scenario – Insertion of Renewable Generation Capacity
(MW) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total
Wind - 0 0 50 50 50 50 50 100 100 450
Geothermal - 0 0 0 0 0 0 25 50 50 125 SHP (≤ 20 MW) - 0 0 0 0 10 15 25 40 53 143
Total - 0 0 50 50 60 65 100 190 203 718
Source: MEM (2009a).
This installed capacity would corresponds to the generation of 263 GWh wind, 372 GWh geothermal and 325 GWh SHPs in 2017, or 960 GWh total in this year
In a long-term horizon (2018-2027) the government's strategy is to maximize the utilization of hydropower potential, as mentioned, and then wait for "a full development of non- conventional renewable energy projects" so that the renewable power sources can "cover the offer variations of hydrological seasonality" (p.85-86), being clear, therefore, the governmental focus on hydroelectric and the role of non-conventional sources as a substitute for thermal sources.
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However, development of government policy towards these sources can alter the planned development on PRE 2017, as the first auction of renewable generation foresees contracting 500 MW installed capacity of wind, biomass and geothermal energy, supplemented by SHPs, which is described in more detail in the law and regulations analysis and whose results are given in Table 49.
Table 50: Bidding of Renewable Energy Resources
Source: Biomass Wind Solar Total Hydraulic
Required Power (MW) 500
Maximum Price (cUS$/MWh) 12.00 11.00 26.90 7.40
Required Energy (GWh/Year) 813.00 320.00 181.00 1314.00
Contracted Energy (GWh/Year) 143.30 571.00 172.94 887.24
Contracted Power (MW) 27.4 142.0 80.0 249.4 161.71
Proposed Projects 2 6 6 14 17
Contracted Projects 2 3 4 9 17
Source: OSINERGMIN (2010a); OSINERGMIN (2010b).
As the PRE 2017 did not consider the inclusion of PV or biomass generation, this is outdated since the contracted capacity should be in operation by 2012, and the Plan considers only the input of 100 MW wind up to this year. In addition, the second bid aimed to contract 419 GWh/year generated from biomass and 8 GWh/year from solar energy, with the possible participation of hydroelectric exploitations of up to 20 MW and therefore a reassessment of the Reference Plan is necessary.
Moreover, in spite of the Peruvian Energy Policy Proposal maintaining the development of hydroelectric projects as a priority, non-conventional renewable energy has a greater significance because of the energy independence goals and the wish of having an energy sector with low environmental impact (MEM , 2010C).
For the supply of electricity to communities outside the interconnected system, the Peruvian government developed the National Plan for Rural Electrification (PNER) 2009-2018 (DGER, 2009). The plan amply makes use of renewable energy sources (hydroelectric, solar and wind), being these sources prioriraty for electrification, and aiming to install 88 PV generation projects, 2.6 MW hydroelectric and 2.758 MW wind.
There are few independent studies that develop energy scenarios for Peru, and clearly their influence is small compared to the Reference Plan of Electricity. Studies of the Developing Renewables project, funded by the European Commission, indicate the following possible development by 2020 to generate electricity:
• PV generation in isolated systems: 9.7 MW (reference) - 31 MW
• Onshore Wind Generation: 6 MW (reference) - 80 MW
• SHPs smaller than 5 MW: 46 MW (reference) - 60 MW
However, some of the assumptions used in the study, as the consideration of PV only in isolated systems, although consistent in the year of publication of the study (2006) no longer align with government policy and recent developments of renewable electricity generation in the country.
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Renewable Sources
Wind energy
By Table 47 the Peruvian installed wind capacity until 2009 was insignificant, a fact confirmed by Gamarra (2009) and Garten Rothkopf (2009). While the wind farms with temporal concessions in 09/2008 totaled 5,535 MW (34 projects), temporal concessions on April 2010 in Peru amounted to 8,620.0 MW (with studies to be completed by 2011), a significant increase, although in November 2009 more projects were indicated (MEM, [N.A.], MEM, 2008, MEM, 2009b). These projects have concessions and are developed in large part by the companies Huayra Kallpa, Gaz & l'Énergie, Generalima, Iberoperuana Inversiones, Peru Renewable Energy, Soleol and SoWiTec. Gamarra (2009) mentions 58 temporal concessions totaling approximately 9,400 MW.
In the first bidding for renewable generation of 2010, the Peruvian government granted the concession for the construction of three wind projects that should start operating by the end of 2012, with 30 and 80 MW for the company Energía Eólica and 32 MW for the consortium Cobra Peru / Peru Energía Renovable. Despite the total power contracted by the bidding for all sources being below the target of 500 MW, the annual supply of electricity from wind power contract was higher than the goal of 320 GWh (571 GWh were contracted). One must however be attentive to the development of projects since the capacity factors are high (the lowest is 43% and the larger 52.93%), and sometimes wind projects end up generating less energy than expected. If these developments are confirmed and the Peruvian government maintains its policy on renewable generation, the PRE 2017 scenario with 450 MW wind can come true and even be surpassed.
However, it should be noted that the first bid determined a maximum wind power injection in the power grid, initially limited to 375 MW in total, which after criticism was enhanced to 640 MW, therefore no longer being an additional impediment to the PRE 2017 scenario, except in the limit for injection in a single bus (which can be of 5 MW on the Tumbes bus) preventing the development of projects in promising areas (OSINERGMIN, 2009; REVE, 2009). Moreover, the inclusion of wind power in the Peruvian power matrix faces resistance from traditional generators (Marticorena, 2009).
Additionally, the Peruvian government aims to install 2,758 MW in wind farms with wind turbines of 0.15 kW at 280 locations for isolated communities in the period 2011-2018 (DGER, 2009). The project will initially be deployed in some departments, and later at national level, but a better definition of the program is still going to be made.
Solar PV & CSP
While there is no generation capacity from solar concentrators in Peru, Gamarra (2009) mentions 3.7 MWp PV installed in the country. In June 2010 there was no solar generation projects registered with the Ministry of Energy and Mines of Peru. In the first bidding for renewable sources generation in 2010, four generation projects of 20 MW each were contracted, the companies responsible being Group T-Solar (2 projects) and consortia Panamericana Solar and Tacna Solar (both with participation of T- Solar). Projects should be operational by the end of 2012 and should produce 172.942 GWh annually, with capacity factors between 28.9% and 21.4%. The contracted energy was slightly below the goal of 181 GWh, which motivated a second bid for hiring 8 GWh. All solar PV winners of the first auction
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are located in the extreme south of the country, the area with the highest solar radiation, as seen in (MEM, [N.A.]).
Biomass
The share of generation from biomass in the Peruvian energy matrix is low, despite the high potential that this source represents. Gamarra (2009) indicates the existence of 77 MW of installed capacity for generation from sugar-cane bagasse, while in spite of there being registered thermal biomass plants with final concessions none were in development ( MEM, 2010b).
The first bidding for renewable generation had low participation of the biomass source, with only two projects offered, but the second bid was devoted almost exclusively to it, with a small share for solar power. The goal of the second bid was to hire 419 GWh of electricity annually, of projects that must be operational by the end of 2012. Using the average capacity factor of the first bidding for projects that use biomass (65%) this would correspond to an installed capacity of 73.59 MW.
Finally, a project developed by the French company Bionersis, with CDM resources aims to collect and burn (flare) landfill gas, indicating the possibility of modifying the project at a later stage to produce electricity, as happened with the company's Bucaramanga project in Colombia (CDM, 2008). The Huaycoloro recovery of landfill gas project funded by the World Bank may also include the generation in a second stage with an output of 5.74 MW (WB, 2010).
Small Hydroelectric Plants
As mentioned, Peru has a huge hydropower potential, confirmed in studies in the 1970s (MEM, 1979). On April 30, 2010, there were nine hydroelectric power plants with capacity of less than or equal to 30 MW with temporal concessions, totaling 175.67 MW (100.17 MW if one considers only the six projects of less than 20MW), with studies to be completed between 2010 and 2012 (MEM, 2010d). Additionally, there were six projects with final awards, totaling 58.62 MW, with startup scheduled between 2011 and 2012 (MEM, 2010c).
Participating in a complementary manner to the first bidding for renewable generation, 17 SHPs projects (of up to 20 MW) were contracted. Excepting two projects with entry into operation in 2008 and 2009, the total power is 145.71 MW and the annual contracted energy is 911.339 GWh, an important contribution in relation to the power informed by Gamarra (2009) of approximately 210 MW (OSINERGMIN, 2010b).
Moreover, according to the National Plan for Rural Electrification, the Peruvian government plans 2.6 MW hydroelectric in isolated Peruvian communities until 2018.
Geothermal energy
Peru does not have geothermal generating plants, although there are potential sites for installation in various parts of the country, as mentioned. Gamarra (2009) indicates development studies in Calientes, with 150 MW, and Borateras, with 50 MW, both in Tacna, in the very south of the country, and PRE 2017 states that Peru "has 156 geothermal identified areas" (MEM 2009a, p. 210). The two ongoing studies mentioned are made with Japanese funding agencies (Nakao, 2008), whereas with the support of Peruvian, Caribbean and European investors the company Andes Power Peru develops the exploration of geothermal resources in the country and aims to develop a project generating approximately 200 MW, operational by 2011 (Artieda, 2008). The mining company Aruntani also develops a generation
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project, which encountered difficulties in obtaining permission for geothermal resources (Velazco, 2008).
As seen from Table 48, the PRE 2017 considers the inclusion of 125 MW by 2017 (25 MW in 2015, 50 MW in 2016 and 50 MW in 2017), without forecasting further additions to the system in the period 2018-2027, but with good chance of change since this prediction only considers structuring projects (MEM, 2009a). According to Nakao (2008) the first steps necessary to spur development of geothermal energy in Peru are: a more detailed development of geothermal resources in the country with the establishment of a Geothermal Plan; the completion of exploration and drilling activities by the government in order to reduce the risk of the private investor, and perhaps facilitate public-private partnerships, whereas the government currently develops this Geothermal Plan through the INGEMMET Institute (INGEMMET, 2008). It should be noted that this model, while reducing the investor risks, transfers to the government a costly and risky phase of the projects, since the drilling of exploratory wells is costly and sometimes fruitless.
Generation integration and interconnection
MEM (2009a) presents a map of Peru's interconnected system, where one can see that the power plants of the center system are usually connected in 220 kV transmission lines, while plants in other systems (south, mid-north, and north) are connected more frequently in the 138 kV grid and sometimes at 66 kV and 33 kV, while the four systems are interconnected by 220 kV lines. According to OSINERGMIN (2009, 2010a) renewable resources prospect generation projects should connect to the system on buses allowed by tenders. For the wind generation most permitted buses are 220 kV buses (with two more buses of 60-66 kV and two 138 kV buses) and these also have a maximum power, as mentioned above, while for other forms of generation (solar, biomass and hydro) there are more connection options, but with the majority being 138 kV and 220 kV buses, and no limitation of connected power. In the first bid of renewable generation there was a winning wind project that was disqualified since it exceeded the maximum power injection in the bus, although the COES could consider such cases as permissible if well-founded (OSINERGMIN, 2010b; De Oca, 2009).
3.1.11 VENEZUELA The information presented in this chapter was obtained from literature searching, mainly on the internet. Not all sources are safe, but all obtained information will be presented in an attempt to contribute to a better perception on the renewable energy situation in Venezuela.
The electricity market
No studies were found concerning projections and scenarios on installed capacity of renewable electricity generation sources, except for large hydropower plants in Venezuela.
Potential and Installed Capacity
Venezuela ranks among the largest worldwide oil exporters, being the largest oil exporter of the Western Hemisphere and, therefore, of the Latin America. In 2008, the country was the eighth largest worldwide oil exporter, what shows the importance of oil the sector to Venezuela's economy, accounting for three quarters of the country total export income, half of the government total revenue, and one third of the Venezuelan GDP (EIA, 2010).
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The country is a founding member of the Organization of the Petroleum Exporting Countries (OPEC)34, having remarkable importance in the global oil market. In 2008, the proven oil reserves of Central and South America was 123.3 billion barrels and Venezuela alone accounted for 81% of these reserves (ANP, 2009, p.25). The country plays an important role in the region oil production, and in 2008 accounted for 38% of the 6.685 million barrels produced daily in Central and South Americas (ANP, 2009, p.29). Natural gas is another important Venezuela's fossil wealth.
In 2008, the country accounted for, approximately, 66% of 7.35 trillion cubic meter of proven natural gas reserves of Central and South America (ANP, 2009, p.40).
The installed electricity system renewable sources capacity in the Bolivar America in 2008 was 14,597 MW, corresponding only to hydropower (slide 5) (Ravelo and Sepulveda 2009), as can be seen in Table 50.
In 2009, according to official information, the Venezuelan electric system installed capacity was 22,434 MW, with 7,812 MW from fossil fuels based thermal plants and 14,622 MW being from hydropower sources (OPSIS, 2010). According to the same source, that year lowest hydro plant had a 25 MW capacity and the second lowest had an 80 MW installed capacity. Therefore, according to the Venezuelan legislation that characterizes as SHP power plants of installed capacity up to 20 MW, there is no SHP development in the country.
Table 51: Installed Capacity in the Venezuelan Electric System (2008)
(MW) 2008
Solar PV Solar Thermal Wind Biomass SHP (<20 MW) Hydro Thermal Total
Total - - - - - 14597 8130 22730
Natural gas 2975.3
Combined Cycle 470.0
Diesel Motors 321.8
Steam 4366.0
Source: Ravelo & Sepúlveda (2009)
Figure 17 illustrates energy consumption per source in Venezuela in 2007 and illustrates how the country's energy matrix is dependent on fossil fuels, with hydroelectricity being the only renewable source present.
34 Organization of the Petroleum Exporting Countries (OPEC / OPEP): a multinational organization established in 1960 to coordinate oil policies of member countries. It is formed by the following countries: Angola, Algeria, Libya, Nigeria, Indonesia, Iran, Iraq, Kuwait, Qatar, Saudi Arabia, United Arab Emirates, Ecuador and Venezuela.
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Figure 17:*Energy consumption per source type in 2007
* Consumption does not add to 100% due to independent figures rounding.
Source: EIA (2010)
Other renewable sources can be found in Venezuela, however, they are related to specific experimental activities, as for instance, bio-digesters installed in Pedraza Barinas and solar PV systems to attend communities in isolated regions (Nogueira, 2005, p.43). However, according to the same source, despite having high fossil energy resources, Venezuela is one of the few oil-exporting nations with good transition prospects to a sustainable scenario.
“Venezuela faces a unique challenge: properly define the space for renewable sources in a diversified and rational form” (Nogueira, 2005).
Table 51 presents Venezuela's renewable sources estimated potential the installed capacity per source type. However, these enterprises are not part of the national interconnected system, since they are not mentioned in the OPSIS (2010).
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Table 52: Venezuela's renewable sources estimated potential and accumulated capacity.
Estimated potential Accumulated power Source (MW) (30/09/2007) (MW)
Electric power generation from renewable
sources
Connected to the network
Agriculture residue 16881 560
Wind energy 45195 7660
SHP 15000 2015
Bagasse cogeneration 5000 692 Urban residue 2700 55
Solar energy - 2.12
Subtotal 84776 10984
Heat concentrator from renewable sources
Biomass cogeneration (except bagasse) - 59
Biomass gasification - 86.5 Residue - 20
Subtotal 165.5
Accrued Subtotal 11150
Source: Márquez (2009: slide 21)
Expansion Plans and Considered Projects
In Venezuela, three expansion plans for the electricity sector were possible to find, these are called: The Generation Expansion Plan 2009-2012 (“Plan de Expansión de Generación 2009-2012”), The Generation Expansion Plan 2008-2014 (“Plan de Expansión de Generación 2008-2014”) and The Development Plan for Renewable Energy Sources (“Plan de Desarrollo de las Fuentes Renovables de Energia”).
We found no documents with further details on these plans, so we will give a short presentation of the same.
DEVELOPMENT PLAN FOR RENEWABLE ENERGY SOURCES
The Development Plan for Renewable Energy Sources is a part of the Plan for Economic and Social Development of the Nation 2007-2013 (PDESON) (slide 14) (Márquez, 2009).
Among the policies and strategies defined in the PDESON, incentives are include for alternative, renewable and environmentally sustainable energy sources, besides the target of turning the country into a worldwide energy potency (RBV, 2007). Paradoxically, it is also part of the PDESON policies and strategies "to increase the generation of electricity with fossil energy".
The Pilot Plan for Wind Power Generation (Plano Piloto de Generação Eólica- PPGE) is part of the plan to diversify Venezuela's energy matrix, which shall provide in its first installation phase 100.32 MW in the Community of Los Taques, in the State of Falcón, and 72 MW in three wind farms: Chacopata, in the Sucre State, with 24 MW, Isla de Margarita and Isla de Coche, in the State of Nueva Esparta with, respectively, 20 MW and 4 MW, and the Peninsula de la
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Guajira, in the State of Zulia, 24 MW (LAWEA, 2009, p.35). Figure 18 illustrates the developments of the plan, to be built until 2013.
Figure 18: Location and capacity of the PPGE enterprises
Source: Márquez (2009: slide 28)
GENERATION EXPANSION PLAN 2008 -2014
As of February 8, 2010 it was published in the Official Press, issue No. 39.363, the Decree No. 7228 that declares "state of emergency" on the provision of domestic electricity services, including facilities and related assets for a 60 days period, extended in April 8, 2010 by another 60 days (Venezuela, 2010). Since then various measures were taken. In addition to the fines imposed on companies and private users who do not meet the reducing energy consumption goals, the country has made scheduled four hours cuts every two days in electricity supply at several points. Several measures are being taken in an attempt to address the continued emptying of the "El Guri" dam, responsible for 73% of the country supply.
As an alternative to remedy the present emergency situation a national electricity fund was created, initially with US$ 1 billion, to accelerate works development to alleviate the collapse of power generation in Venezuela. The Venezuelan government also proposed to install a total of 5.9 GW of thermal power generation by the end of 2010 with an investment of $ 5.9 billion (Globo.com, 2010).
The electricity sector 2008-2014 development and expansion plan is expected to invest an amount around 20 billion dollars. With this investment it is expected to achieve an additional installed capacity of 10 GW, one third of the present installed capacity (RANAV, 2009).
GENERATION EXPANSION PLAN 2009 -2012
Table 52 presents the developments that are part of the Generation Expansion Plan 2009 -2012, which does not mention sources. It was found, through research on the internet, that the plan plants are basically fossil and hydroelectric power plants.
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Table 53: New developments, their capacity and date of entry into operation
Central Capacity (MW) Date of Entry
Centro I Plant Thermoelectric 400 02.2010
Alberto Lovera Thermoelectric 300 10.2010
Fabricio Ojeda I Hydroelectric 250 10.2010
Ezequiel Zamora Thermoelectric 150 08.2010
Cabrutica I Thermoelectric 150 12.2010
Cabrutica II Thermoelectric 150 02.2011
Fabricio Ojeda II Hydroelectric 250 04.2011
Bachaquero I Thermoelectric 150 05.2011
Termocentro I Thermoelectric 180 06.2011
Temozulia III Thermoelectric 170 06.2011
Bachaquero II Thermoelectric 150 07.2011
Termolsa - 250 07.2011 Cumana III - 170 07.2011
Termocentro II Thermoelectric 180 08.2011
Termocentro IV Thermoelectric 180 10.2011
Cumana VI - 170 09.2011
Tamere I Thermoelectric 150 10.2011
Cumana V - 170 11.2011 Termocentro V Thermoelectric 180 12.2011
Tamare II Thermoelectric 150 12.2011
Cumana VI - 170 01.2012
Bachaquero II Thermoelectric 170 03.2012
Tamare III Thermoelectric 170 07.2012
Source: CORPOELEC (2009: slides12 e 13)
From Table 52 the enterprises to be carried out until 2012 are found, totaling a capacity of 4,410 MW, which is less than half the capacity to be installed in the country until 2014 according to the Generation Expansion Plan 2008-2014.
Renewable Sources
Wind energy
By the year 2013, 172 MW of wind power shall be installed in Venezuela according to the PPGE. Figure 19 presents the country potential use for wind energy.
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Figure 19: Map of the country potential use for wind energy.
Source: Márquez (2009:slide 25)
Biomass
Figure 20 presents locations with potential for biomass use in Venezuela, these add to 340 MW.
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Figure 20: Areas with potential for biomass use
Source: Márquez (2009:slide 26)
Solar PV
Venezuela has so far installed 806 PV systems that benefited 107,590 people and provided access to electricity for 551 communities, being 235 indigenous and 316 isolated locations (Ecoloquia, 2010). However, no plans were found of PV system installations to be connected to the country electric net. Figure 21 presents the solar energy potential, per area, in Venezuela.
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Figure 21: Areas with potential for solar energy use
Source: Márquez (2009:slide 23)
Solar radiation in the country delivers an average of 4.71 kWh/m2.day lasting 5.5 hours on the average (Hernandéz, 2008).
3.2 Legal framework
3.2.1 ARGENTINA
In spite of some criticisms, Argentina has a relatively well-established legal framework for promotion of renewable energy sources, not only setting goals, but also defining resources and creating different rates and adequate conditions for the local market development. These sources are: SHPs35, wind, solar, geothermal, ocean, biomass, landfill gas, process gas and biogas.
The start of this framework was Law 25.019/1998 that mainly promoted the development of solar PV and wind energy. The most expressive is Law 26.190/2006, which established that in a ten years period since its regulation (2016), 8% of the country's electricity generation must come from renewable sources.
The country has not yet seen the federal program for the development of renewable energy published, as established by Law 26.190/2006, and does not offer long term stable signals to the market, despite of performing specific public biddings for these sources.
35 Defined for power smaller than 30 MW.
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Major laws and regulations
Lei No. 24.064/92
This law is considered to be a milestone in Argentina's electric sector reorganization. The Argentine electricity sector reform began with the State Reform Law No. 23.696/89 and was latter on materialized by Law No. 24.064/92.
Law No. 24.064/92, the electric power regimen, determined that electricity transport and distribution are public services, while generation is of "general interest". The law was amended by Decree No. 804/2001 (of deregulatory trend), but this was revoked by the Congress, thus prevailing the original articles.
The law guarantees free access to the transmission system (for the excess of the already contracted capacity) and states that the National Regulatory Authority for Electricity (Ente Nacional Regulator de la Electricidad - ENRE) should regulate electricity transport and distribution, always maintaining "fair and reasonable rates", but ones that stimulate "private investments", assuring competitiveness whenever possible. Transport and distribution shall be performed by private players through the executive power concessions, with the State only acting in the process if no bidders are found. Furthermore, companies with major state control can only receive payment for its costs, with the surplus passed to a fund intended to finance works already existent upon the law enactment and to stabilize prices paid by distributors. On the other hand, controllers of transport companies cannot operate in other segments of the industry.
Energy distributors are excluded from the players' definition of the wholesale market (“Mercado Eléctrico Mayorista” - MEM36) and therefore cannot actuate on it (therefore these must sign contracts directly with generators). These would participate according to the revoked Decree No. 804/01, as well as self-producers and cogenerators. However, according to the definition of Article 5 the latter ones, as generation agents, can participate as players (by Authors' interpretation). Additionally, despite of the law, distributors are actually MEM agents, they only do not participate in the spot market.
Furthermore, contracts entered with self-producers cannot be overthrown by the economic dispatch - they can produce even if this is not the most economical option for the system.
According to amendments to Law No. 15.336/60, only hydroelectric projects with power over 500 kV and public service activities of transmission and distribution require concessions by the executive power.
Law No. 25.019/1998
This Law, the initial legal framework for the development of electricity alternative sources in Argentina, originally focused mainly on the development of solar PV and wind power.
The law firstly determines that the Energy Secretary shall promote the research and use of renewable or non-conventional energy sources, and that generation from solar and wind sources do not require an authorization from the Executive Power for installation. VAT37
36 For further details of their operation, see the attachments section of this report. 37 Value Added Tax - a tax charged on the sale of a product, and passed on to the end consumer,
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payments due to investment in installations and/or equipment can be divided into 15 annual installments with payment starting in 2013, and enterprises enjoy tax stability.
The Federal Electric Energy Council can apply FEDEI funds for solar and wind generation. Energy purchase receives a treatment similar to hydroplants without reservoir capacity (preferential dispatch). Due to changes introduced by Law No. 26.190/2006, special rates were extended to other sources for a fifteen years duration. These are:
Table 54: Value of Special Tariffs for Electric Injection
Wind 0.015 US$/kWh
Solar PV 0.9 US$/kWh
SHP( <30 MW) 0.015 US$/kWh
Others 0.015 US$/kWh
The marginal production price of a large combined cycle gas plant (620 MW) was 417.82 $/MWh as of 31/03/2010. According to CADER (2009), these incentives are small for wind energy as compared to the spot price for electricity traded in the Argentinean market.
Law No. 26.190/2006
This Law, regulated only in 2009 by Decree No. 562/2009, intends to achieve an 8% share of renewable sources in electricity generation within ten years - until 2016 (SHPs, wind energy, solar, geothermal, tidal, biomass, landfill and sewage treatment gas, and biogas). The law determines that the Executive branch must elaborate a "Federal Program for Development of Renewable Energy", to stimulate the development of technologies and equipment, enter cooperation agreements, train human resources and promote renewable energy acceptance by the society.
It determines that until 2016 returns can be anticipated or accelerated amortization of VAT and income tax can be made for purchases of capital goods and/or services, according to Law No. 25.924/2004. In addition, during 3 fiscal years, these properties will not be used in accounting the minimum presumed income tax. However, the regulation determines that a maximum annual amount of the budget may be used for this purpose. There is an incentive mechanism included for a quick implementation of projects: amortization is accelerated for faster investments, from the project approval, and some obstacles to people affected by court proceedings, bankruptcy and other is set. Projects with national resources are favored, and integration is allowed with imported equipment when there is "no local national competitive technology".
Law No. 26.123/2006 - Hydrogen Promotion
The law (which should have been regulated 90 days after it publication) determines a wide range of responsibilities to the enforcement authority, yet to be determined, from development of human resources to pilot projects for hydrogen use (obtained from renewable energy sources or from fossil fuels). Thus, the effectiveness of these measures will depend on the regulation, although the delay is a negative signal on the political will to regulate the Law.
The law also creates the "National Fund for Hydrogen Development (FONHIDRO - Fondo Nacional de Fomento del Hidrógeno)", whose resources shall be determined through the Union budget, without any other fixed source of funds. The value-added tax (VAT) paid on
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infrastructure investment and capital goods can be deducted from other taxes amounts after three fiscal years (therefore, three years). Furthermore, goods involved in hydrogen related activities do not integrate the income tax accrual base, and hydrogen does not pay fuel taxes. Importantly, the use of hydrogen on the chemical and petrochemical processes does not enjoy of the benefits created by this law.
Resolution No. 269/08
With this resolution the concept of distributed self-generator is established, which allows a company to produce electricity and use the transmission network to transmit the generated energy for its own consumption, and even sell the surplus. This may allow an industry to invest in renewable generation to ensure its energy supply, however the producer and consumer legal entity must be the same (Cader, 2009).
Law No. 25.943/2004 - ENARSA Creation
In 2004 the government created Argentine Energy S.A. (ENARSA - Energía Argentina Sociedad Anónima), a company operating with fossil fuels, nuclear, and renewable power sectors, motivated by the country's energy crisis. The main ENARSA asset is the possession of the not yet granted concessions to exploit oil and gas in Argentina, but the company was established to actuate in all energy fields.
Existing Bills
S-4370/08 – Amendment to Law No.26.190/2006
The project includes fiscal stability and relief from import duties (for items with no national equivalent) as directives of a favorable tax treatment. Furthermore, it increases the special rate for wind source feed (from 0.15 to 0.31 $/kWh), solar PV and CSP (from 0.9 to 1.00 $/kWh). This bill is more limited in scope, and tax changes are its most important issues in terms of incentive potential, but apparently the bill expired in 2010 in the Senate and the project was abandoned. More consistent, project 4001-D-05 increases taxes collected for the FNEE by 0.8 $/MWh to pay for wind power up to 40% on the price of conventional energy sources (30% for sites with average wind speed above 23 km/h) for 15 years. Conventional sources energy price definition clearly depends on the regulation and on the definition of "average wind speed" (as a function of height and other parameters). Moreover, as the bill date is 2005, therefore preceding Law No. 26,190, its approval is uncertain.
Other existing minor bills, programs and special procedures
The following initiatives were identified, which can have a positive impact on the advancement of renewable sources technology:
• Statement of National Interest on Renewable Sources: 798/06, 424/01
• Hydrogen: 844/05, 859/03, 213/04, 2184/05, 1760/02
• Wind: 0791-05
• National Program for Nontraditional Energy Cultures : 2843/07
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Special programs
PERMER Project Bids
Under the Program for Renewable Energy in Rural Areas (PERMER - Programa de Energías Renovables en Mercados Rurales) bids are regularly published for supplying PV power generation systems. The current bids (as of 30/March/2010) are "Provision and Installation of Photovoltaic Equipment and Internal Installation in Rural Houses in Various Provinces", phases I and II, "Provision, Installation and Commissioning Service of 238 Photovoltaic Systems in Rural Schools" and "Repowering of Rural Schools in the Province of Jujuy".
Energy PLUS
Established by resolution 1281/06, the Energy Plus ("Energía PLUS") program requires major users of the wholesale market to "contract in the energy market their consumption above their actual 2005 demand" (Cader, 2009). Also, according to this source, Resolution 220/07 (which stimulates generation projects through contracting by CAMMESA for a 10 years period) would be the only possible form to incentive wind power, since this study precedes regulation and the bids mechanism institution.
The System Operating Procedures
The system operating procedures are important to discipline the insertion of energy from generation plants into the network. Argentina already has these procedures, and they have some special considerations for generation from renewable energy sources (CAMMESA, 2009b).
Renewable energy sources, except for hydro and wind power, must comply to the procedures specified for hydroelectric units without reservoirs, except when otherwise specified (Procedures' Annex 39 ) addressing the issues described in following.
Network Procedures for Renewable Sources Except for Wind and Hydraulic
The non-synchronous generator units with rated power of less than 1 MW cannot consume reactive power from the grid, and shall have voltage control when necessary. Generators of 1 to 25 MW must keep a power factor above 0.95, and shall have voltage control when necessary. Generators above 25 MW must meet the requirements of Technical Procedure No. 1. Synchronous units must comply to normal procedures, or with the ones of Annex 4 according to their request, in case of impossibility.
Network Procedures for Wind Power
A wind project may participate in the MEM if its minimum power is 1 MW. The wind farm must respect a power factor of 0.95. Otherwise, it shall pay the costs paid to any generator to maintain such an equipment, of 0.45 $/MVArh, if the impossibility of providing the reactive power was informed in the station quarterly programming. Otherwise, the cost is $ 4.5 / MVArh, and breaching of rules may result in disconnection from the network at critical moments.
Procedures separate wind farms into two types according to their influence on the network: type A - the ones with the greatest impact and type B - the ones with less impact, ranked by nominal power rating and the rated short-circuit power at the connection point.
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TYPE A
Type A shall not cause voltage variations larger than 1%, 2% or 3% for networks with voltages larger than 132 kV, between 132 kV and 35 kV, and lower than 35 kV, respectively, (calculated for the lowest short-circuit power at the connection point). If the wind farm cannot provide active power or the speed of the joint voltage control is not enough, the system operator may require the installation of an additional equipment. The generator must also provide a "countermeasure or strategy" for a simultaneous turbine shutdown situation due to extreme winds. Shut-down and reconnection shall be made in a manner adequate to the primary power reserves. The farm must support the same islanding / under-voltage conditions of other generators, and provide generation control (increase or decrease) according to the operator.
TYPE B
If the wind farm meets the criteria for voltage variation of a type A central even in case of an instantaneous shutdown of the nominal power, the wind farm is type B. The requirement is to respect the 0.95 power factor, and the farm does not need to perform voltage control.
For both types, if necessary, a shunt capacitor may be used to respect the power factor. In case of shut-down or start-up the voltage variation limit plus 1% must be respected. Moreover, both types must show strength against frequency variations required from other generators. Additionally, wind generators must comply with the IEC 61400-21 Standard "in respect to harmonics, flickers, etc.".
Considerations on the Argentine Legislative Framework
A large part of Argentina's wind farms was developed in the period after the enactment of Law No. 25.019/98. Nevertheless, given the 2009 total installed power in Argentina, of some 30 MW, it can not be considered that this law has been effective in promoting wind energy, and particularly in promoting PV solar energy.
According to CADER (2009), Law 26.190/2006 is also insufficient because there is no penalty for violating the goal, power tariffs are low as compared to cost (at least for wind), and no accounting is made of the positive environmental benefits of generation projects based on renewable sources.
According to Guzowski et al. (2008), the high risk of renewable generation projects is an obstacle to their development in Argentina. Analyzing Law 26.190/2006, it may be concluded is that its contribution to projects' risk reduction is modest. Despite the various tax exemptions, there is no clear mechanism for investment in projects, and the delay of the executive to regulate the law does not indicate a strong political will. However, with the 2009 ENARSA bidding, it is possible to foresee a further development of alternative sources. Of course, this depends on the enactment of new bids or of a reform of incentive mechanisms, such as an increase in power tariffs. Furthermore, the bid’s projects constructions must be accompanied to ensure that they are effectively implemented.
The Hydrogen Promotion Law No. 26.133/06, should have been regulated within 90 days after its publication, which did not occur up to April 2010. Thus, as in case of Law No. 26.190/06 (regulated three years after its enactment), the delay in the regulation gives a negative signal on the Government commitment to support renewable energy generation.
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3.2.2 BRAZIL
Despite some difficulties and gaps in the legislation and regulation on renewable energy sources incentives, Brazil already has a legal and regulatory framework to promote some of them, i.e., SHP, wind and biomass. Examples of these difficulties and gaps, are the periodicity non-regulation of alternative sources specific auctions, the absence of a defined long-term planning, and incentives deficiency for renewable sources as solar power.
The inclusion of wind power, biomass and SHP in the SIN has recently gained prominence, as these have been addressed by specific auctions and by Proinfa. Other alternative and renewable sources like solar and sea have not yet found the necessary political support for them to be leveraged, despite the existence of an inter-ministerial institutional effort underway to promote the introduction of solar PV energy in the country.
Presently, specific auctions for alternative sources are the main incentive mechanism for the same in the country: the so far installed capacity contracted through these auctions sum 3853.5 MW of wind farms, and 228.24 MW of SHPs, and 3634.2 MW of biomass, totaling 7715.94 MW, an amount of power larger than the one contracted by Proinfa. However, through Proinfa contracted SHPs added to a much higher capacity, i.e. 1191.24 MW.
Main Laws, Regulations and Programs
Incentive Program for Electric Energy Alternative Sources (Proinfa-Programa de Incentivo às Fontes Alternativas de Energia Elétrica)
Proinfa was created by the enactment of Law No. 10.438/2002 and, later, amended by Law no. 10.762/2003, Law no. 11.075/2004, and Law No. 11,488 enacted as of June 15, 2007, being regulated by Decree no. 5025, as of March 30, 2004 (Martins, 2010).
Despite criticism and mishaps, the program played an important role in helping to create a market for renewable energy in the country, although its long-term component and effective consolidator of these sources insertion in the national energy matrix, which would be its second phase, have been dropped because of specific auctions.
Created in the wake of Brazil's 2001 energy crisis, Proinfa main strategic objectives were: to diversify the Brazilian energy matrix and increase the internal supply security, provide jobs creation and manpower training, and intend to lower greenhouse gases emissions. And as a specific objective, increase the participation in electricity generation from wind , biomass, and SHPs in the SIN (Casa Civil, 2002).
Proinfa was divided into two phases, and only the first one succeeded. In the first phase contracting of 3,300 MW by Eletrobrás was determined, evenly distributed between sources (1,100 MW for each), with generators' contracting guaranteed by Eletrobrás for 20 years after their operation start. In the second phase, these sources should attend, in 20 years time, 10% of the annual national electricity consumption.
At the end of the first public auction, held in October 2004, 2527.46 MW was contracted for the three sources, being: 1,100 MW of wind, 1,100 MW of small hydro, and 327.46 MW of biomass (Varela 2009).As even with the second public call biomass did not reach the 1,100 MW goal, the missing power amount (MW 414.76) was filled by wind power and small hydro (Varella, 2009).
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Table 54 presents the final figures for the undertakings contracted by Proinfa after two public calls. All foreseen to come into operation in January 1st, 2011 after repeated extensions38.
Table 55: Sources contracted by PROINFA, power per source (MW) and number of contracted projects per source
Contracted Sources Power (MW) Number of Projects
SHPs 1191.24 63 (43.75%)
Wind 1422.92 54 (37.5%)
Biomass 685.24 27 (18.75%)
Total 3299.40 144 (100%)
Source: Varella (2009)
The price to be paid for these sources electricity in the first phase of the program was established by the Government Executive Power through Administrative Rule MME No. 45, as of March 30, 2004 (Table 55). Economic values were adjusted since their publication until the signing of contracts with Eletrobrás according to the variation of General Price Index (IGP-M) of the Getúlio Vargas Foundation. Even after the contracts entering, they continued to be readjusted by the same index (Martins, 2010).
Table 56: Economic values per source
Sources Economic Value (R$/MWh)
SHP 117.02
Wind 204.35/180.18 1
Cane Bagasse 93.77
Rice Husk 103.2
Wood 101.35
Notes: 1 The maximum economic value of wind power was set at R$ 204.35/MWh and the minimum economic value was defined as R$ 180.18/MWh.
Source: ANEEL (2004a)
Proinfa suffered a series of mishaps during the program first phase, with many contract terminations, especially in the biomass sector which had six undertakings excluded from the program, and many delays in construction of wind farms (in March 2010, 16 projects works had not yet been started) (Mendonça, 2010).
Some difficulties were identified concerning the delayed entry into operation of the Proinfa first phase projects, such as: (1) lack of investors' financial resources; (2) PIE39 definitions restricted participation of utilities in the program; (3) the set up of a 60% domestic
38 According to Decree 4.541/2002, the initial forecasts for operation start of the Proinfa first phase projects was until 12.30.2006, but due to the encountered difficulties, this date was postponed by Law No. 11,075, published as of 12.31.2004 to 30.12.2008. Later this term was further extended by Eletrobrás until May 31, 2009, through Resolution No. 171, dated as of February 19, 2009. Finally, Law No. 11,943 as of May 28, 2009, set the operation start-up closing date as of December 30, 2010 for the first phase of the program (Martins 2010). 39 Independent Power Producer means a legal entity or business consortium that receives a concession or authorization to produce electric power for sale in total or part on their own account and risk.
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content, aimed at fostering basic industries, created delays in execution, because the national production capacity was not enough to meet the program demand; (4) difficulties encountered in the program first phase created uncertainty on the second phase success: (5) there was much speculation in the program early years caused by the rule that the developments with older environmental permits would have priority in licensing and thus "pseudo-investors" obtained qualification without having actual conditions of building the project for not having collateral warranties to raise financing, passing to make money selling projects (Salamoni, 2009; Medeiros, 2010a).
For the specific biomass case, some reasons have been identified to explain the fact that the planned 1,100 MW were not attained: (1) the prevailing market economic conditions at the time had very attractive international sugar market values, making mill owners to prefer investing in a business sector that was already technologically known, instead of actuating under Proinfa; (2) the economic value established for biomass was considered relatively low by the sugar-alcohol sector; (3) uncertainty among investors in relation on how much would be necessary to invest to produce the energy to be made available to the network; (4) the requirement for entrepreneurs to meet all criteria presented in the license guide for each source, i.e., to submit the required documents for legal, fiscal, financial-economic, and technical40 capacity, among others(Martins, 2010).
Proinfa foresees a second phase, in which sources should attend, in 20 years time, 10% of the annual national electricity consumption. However, according to Eletrobrás information, the second Proinfa phase shall not take place, since specific auctions are presently considered more appropriate to promote alternative sources in the country (Mendonça, 2010).
Light for Everyone Program The National Program for Universal Access and Use of Electric Power - Light for Everyone (Programa Nacional de Universalização do Acesso e Uso da Energia Elétrica Luz para Todos-LPT), established by Decree No. 4873 as of November 11, 2003, and amended by Decree No. 6442 as of April 25, 2008, aims to provide access to electricity to the entire rural population of Brazil by the end of 2010. The attainment of this goal will benefit about 2.5 million households (12 million people), anticipating the universalization of electric energy in rural area that was originally supposed to be implemented by concessionaires until December 2015. The initial target was to attend 10 million people in 2008, but it was necessary to increase this goal and extend the period as new demands have arisen.
The program is coordinated by the MME and deployed with the participation of Eletrobrás, according to art. 3 of Decree No. 4873, which established the LPT (Eletrobrás, 2010). Decree No. 6442 expires in December 2010, but the Federal Government will extend the program until 2011 primarily because of the challenges to attend the population located in the Northern Region.
Because there are many isolated areas in Brazil and, consequently, difficulties in extending the conventional power grid to these areas41, the Program provides alternatives to
40 The difficulty found in attaching numerous certificates especially the ones regarding labor aspects, because of the large number of formal and informal manpower associated directly or indirectly to agricultural and industrial production of sugar and alcohol is mentioned as a factor for the lack of interest of the sugar cane industry (Martins, 2010). 41These are small scattered villages, of low income, poor infrastructure, at remote sites and requiring high costs to construct long transmission lines and distribution circuits to serve a few consumer units.
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attend these families through decentralized power generation, such as renewable sources. For these cases, the ANEEL Normative Resolution No. 83/2004 and the MME Administrative Rule No. 60 of February 12, 2009, established the following.
The ANEEL Normative Resolution No. 83/2004 regulates technical, commercial, and quality aspects establishing the supply procedures and conditions through the Individual Systems of Electric Power Generation with Intermittent Sources (Sistemas Individuais de Geração de Energia Elétrica com Fontes Intermitentes-SIGFI) as an option for universalization of electricity services.. Each family shall receives such a system installed in its domicile. According to the resolution, "intermittent source of energy is a renewable energy resource that, for conversion into electricity by the generating system, cannot be stored in its original form” (Art. 2, proposition V, sheet 2) (ANEEL, 2004b).
The Administrative Rule No. 60 as of February 12, 2009, created a new special projects' manual for the Program encouraging mini-net projects for rural electrification and prioritizing the use of renewable sources and environmental impact mitigation. Using renewable sources compatible with local realities, the locally generated energy is supplied to households through small sections of distribution networks built in primary and/or secondary voltages (mini-nets), and comprising, when necessary, the use of non-conventional distribution networks, using technologies supported by the legislation in force (Eletrobrás, 2009).These special projects are 85% subsidized of their direct deployment costs with CDE resources, with the remaining 15% in return by the Executing Agents (Eletrobrás, 2009).
The SIGFIs are considered an important solution for rural electrification by concessionaires, but only some few of them install these systems in the LPT scope. Concessionaires (having or not installed SIGFIs) point at non-regulatory issues as the main encountered difficulties, for example: consumer uncertainty regarding the mode of supply (network x SIGFI), large rejection of the audience for PV systems and lack of economic incentive by the MME, as in case of mini-nets (Jannuzzi et al., 2009).
Regarding mini-networks, despite being pointed out as a priority by the MME by counting with a considerable economic incentive, lack of information by concessionaires is perceived on this modality and specific ANEEL regulation is absent, as there is for SIGFI. Some concessionaires pointed out that due to the lack of regulation, there is a large possibility of the system be exhausted by load increases, because the concessionaire cannot limit the consumption of each household. Table 56 illustrates the current situation regarding regulation and financial incentives relative to mini-networks and SIGFIs.
Table 57: Regulation and economic incentive: mini-nets versus SIGFIs.
Mini-grid SIGFI
Specific regulation None Yes
Economic incentive Yes None Source: Authors' elaboration based on Jannuzzi et al. (2009).
Therefore, despite the potential for renewable energies insertion within the LPT by installing mini-networks and SIGFIs, gaps remain to be filled for the implementation of these alternatives to become effective.
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Fund of Investment in Solar Energy (FIES - Fundo de Investimento em Energia Solar) Complementary Law No. 81 as of 09.02.2009 established within the Executive Power of the State of Ceará, the FIES, whose goal is to stimulate the installation and maintenance of plants for production of solar energy, as well as manufacturers of solar equipment in the territory of Ceará. According to the law, FIES resources will be used in the development of generation and consumption of solar power, intending the installation of solar plants and attracting investments to its supply chain (Ceará, 2009).
According to the Complementary Law No. 81, FIES revenues will consist of: budget allocations from the State Fiscal Budget; resources from charges collected from beneficiaries of the Industrial Development Fund of Ceará; resources arising from contributions of free consumers or of incentivized energy, from the State of Ceará or other federation states, that voluntarily wish to consume solar energy produced by plants located in the State of Ceará, in accordance to the regulatory legislation, resources arising from agreements, settlements, contracts and conventions entered into with entities of the Federal Public Administration or Local Government agreements; conventions, contracts and donations by national or international public or private, grants, aid, grants and bequests of any kind, from individuals and corporations of the country or abroad; return of loans, taxes and amortization, provided with FIES funds, earnings from financial investment of its resources and other revenues that may be meant to the Fund. As a result of the Law approval, in August 2010 were started the works of the first solar PV power plant in Brazil, to be installed in Tauá inland of Ceará. The enterprise was announced in 2008 by Company MPX of the EBX Group, but the installation was postponed expecting FIES approval; it is pioneer in Brazil (Souza, 2010). The plant first phase will have 1 MW of installed capacity, but was granted by ANEEL with a 5 MW power capacity.
Existing Bills Although nothing can be taken for sure, and no one can assure the approval of bills in progress, it is important to point out that the existence of a series of legislative initiatives encouraging renewable energy in the country, pointing out that the issue has been receiving increasing highlights. Table 57 presents some of the bills following procedures in the House of Representatives and the Senate.
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Table 58: Bills relating to renewable sources.
House of Representatives
Provides for the deployment of heating systems and electric power Bill No. 6,529/ 2009 Awaiting Opinion. generation based on solar energy in new developments funded by the National Rural Credit System.
.Amends provisions of Law No. 9.427, as of December 26, 1996, and Law Bill No. 3,986/2008 Awaiting Opinion. 10.848, as of March 15, 2004, to promote generation and consumption of energy from renewable sources Bill No. 2,867/2008 Following procedures jointly. Authorizes issuance of Certificates of Alternative Energy. Bill No. 2,737/2008 Following procedures jointly. Provide incentives to energy generation from solar source. Disposes on renewable energy sources, aiming to promote their universal use, distributed generation, and energy rationalization, amending Law No. Bill No. 1,563/2007 Following procedures jointly. 10,438, as of April 26, 2002, to modify Proinfa and increase participation of alternative sources in the National energy matrix. Creates the Certificate of Renewable Energy Entrepreneur (CEER - Certificado de Empreendedor de Energia Renovável), to be granted to Bill No. 2,505/2007 Following procedures jointly. natural persons or legal entities that produce electricity from alternative and renewable sources. Establishes tax incentives for the purchase of goods and rendering of Bill No. 2,023/2007 Following procedures jointly. services required for the use of solar, wind, or other forms of alternative energy. Establishes the Brazilian Program for Decentralized Generation of Electricity Bill No. 2,692/2006 Following procedures jointly. and provides for other matters. Creates a Program to Promote Renewable Energy and provides other measures. "Explanation": Changes Laws Nos. 7990/1989, 9478/1997, Bill No. 4,242/2004 Following procedures jointly. 9648/1998 and 9991/2000, establishing mechanisms for utilization of renewable energy sources, stimulates production and research of "clean energy". Creates the Incentive Program for Renewable Energy, and gives other Bill No. 3,259/2004 Following procedures jointly. provisions. Disposes on incentives for alternative energy generation and gives other Bill No. 3,831/2004 Following procedures jointly. provisions Amends Art. 1 of Law No. 8001, as of March 13, 1990, constitutes a special Bill No. 630/2003 Awaiting Resolution of Appeal. fund to finance research and foment production of electric and thermal energy from solar and wind energy, and gives other provisions. Senate Authorizes the Federal Government to create the National Renewable Senate Bill No 495/2009 Following procedures Energy Agency (ANER - Agência Nacional de Energias Renováveis). Source: Authors' elaboration based on the Portal of the House of Representatives and the Senate. Research performed as of 23/03/2010.
Fiscal incentives There are in Brazil some incentives for certain PV and wind equipment. The two most important fiscal incentives that encourage use of solar and wind equipment are the Value Added Tax (ICMS - Imposto sobre Circulação de Mercadorias e Prestação de Serviços) of state jurisdiction, and the Excise Tax (IPI - Imposto sobre Produtos Industrializados) of federal jurisdiction.
The agreement ICMS 101/97 grants ICMS exemption on some equipment and components for use of solar and wind power and has been extended until 12.31.12 by agreement ICMS 01, as of January 20, 2010 (CONFAZ, 2010). Table 58 illustrates solar and wind equipment exempt of ICMS, being worth to highlight that the benefit is limited to equipments exempt or taxed at zero IPI rate, according to Decree 3,827/01.
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Table 59: Wind and solar photovoltaic equipment exempt from ICMS.
Wind turbines to convert wind energy into mechanical energy for water pumping and/or grain grinding. Pumps for liquids, for use in photovoltaic DC solar energy system, with power not exceeding 2 HP. Solar water heaters. PV power generator with power not exceeding 750W PV power generator with power output exceeding 750 W but not exceeding 75 kW PV power generator with power over 375 kW PV power generator with power output exceeding 75 kW but not exceeding 375 kW Wind power generators Non assembled solar cells Solar cells in modules or panels Tower to support wind power generator Source: CONFAZ (1997).
The Ministry of Finance (2009) disclosed that wind power has received permanent IPI exemption for wind turbines used in energy production from wind sources. It is expected that this measure will increase investment in wind energy production and add to equipment production in Brazil. The estimated tax relief is $ 89 million in 2010.
Study Groups for Policies Implementation
WORKING GROUP ON DISTRIBUTED GENERATION WITH PV SYSTEMS
Under the MME was created the Working Group on Distributed Generation with Photovoltaic Systems (GT-GDSF) through Administrative Rule No. 36 as of November 26, 2008. The administrative rule defines that the GT-GDSF will prepare studies, propose conditions and suggest criteria intended to subsidize proper definitions for a policy proposal for use of network-connected PV generation, particularly in urban buildings, as a factor in optimizing energy demand management and environmental promotion of the country, for short, medium and long-term.
The Working Group is formed by representatives of the Secretary of Energy Planning and Development (SPE), the Department of Electrical Energy (SEE), the CEPEL, the University of Salvador (UNIFACS), the Federal University of Santa Catarina (UFSC) and the Institute of Electrotechnics and Energy of the University of São Paulo (USP) (DOU, 2008).
The group activities have already ended and it is currently working on the final review stage of a report. The MME disclosed that during the GT-GDSF activities evolution, it became clear that the breadth of the discussion extended from a proposal to revise the legislation on how to connect these systems to the network to preparing a proposal of broader scope, by structuring an industrial development policy, the productive chain consolidation and evaluation of technology improvement needs, considering proposals for research and development projects. As a function of this new context, the MME Executive Secretary gave an orientation to, before the report publication, held a technical meeting with key players of relevant sectors (ANEEL, concessionaires, among others), and also with representatives of the Ministry of Science and Technology (MCT), and the Ministry of Industry Development and Foreign Trade (MDIC) to validate the report content and gather elements to generate a systematic action plan to insert the PV solar technology into the mix of Brazil's energy options (Júnior, 2010).
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PROSPECTIVE STUDY ON PHOTOVOLTAIC ENERGY
Within the scope of the Ministry of Science and Technology (MCT) was elaborated a Prospective Study on Photovoltaic Energy, conducted between 2008 and 2009 by the Management Center for Strategic Studies - CGEE - by request of the Federal Government, with the objective was to build recommendations on public policies for the PV industry development in the country. Based on the knowledge and experience of hundreds of experts from the government, academia and businesses, the study provides subsides for decision-making reaching the horizon of 2025 and includes three phases: panorama, perspectives and proposals. The last phase presents proposals for public policies based on four ideas (Table 59).
Table 60: Summary of proposals outlined by CGEE.
Finance R&D programs that enable competitiveness gains;
To incentive research and technological Coordinate R&D activities through an information network; innovation. Modernize laboratories and establish pilot procedures; Develop qualified human resources; Establish international cooperation. Regulate the connection of photovoltaic systems to the electric network; Publicize photovoltaic solar energy to the society; Incentivize distributed photovoltaic power generation connected to the electric network; Creation of a consumer market. Stimulate the creation of installation and maintenance service companies; Incentivize large-scale photovoltaic generation for specific loads with stable demand; Foment the implementation of mini-nets; Insert the Renewable Energy subject into the Production Development Policy; Establish local solar cells and photovoltaic Stimulate the establishment of solar cells and photovoltaic modules industries. modules industries. Stimulate the establishment of industries of equipment for PV systems; Establish industries of solar grade and electronic grade silicon. Source: Authors' elaboration based on CGEE (2010).
Cooperation between interested, or involved, Federal, States and, where applicable, Municipal Governments is indicated by the CGEE as key to improved effectiveness of the public policies to be implemented.
The study also concludes that the government should invest in the development of silicon and solar PV industries given their potential to: generation of thousands of high-level jobs in the country; socioeconomic wealth generation and distribution; development of internationally competitive industrial park; production of renewable and environmentally clean energy, since the high solar potential in the country.
Auctions With the Brazilian power sector reform in the 90's and the reformulation of electricity sale model in 2004 by Law 10848 as of March 15, 2004, considerable changes occurred in energy commercialization in the country (Casa Civil, 2004a). Decree 5163 as of July 30, 2004, sets out the basis for electricity commercialization: creation of two contracting environments, The Regulated Contracting Environment (ACR- Ambiente de Contratação Regulada) and The Free Contracting Environment (ACL- Ambiente de Contratação Livre); competition for
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generation expansion through auctions for lower tariff; joint contracting by all distributors through auctions applying the lowest tariff criterion (Casa Civil, 2004b).
The ACR covers the purchase by distribution companies in public auctions to attend their captive customers, and the free contracting environment, includes the purchase of electricity by non-regulated entities, such as Free Consumers and Traders.
Auctions can be for new energy, for existing energy, for energy adjustment, or auctions can be specific for a set of technologies (renewable), for a single technology (wind) or for a project (large hydro).
Every year, there are two auctions for new energy: A-5 and A-3, which promote the construction of new capacity to meet the utilities' demand increase with contracts having between 15 and 30 years duration (Barroso, Bezerra, and Flach, 2009). According to Decree 5163, new generation projects are those that at the publication date of the respective auction call: are not holders of concession, permit or authorization; or part of an existing development that may be subject to extension, limited to the increase of its installed capacity.
Auctions of existing energy are called A-1 and complement new energy contracts. Contracts have a duration of 5 to 15 years and are held annually (Barroso, Bezerra, and Flach, 2009).
Adjustment auctions are called "A-0". The contract term is up to two years, being held 3-4 times per year, and starting in the same year. The distributor has a 1% limit of its total load to be contracted in this type of auction (Barroso et al., 2009).
Special auctions are a function of the political interest to promote a given technology, as alternative sources, strategic projects to the country, such as large hydro and power reserve auctions. The current legislation does not set a schedule to perform this type of auctions (Barroso, Bezerra, e Flach, 2009).
The first and only alternative sources auction was held on June 18, 2007, and included small hydro, thermoelectric and biomass (bagasse and poultry breeding) power plants, when a total of 541.9 MW was contracted. The first auction of reserve energy (LER) commercialized biomass energy, with 15 years contracts and operation start in 2009 and 2010, when a total of 2379.4 MW was contracted.
The first special auction major success in promoting renewable energy was the first specific wind source auction (a second reserve energy auction) held as of December 14, 2009, which resulted in contracting 1805.7 MW, at an average selling price of R$ 148.39/MWh. In relation to the initial auction price of R$ 189/MWh, the final average price of R$ 148.39/MWh, represents a discount of 21.49%. With the auction, it will be feasible to build a total of 71 wind generation projects in five states in the Northeast and South regions (EPE, 2010).
According to the rules established by the MME Administrative Rule No. 211, as of May 28, 2009, the Contract for Reserve Energy resulting from the auction will be signed as quantity of electricity power from wind source, with supply starting in July 1st, 2012 and contractual term of 20 years.
The first auction to contract Isolated Systems electric power was held in 04/09/2010. The MME, through Administrative Rule No. 78, as of March 3, 2010, approved the Auction Systematic for Contracting Isolated Systems Electric Energy and Associated Power, specific for biomass source, of which deals the MME Administrative Rule No. 56 as of February 04, 2010. Just a little over 8.1 MW were traded in the bid for three projects that will sell the energy to
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distributors Celpa and CERR. The date for the supply start of the three contracts traded in the auction will be 2012 for Para and 2013 for Roraima. The price of energy sold at the event ranged from R$ 148.50/MWh to R$ 149.00/MWh. The Contract for Electrical Energy Supply in Isolated Systems (CCESI) will have 15 years duration.
The Alternative Energy Sources (A-3 and Reserve) second auction of 2010, held in August, 25 and 26, 2010, resulted in contracting 2892.2 MW of installed power, corresponding to an average power of 1159.4 MW. Overall, were contracted 70 wind farms, 12 biomass power plants and 7 SHPs that will receive investments of approximately R$ 9.7 billion.
Normative Resolution No. 247 The Normative Resolution No. 247 as of December 21, 2006, establishes the figure of the Special Consumer and his conditions for electric energy commercialization (ANEEL, 2006). This resolution establishes that special consumers should receive treatment similar to that given to free consumers and can buy incentivized energy in whole or part. Special consumers are also allowed to own contracts of sale of incentivized energy, as well as captive supply contracts with concessionaires or distribution permit holders. Therefore, the special consumer can participate in the free market even without having the characteristics of a free customer, with the generation to be traded compulsorily coming from: use of hydraulic potential with power exceeding 1,000 kW and equal to, or less than 30,000 kW, intended for independent production or self-production, maintaining the characteristics of a small hydropower plant; enterprises with installed capacity equal to, or less than 1,000 kW; enterprises whose primary source of generation is biomass, wind or solar power, whose injected power into the transmission or distribution system is less than, or equal to 30,000 kW.
Thus increasing the commercialization possibilities for energy coming from renewable sources in the free market.
Normative Resolution No. no77 Normative Resolution No 77 as of August 18, 2004, determines the application of a fifty percent (50%) reduction to rates of transmission and distribution electrical systems, applicable to the production and consumption of electricity sold by hydropower projects with installed power equal to, or smaller than one thousand (1,000) kW, for those characterized as SHP, and to those based on solar, wind, biomass or cogeneration sources according to ANEEL regulations, whose injected power into the transmission or distribution system is less than, or equal to 30,000 kW (ANEEL, 2004a).
Considerations on the Brazilian Legislative Power Renewable energy sources began to be used in Brazil, on a larger scale, through the Proinfa, which had an important initial role in creating a market for renewable sources in the country, although its program had suffered delays in enterprises' startup. Specific auctions for renewable sources are now considered by the government the main mechanism to encourage renewable sources. However, it is noteworthy to mention that, as in the Proinfa only SHP, wind and biomass have been addressed. Comparing to Proinfa, auctions have already hired a much higher capacity and have the advantage of establishing penalty for failure in complying with projects' deadlines for operation startup.
Studies were conducted to establish a policy for the development of PV industry in the country and there is an expectation for its establishment in coming years. Thus, the FIES has distinguished itself nationally as a pioneer in attempts to development the PV sector in Ceará.
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Fiscal incentives given for certain PV and wind equipment are another important mechanism to incentive renewable sources, but insufficient, by themselves, to encourage the creation of a market for these sources. Additionally, the uncertainty regarding their renewal and the absence of minimum terms for their renewal has been criticized by some industry experts.
Thus, despite the recent Brazilian experience in adopting mechanisms to incentivize renewable sources, the country has achieved through the auction mechanism the creation of a favorable environment for investment in renewable sources, ensuring long-term contracts, even though there is no regulation stipulating their periodicity. However, the PDE 2019 is an important indication of the Government interest in continuing to held such auctions periodically.
3.2.3 CENTRAL AMERICA Central America countries have also made efforts to spur development of renewable energy, which originated in the oil crisis and in the increased awareness of resources availability, as well as on the consequences to the environment of using fossil fuels.
Main Laws, Regulations and Programs In Central America there are laws to promote and support renewable energy projects.
El Salvador Law of Fiscal Incentives to Promote Renewable Energy in Electricity Generation. Approved in December 2007 by Decree No. 462, this law establishes a package of fiscal incentives for natural persons or legal entities that invest in renewable sources for electricity generation, among which stand out: i) exemption from import tariffs for capital goods and other inputs associated with power stations up to 20 MW, for the first 10 years; ii) exemption from income tax during the first 5 years for power plants between 10 MW and 20 MW, and during the first 10 years for power plants with less than 10 MW, and iii) projects over 20 MW can deduct from the income tax the cost of all studies related to the project.
Guatemala Law of Incentives for the Development of Renewable Energy Projects and its Regulation. The Law aims to promote the development of renewable energy projects and establishes fiscal, financial and administrative incentives for their realization.
Honduras Law of Incentives for Renewable Energy Projects. The Law seeks to develop small projects that use natural resources in counties, with the aim of promoting economic and social development of its members and of surrounding areas.
Nicaragua • Law for Promotion of the Hydroelectric Subsector (Law No. 467). Allows the development of hydroelectric projects of up to 5 MW and gives fiscal incentives.
• Law for the Promotion of Electric Power Generation with Renewable Sources (Law No. 532). Establishes fiscal, economic and administrative incentives for the development of renewable energy projects.
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3.2.4 CHILE During 2004 and 2005 the Chilean electricity sector underwent a reform ensuing from the energy crisis lived by the country. The high share of hydroelectricity and reductions in Argentine natural gas have created a risky environment for investment in new generating capacity, mainly due to the volatility of the spot market.
The General Law of Electricity Services (LGSE), enacted in 1982, was amended in 2004 by Law 19,940, known as Short Law I, and in 2005 by Law 20.018, known as Short Law II.
According to Chilean regulation (CNE, 2006) the behavior has historically been neutral regarding generation sources and employed technologies. Thus, Law 20,257 was published in 2008, based on the quota mechanism, which establishes that generators should sell increasing participation goals of renewable energy under penalty with a fine.
Technical rules for connection and operation of an ERNC generating system differs depending on the selected connection. Figure 22 presents the rules used depending on the connection to the distribution or transmission system.
Figure 22: Regulations imposed by virtue of the connection system
Source: CNE & GTZ (2009: p.71)
Main Laws, Regulations and Programs
Law No. 19,940, Short Law I Law No 19940 (Short Law I), enacted by the "Ministerio de Economía, Fomento y Reconstrucción" and published in the Official Newspaper as of March 13, 2004, opened the spot market and assured to small generators (installed capacity less than 9 MW), the size that normally is the basis for ERNCs developments the right of connection to distribution networks, thereby increasing the options for selling energy and power of these centrals.
Furthermore it provides for payment exemption for using the transmission system for MGNCs42 (with a differential treatment for units smaller than 9 MW and units between 9 MW and 20 MW of installed capacity) (CNE e GTZ, 2009).
42 MGNC: Non-conventional generation whose capacity installed to the system is less than 20 MW. This category also includes enterprises smaller than 20 MW based on ERNCs, including cogeneration projects based on fossil fuels smaller than 20MW and efficient.
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Units with power between 9 MW and 20 MW receive exemptions in proportion to their capacity. Those with less than 9 MW capacity have total relief and units with installed capacity over 20 MW do not receive any exemption (see Figure 23).
Figure 23: Exemption from payment for MGNC units use of the transmission system, as a function of installed capacity.
Source: CNE & GTZ (2009: p.77)
Law No. 19,940, Short Law II Short Law II, enacted as of May 19, 2005 by the Ministerio de Economía, Fomento y Reconstrucción, overhauled regulations for transactions between generators and distributors to attend regulated customers supply in response to the energy crisis experienced by Chile due to restrictions of natural gas supply from Argentina, where the entry of new ventures to generate electricity in the country was threatened (CNE, 2008; IEA, 2009).
Law 20,018 establishes that electricity distributors should celebrate their power supply contracts with the generators through open, transparent, public auctions, overseen by the CNE, where at competing prices energy is purchased by the lowest price.
The distributors will pass on to their regulated clients the contracts average price (price weighted by the offered volume) instead of the previous "precios de nudo" (open positions price) (IEA, 2009; MEFR, 2005).
Generators are free to choose the energy price to auction, but the CNE sets a ceiling price through a formula set by law. If the auction process is not successful due to lack of generators' interest or failure to comply with auction reference terms, the CNE may approve an increase of 15% on the previously ceiling price. Distributors are compelled to conduct long-term contracts with generators, and it is required a three-year period between the auction and the start of supply as defined in the contract (IEA, 2009).
In addition, the law created an exclusive market for renewable non-conventional sources by granting the right to supply up to 5% of the demand intended to distributors' regulated clients at the price negotiated to regulated clients. This item recognizes a special treatment to ERNCs, which can help small generators who have few opportunities to participate in the auctions (item 5, Article 96) (MEFR, 2005).
The two decrees below regulate the Law Cuts II (Law 20,018).
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Decree No. 4 The Decree No. 4, published as of April 28, 2008, provides a regulation on power supply auctioning to attend consumption of concessionaires electricity distribution regulated clients (MEFR, 2008).
Decree No. 244 Decree 244, enacted as of September 2, 2005, and published as of January 17, 2006, provided a regulation establishing conditions for connection and operation for MGNCs & PMGs43;determines that the mentioned generation means have the right to sell their energy at marginal cost and its power at nodal price, operating with self-forwarding; exempts MGNCs owners of the full or partial usage fees payment of the system transmission systems (MEFR, 2006; Jaime Z., 2007).
Law No. 20,257: Law on Non-Conventional Renewable Energy Law 20,257, published as of April 1, 2008, and regulated by Resolution Exempt No. 1278 ─ which establishes rules for its proper implementation─ encourages the generation of electricity from renewable non-conventional sources by requiring that electricity generating companies with installed capacity exceeding 200 MW had a percentage of their electricity commercialized with free distributors or clients provided by renewable non-conventional energy sources, or hydropower plants, with capacity below 40 MW from January 1st, 2010, onwards, either by own or contracted generation means.
The requirement applies to generators that supply energy to the SIC and to the SING, whose premises were connected to the system since January 1st, 2007. Legislation states that the required 10% percentage shall be achieved gradually by increasing the volume of such energy type, so that, between 2010 and 2014 it reaches 5%, and increasing by 0.5% annually from 2015 onwards, until reaching 10% in 2024 and ensuring this participation until 2030.
The generators who do not evidence compliance with the quota on March 1st of the following year must pay a fine of 0.4 UTM44 per megawatt-hour (MWh) of non-accredited renewable non-conventional energy. The charge will increase to 0.6 UTM/MWh for companies that repeat non-compliance over the next three years. The law also provides that the collected funds by the breach of the law be distributed, in proportion to the energy consumed by each client, between regulated and free clients whose suppliers have obeyed the quota, thus establishing an incentive to comply with the law. It is noteworthy that in Chilean auctions each distributor sells at auction requirements according to their needs without being made unified auctions in the Brazilian case (Barroso, Bezerra & Flach 2009). Thus, it is possible that two distributors are served by a different set of generators, thus enabling the transfer of the money collected through fines only to customers of the distributors whose generators have met the requirements of the Law.
Law 20,257, known as the Law of ERNCs, published in April 1st, 2008, amends the LGSE aiming to incentive ERNCs to entry in electric systems. The standards set for the proper implementation of Law 20,257 are defined in Exempt Resolution No. 1278.
43PMG: Means of generation whose installed capacity to the system equals to, or is smaller than 9 MW, connected to a transmission system installation, to a sub-transmission, or additional (Article 1) (MEFR, 2006). 44UTM: Monthly inflation index. Monthly value available at: http://www.sii.cl/pagina/valores/utm/utm2010.htm
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Resolution No. 370 The Resolution establishes subsides for additional transmission lines needed for connections to the SIC or SING for ERNC generation projects, not being applicable to backbone lines of transmission system or sub-transmission systems (CORFO 2010).
The transmission agent that requests the subsidy should connect to the SIC or SING, at least, three ERNC projects (CORFO, 2010).
The subsidy payment will be made annually in foment units (UF) between years 6 to 10 of the line operation and will be equivalent to the lower value between: 18,000 UF; 5% of the project initial investment; the product of the potential transmission tariff for the period i estimated at the time of the subside request and the difference between the projected and actual demand for potential transmission for period i (whenever this difference is positive); the difference between annually projected power input and real power input obtained by the project for the corresponding year as contained in the petition (whenever the difference is positive) (CORFO, 2010).
Existing Bills As of January 21, 2009 a bill began to follow procedures in the Chamber of Deputies of Chile that introduces changes to Law 19,657 on geothermal energy concessions (MH, 2009). Its aim is to increase efficiency in the allocation of geothermal energy concessions; ensure sustainable use of geothermal production resources, and improve the State role in promoting and monitoring commitments.
The main content of the bill refers to the relaxation of conditions for determining the territorial extension of a geothermal power concession and the obligation for the company to provide a guarantee at the exploration concession to ensure compliance of works and to committed investment; incorporating the definition of exploitation of the obligation to conserve the geothermal resource through sustainable management of the activity and establishment of an incremental value of the patent to be paid by the concessionaires operating until the project begins production. This gives a signal to companies that received the exploration concession to proceed quickly to the development stages of geothermal production. The bill also proposes the reduction of some procedural deadlines, such as halving the time required for the authorities to make available the information requested.
Table 60 includes other smaller bills that are following procedures, which favor ERNCs.
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Table 61: Bills to incentivize ERNCs in Chile.
Bulletin No.: 4315-08 Following Modifies the LGSE to incentive ERNCs development. Proposed in: 11/07/2006 procedures
Obliges electricity distribution concessionaires to allow and implement the Bulletin No.: 6605-08 Following connection of net metering system to ease the generation of renewable non- procedures Proposed in: 09/07/2009 conventional energy.
Bulletin No.: 6379-08 Following Modifies Law 19,657 on concessions of geothermal energy. Proposed in: 21/01/2009 procedures
Source: DIPRES (2010)
The Sustainable Energy Program in Chile The Government of Chile and the Interamerican Development Bank (IDB) are currently working together to prepare the profile of a new rural electrification program in the country to be called "Energia Sostenible en Chile".
The program, still under preparation, shall support the following activities: (i) incentive investment in sustainable energy in isolated communities, promoting the use of ERNCs for self- generation and to replace sources of power generation based on fossil fuel, and improve coverage and service quality;(ii) promote rational energy usage, and (iii) strengthen key institutions such as schools, hospitals, and clinics (BID, 2010).
Considerations on the Chilean Legislative Power Chile, despite its high potential for exploitation of renewable sources, it still has a low insertion of the same. Legislation to encourage renewable sources in the country is very new, standing out Short Laws I & II, and mainly Law 20,257 that is based on a quota mechanism.
In the Latin American context, regulation 370 stands out because it is the only one that provides a subsidy for additional transmission lines to connect renewable sources' generation projects.
According to the industry experts, the Chilean regulatory environment needs to be redrafted to ensure that the law on non-conventional renewable energy sources to effectively reach its goals. A mentioned aspect is the absence of specific auctions for renewable sources and the non-distinction between auctions of new and for existing energy, as occurs in Brazil.
3.2.5 COLOMBIA As in many South American countries, the Colombian electric system has undergone a makeover in the 90's. According to Ruiz et al. (2006) since the 90's other changes have occurred, which negatively influenced the development of alternative energy sources. Several institutions have been remodeled or their focus was diverted from the promotion of alternative energy sources, such as the MME Division of Non-Conventional Energy (suppressed), remodeling of the Colombian Institute of Electric Energy (which became the Institute for Planning and Promotion of Energy Solutions - Instituto de Planificación y Promoción de Soluciones Energéticas para las Zonas No Interconectadas) and the suppression of the Institute of Nuclear Sciences and Alternative Energies, with the focus being the creation of regulatory bodies.
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Legislative Power The Colombian Legislative Power on the electric sector was changed in the 90's. In 1994, Law No. 142 (utilities law) and Law No. 143 (electricity law) were enacted, which allowed the participation of private investors in the electric sector.
Law No. 143/1994 This law stipulates that the Colombian Ministry of Mines and Energy is responsible for promoting the rational use of energy (URE - Uso Racional de Energia) and non-conventional sources. The State is also responsible for general access to energy. It created the Energy and Mining Planning Unit (UPME - Unidade de Planejamento Mineiro-Energético) whose function, among others, is to "assess the economic and social convenience of the development of non- conventional energy sources, as well as the development of nuclear energy for peaceful uses". The UPME prepares a reference expansion plan for the electric sector. Projects not chosen by the private sector rest as a state responsibility if they are fiscal and financially sustainable (Article 18).
Furthermore, according to this law, the connection cost of a generator to the national interconnection net is a responsibility of the same, but the access to the transmission network is free, if the established standards are respected. This access can be made in the regulated or free mode. In the free node, the agent does not assume to supply a fixed amount of energy, and prices are determined by the market, while that in the first mode, the agent signs a contract to supply at a fixed price.
The institution responsible for the system dispatches is the national dispatch center, a part of the XM company, while regulating the network procedures is a function of the National Operation Council.
Law No. 697/2001 and Tax Reform (Law No. 788/2002) This law was regulated by Decree No. 3863/2003, and deals with the promotion of alternative sources of energy and the rational and efficient use of energy (URE). According to the law definition, non-conventional sources of energy are those energy sources worldwide available, environmentally sustainable, but used at a marginal scale and not "widely commercialized." SHP projects are defined as hydroelectric power projects less than 10 MW. Nevertheless, Ruiz et al. (2006) state that renewable energy sources' definitions have varied forms in the Colombian legislation, even including natural gas, therefore allowing resources that should be used exclusively for renewable energy souecew being used in promoting other sources.
A program was created, the Program for Rational and Efficient Use of Energy and Non- Conventional Forms of Energy (PROURE), headed by the MME, which requires electric companies to comply with URE programs.
The regulation obliges the MME to prepare a priority program with a pilot project for the development of renewable sources, in non-interconnected areas, for use of funds from the Financial Support Fund to Energize Non-Interconnected Zones (which receives 1$/kWh dispatched in the wholesale market, according to Law No. 788/2002). Furthermore, in the PROURE program listing contained in MME's resolution 18-0609/2006, activities related to generation by renewable sources are restricted to non-interconnected areas.
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The 2002 tax reform - Law No 788 - promotes 15-year income tax exemption for wind and biomass projects of generation companies, provided that they obtain and sell carbon dioxide emission certificates and that at least half of the proceeds from this sale is applied to "social benefit works" in the generators' operation region. Moreover, the importation of equipments for enterprises that "export carbon emissions reduction certificates" is exempt from tax.
The agreement No. 6 of 2006 for use of the National Benefits, Benefits Reassignment, and Compensation Fund allows the use of this fund by departments and municipalities for the development of electric generation projects, both by conventional and alternative sources. However, "the costs of activities to be undertaken must be consistent with the averages of the region where the project will take place" (Article 4), which could deter the renewable source generation project development, pending on this paragraph interpretation.
Technical Standards The national Colombian standardizing entity ICONTEC had in 2003 a "Technical Committees for Standardization Related to Alternative Energy" (ICONTEC [s.d.]). Currently there are standards for wind generators and PV systems.
Considerations on the Colombian Legislation for the Electricity Sector and Renewable Energy Sources Despite establishing the obligation to support human resources training, granting of scholarships, and providing special financing mechanisms, the regulation of Law No. 697/2001 is vague; it does not clearly indicate the incentive mechanisms, the source of funds for these mechanisms, and do not penalize the non-fulfillment of the objectives (which are already uncertain).
These deficiencies compounded with the absence of other support mechanisms and also the existence of requirements for the release of funds compose a negative scenario for the development of non-conventional sources of electricity generation. The lack of a mechanism to stabilize revenues of a generator who uses renewable energy sources is evident, because if he fails to sign a freely agreed up contract to sell his energy, he must sell the same for the system spot price, or slightly below it. Fundación Bariloche et al. (2007) indicate that although Colombia has edited a number of laws on the rational use of energy and non-conventional sources of energy, these laws are vague, without determining devices and of little strength.
Ruiz et al. (2006) agree that the mechanisms implemented by these laws are insufficient. Furthermore, they indicate that no specific considerations are made on the interconnection of alternative sources' generation projects that prioritize their dispatch and take into account the technical characteristics of sources. For wind power this is confirmed by notice E-2006-000856 of the Regulatory Commission of Energy and Gas (CREG, which is responsible for developing network procedures) that states that "the CREG has not issued specific resolutions governing the issue of wind generation", what is confirmed by Millán (2009). For other technologies, as we shall see, there are considerations for PV solar and small-scale hydroelectric projects, but only for non-interconnected zones.
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Wholesale Energy Market Operation, Electric System and Relation with Renewable Sources The economic dispatch of the Colombian electric power system is a responsibility of the Colombian National Dispatch Center, while financial transactions are made in the Wholesale Energy Market (Mercado de Energía Mayorista), with the company XM performing both roles.
Participation in the centralized dispatch is mandatory for power generators greater than 20 MW, and optional for generators with power between 20 and 10 MW. Participation in the centralized dispatch is forbidden to power generators under 10 MW, according to communication CREG-3073/2001.
Thus, generating plants participating of the centralized dispatch can sell their energy through bilateral contracts, or in the open market, at the exchange price. Nevertheless, this does not mean that the plants will be effectively dispatched, since this decision is the result of the economic dispatch simulation. The difference is paid by the reconciliation price - negative if actual generation is less than contracted and positive otherwise.
Price for Smaller Generating Centrals For power plants smaller than 10 megawatts, or power plants between 20 MW and 10 MW that choose not to participate of the MEM, the generated power can be sold to a trader, by the hourly price of the MEM less $1/kWh, or to a bidding trader, or to a generator, or to an unregulated user or to a trader (that will deliver the energy to a non-regulated user), at a freely contracted price.
Price for Cogenerators' Centrals The minimum efficiency requirements necessary to obtain the co-generator classification are given in Resolution 05/2010. Cogenerators with surplus energy to guarantee power delivery (Resolution No. 85/1996) acting out of the MEM have the same selling opportunities as power plants with less than 10 MW. Cogenerators with guaranteed power that operate in the MEM can sell energy in the MEM, or in possible modes out of the MEM.
Cogenerators with excess energy but without guaranteed power and not a MEM participant can only sell the energy to traders who will deliver it to non-regulated users. When MEM participants, the energy must be sold on the exchange market subject to the rules for firm generation.
Support Contracts Smaller plants operating out of the MEM and who enter energy supply contracts with non-regular users must sign a support contract with another generator or supplier (at free price) to ensure delivery of the contracted energy at all times (Resolution No. 86/1996). Regulated or non-regulated cogenerators must sign a support contract to obtain electric energy above its production capacity.
Auxiliary Services for the SIN Besides the payment for the generated energy, centrally dispatched generators can get payment for ancillary services, or, on the other hand, may have to pay for the provision of regulatory services provided by third parties.
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According to CREG's Resolution No. 23/2001 "all plants and/or centrally dispatched generating units are required to provide the Primary Frequency Regulation Service", and Resolution No. 64/2000 states the obligation to provide secondary regulation service, only for those plants also centrally dispatched.
Participating units of primary regulation shall provide the primary regulation service at a frequency of up to 3% of their scheduled capacity. If the unit does not provide the regulation service, it must pay a reconciliation cost for each day that this event occurs. All units centrally dispatched must contribute to the payment of secondary regulation service charges.
Responses to Transients According to Millán (2009) and the Colombian network code (Resolution No. 25/1995) in case of a 220 kV-system three phase or a 500 kV-system single-phase short circuit there must not be a voltage drop below 0.8 pu during more than 700 ms, and furthermore, the voltage during normal operation should not vary more than 0.9 to 1.1 pu. Instantaneous shut-down is not allowed for instantaneous frequencies in the range of 57.5 - 63 Hz, and from 57.5 to 58.5 Hz or 62 - 63 Hz, the generating unit must remain connected for at least 15 s.
Charge Based on Reliability Established by Resolution No. 71/2006, charge based on reliability, which replaced the charge based on capacity, is a mechanism used to warrant demand attendance even in unfavorable hydrological conditions, since the hydrological regime of Colombia is affected by El Niño, according to the CREG. Thus, by assigning firm power obligations (OEF) this system compensates those plants who commit themselves to provide the contracted energy even at times when the market price exceeds a limit determined as the shortage price. This guaranteed energy is supplied by the contracted price irrespective of the market price.
If the total individual payment (due to the charge) to the generator is greater than the amount payable (to pay the total system charge), this generator is entitled to receive the difference for the availability, regardless if this available power was used, thus setting an additional compensation to the effective supply of energy (see (XM, 2007)). The amount payable is determined by multiplying the actual generation (for centrally dispatched generators) or by sales at the market (for non-centrally dispatched generators) at the Real Equivalent Cost of Energy.
For non-centrally dispatched plants, firm energy depends on the net power rating and on the availability, to be specified by the generator. If he does not indicate the availability, 35% is assumed. This data is subject to audit for comparison with historical data. According to Caspary (2009), the charge for availability that must be paid is set at 13.9 US$/MWh until 2013.
Connection to the Transmission System According to Resolutions Nos. 85 and 86/1996, generator units with power capacity below 20 MW and cogenerators are subjected to the same connection rules to the transmission or distribution systems (described in the Norms Nos. 01 and 03/1994) as other generators, and must pay the "connection load" to the system operator or perform the construction of transmission assets.
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Analysis of Network Procedures and Suitability for Integration of Renewable Energy Sources The CREG network procedures in force do not have specific rules for electricity generation by renewable energy source interconnected to the electric system, except when they determine that normal rules apply to this type of generation, as above. Thus, they should act as if they were common generators (with power greater than 20 MW) and participate of the energy market, paying reliability charge costs, primary regulation and secondary regulation if they cannot provide these services, or can actuate out the energy market (as small generators), lacking in both cases priority dispatch, except in case of cogenerators when are considered inflexible.
Thus, in addition to virtually no available mechanisms to encourage their integration, renewable generators are exposed to the payment of various operation expenses, due to the characteristics of some sources (intermittency, seasonality), such as wind, solar PV or CSP, and even biomass. Thus, a plant that cannot meet primary regulation requirements and does not have a secondary regulation capacity shall pay reconciliation costs for the first and contribute to the payment of the secondary regulation. Also, if it cannot obtain firm power obligations, it must pay for the charge for reliability. Comparing this value to the generation cost planned in Caspary (2009), the need for the regulation adaptation is clear if one wants to encourage renewable generation of electricity in the interconnected system. This need is also noted in a CREG presentation (2009) on distributed generation (Hernandez, 2009).
Energy Generation in Non-Interconnected Zones Remuneration for rendered services in non-interconnected zones (ZNI) can be made in two ways: through payment established by competition or payment based on average costs. In exclusive service areas, it is allowed to include clauses in the service rendering contract to ensure exclusivity. Resolution No. 91/2007 established the maximum remuneration for generation and distribution permitted under ZNI, which was updated by Resolution No. 57/2009. The current values for generation are presented in Table 61 (in 04/03/2010 C$ 300 = US$ 0.157).
Table 62: Compensation for Power Generation in Colombian ZNI
kW value $/kWh
Technology Minimum Maximum
SHP
Micro turbines 1 100 307.34
Mini Centrals 100 1000 225.38
Small Centrals 1000 10000 122.93
Solar Photovoltaic
Individual CC 0.05 0.1 439.75
Individual CA 0.075 0.5 439.75
Isolated Central 0.3 10.0 296.69
Remuneration for other technologies shall be defined by the CREG. The maximum return on admistration and O&M of these systems is:
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Table 63: Maximum Return on Administration and O&M in Colombian ZNIs
$ as of 12/ 2006
SHPs 44.78 $/kWh
Solar PV 188.06 $/Wp-month
Other Technologies To be defined
These payments are adjusted according to the index of producer total prices.
These resolutions also have compensation schemes for diesel generation systems. While this resolution establishes the maximum pay, Resolution No. 56/2009 determines that the rate of return on invested capital to be used for determining generation and transmission remuneration in ZNIs is 14.69%.
Considerations The 14.69% rate of return is higher than the one applied to transmission of electricity in the Colombian electric sector (11.50% according to CREG Resolution No. 83/2008), but may be lower than the rate of return used by the private sector. Thus, given the possible difficulties that a generation development project using renewable sources in non-interconnected areas may face, it is possible that this rate is too low, particularly considering that it is the same one for projects that use alternative energy sources and for projects with diesel generators. This last technology can be the safest choice for investors, as he will be paid at the same rate of return, but will use a conventional technology, thus reducing risks. Comparing the maximum allowable pay and costs given in Caspary (2009), the payment resulting by applying the rate of return for solar PV projects will possibly be placed below the limit, but more accurate data and current costs of these projects in Colombia are not available.
Bills Only one bill on renewable electricity generation was found, and with an effect contrary to the development of the same.
Bill 257/2004 - House of Representatives
This bill establishes an extra charge of 6% on the revenue generated from electricity sales stemmed from renewable sources, in favor of the department or county, which may be deferred by 7 years. Bill No. 171/2004 apparently has the same wording. There is no indication of new developments of the bill.
3.2.6 MEXICO Mexico has made efforts to boost development of renewable energy. These efforts originated from the oil crisis and the increased awareness of resources' availability, as well as of the environmental consequences of using fossil fuels.
Main Laws, Regulations and Programs Mexico is a privileged country concerning renewable energy because it has a huge usable potential, a large territorial extension, an advantageous geographical location, plus viable and mature technologies to be used. Furthermore, production costs of renewable sources have declined markedly in recent years (De Buen, 2007).
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In addition, the Mexican government is currently focused on developing renewable energy such as hydroelectric (large and small hydro), wind, solar and biomass energies, among others, mainly in order to reduce greenhouse gases and expresses as a basic premise of its electric energy expansion plans the use of renewable generation sources (SENER, 2009).
In particular, the "Law on the use of renewable energy and financing of the energetic transition", enacted as of November 28, 2008, intends to regulate the use of renewable energy sources and clean technologies to generate electricity for purposes other than providing public service power, as well as to establish the national strategy and financing instruments for the energetic transition. This law includes as renewable energy, among others: wind, solar radiation, water movement in natural or artificial channels, the ocean energy in all its forms, geothermal heat and bioenergy, as determined by the Law on Bioenergy Promotion and Development.
Derived from this law the Special Program for Renewable Energy Development was published intending to increase the percentage of renewable energy installed capacity from 3.3% in 2008 to 7.6% by 2012.
On the other hand, the Energy Regulatory Commission has established specific regulations for renewable sources of energy, aiming for promoting the development of electricity generation projects, with the user invoice showing his contribution of electrical energy injected into the network. Among them standout:
The "Interconnection Agreement for intermittent renewable sources of energy". This is the mechanism that defines interconnection terms and conditions necessary between the National Electric System (SEN), the renewable energy user unit and the concessionaire consumption centers, so that the said contract serves as reference to all operations between suppliers and concessionaires.
"Interconnection Agreement for small-scale solar energy sources". This instrument applies to solar energy generators with capacities up to 30 kW that are connected to the net at voltages below 1 kV and that do not require to use the system to transport45 power to their loads.
3.2.7 PERU Although the Peruvian electricity sector reform dates from the 90's, only recently some special devices dedicated to encouraging the interconnected generation from renewable energy sources have been implemented (although the geothermal source dedicated legislation goes back to 1997). However, since the enactment of the main law, the government has worked fast, completing the first bid for contracting new developments in 2010 and developing the adaptation of networks' procedures. This adjustment, however, still needs to be improved and has been criticized, for example, about the treatment given to wind power. Nevertheless, the Peruvian government demonstrated agility in implementing an incentive policy.
Peruvian Legislative Framework The electricity sector organic law is Law No. 25,844/1992 (Electrical Concessions Law), while Law No. 26,734/1996 deals with the creation of the sector regulator entity. In 1997 the
45 Transport (many times "porte" in the original language) is the use of the power company networks to carry power between the generation central and the installation that makes the end use of a self- sufficiency project .
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organic law for geothermal resources was enacted (Law No. 26,848/1997), whose most recent regulation was given by the Supreme Decree No. 19/2010.
More recently the legislation supporting renewable electricity generation (Legislative Decree No. 1002/2008 and the corresponding regulatory Supreme Decree No. 50/2008) was enacted together with the Legislative Decree No. 1058/2008 and the Supreme Decree No. 56/2009.
Law No. 25,844/1992 - Electrical Concessions Law, and Law No. 26,734/1996 The electricity sector Law No. 25,844/1992 created the Commission of Electric Rates and the COES - Committee for Economic Operation of the System. In 2000, the Commission was incorporated into the OSINERG - Organismo Supervisor de la Inversión en Energía (the Supervisory Agency for Energy Investment). The COES is responsible for elaboration of the network procedures of the Peruvian electric power system. OSINERG was created by Law 26.734/1996, and its attributions were expanded in 2002 and 2007 to include mining and hydrocarbons.
Law No. 25,844 establishes the need for concession to use public assets for generation, allowing restricted concessions for two years to perform studies, extensible for more 2 years. To obtain a definitive concession for generation projects, it is required to submit the authorization to use natural resources, the project plans and various other warranties. Access to the transmission system is free, while system usage fees and enlargement costs arising from the connection shall be borne by the connection beneficiary.
Price regulation is mandatory for transfers among generators, for payment of the transmission system usage, and for power supply to distributors as a public service. The law also establishes the concept of connection toll (peaje de conexión) and tariff income. The second concept is a charge due to "power and energy delivered to, and removed from bars, valued at their respective bar tariffs" (Art. 60). The connection toll is proportional to the generator firm power and covers the difference between the cost of the transmission system operator and the income from the tariff collection, and is how the renewable energy generation costs are charged by their excess over spot prices, according to Decree No. 1002/2008.
This law also establishes the possibility of splitting taxes on capital goods' imports for new projects and determines that hydroelectric and geo-thermoelectric exploitations shall pay a "retribution to the State", which may not exceed 1% of the average power generation cost.
Law No. 28,546/2005 and Rural Zones This law promotes the use of non-conventional energy resources (including hydroelectric energy up to 10 MW), determining research promotion, development of technical standards and granting of rural electric concessions through the Ministry of Mines and Energy. The Rural Electrification with Renewable Energy Master Plan Study, 2008, considers solar PV and hydroelectric sources to attend rural areas, while the National Plan for Rural Electrification (PNER) 2009-2018 considers these two and also wind power (DGER, 2008; DGER, 2009).
Legislative Decree No. 1002/2008 and regulation by the Supreme Decree No. 50/2008 To obtain definitive concessions the renewable electric generation projects are still subject to the rules of the electric concessions law. However, Decree No. 1.002/2008 modifies some determinations. Generation projects that require granting of a final concession include, besides hydroelectric power stations larger than 500 kW, renewable source energy generation
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projects larger than 500 kW. Thermoelectric projects exceeding such power only require authorization. Nevertheless, for projects with power between 500 kW and 10 MW, regional authorities are authorized to issue final generation concessions, according to Supreme Decree No. 56/2009.
Electric generation using renewable energy resources (RER) is declared of national interest and public need, and the decree stipulates that the Ministry of Energy and Mines shall establish at every five years a minimum participation percentage of renewable electrical energy (not exceeding 5% the first five years), excluding hydroelectric centrals. However, hydropower is considered a RER for capacities smaller than 20 MW.
Dispatch of renewable sources generation plants is prioritary, and its production variable cost (used to determine the dispatch order) is zero. Each generator that uses RER and holds an energy supply contract (obtained at an auction) and sells energy in the short-term market will receive an additional benefit if the SEIN marginal cost is less than the contracted rate, and shall be paid an amount updated at a rate of 12% p.a. levied on all generators in proportion to their firm power, through the connection toll mechanism (described above). In isolated systems (which have no connection toll) the generator must sell the energy to the distributor by the contract price, and the latter is compensated according to rules established by OSINERGMIN.
The renewable energy generator must pay the energy transmission cost, and the connection costs to the transmission system shall be determined by OSINERGMIN. If there is excess transmission or distribution capacity, these generators have connection priority, until, at maximum, the percentage established by the Ministry of Energy and Mines for RER participation in the power matrix.
The National Council for Science, Technology and Innovation in partnership with the MEM shall implement mechanisms to incentive research in renewable energy. Furthermore, the MEM should develop a National Energy Plan up to one year after the enactment of the law, which must be renewed at every two years. Only recently measures were adopted to prepare such a plan (MEM, 2010a).
The law regulation is under discussion (Law No. 1002) since October. The regulation mechanism established for achieving the participation objectives set for electric energy produced from renewable sources is a bidding mechanism. Each technology share in the auction shall be based on the national plan for renewable energies, on entrepreneurs' interest expression and in the projects that have requested or hold a concession. Auctions shall be undertaken by OSINERGMIN and should occur at intervals not smaller than two years.
To participate in the auction, the entrepreneur shall be or have been the temporary holder of a concession; in the first case, he shall ensure that studies are being conducted, and in the second demonstrate that they were finalized. The plant design shall be presented attending the nominal power rating and capacity factor, budget, schedule and a bank guarantee to be replaced, in case of award, by another guarantee for the contract.
The projects' selection is made separately, by technology, completing the missing power or energy of one technology with another, after evaluating all projects with prices below the basic tariff. The basic tariff is determined by OSINERGMIN taking into account the rate of return determined by Art. 79 of the Law of Electric Concessions (12%), international project costs, and the cost for connection to the system. Moreover, generators have the right to
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payment for power, corresponding to the firm energy referring to "the degree of control of its generation capacity," paid by energy consumers who are members of COES.
When the required energy is not fully or partially contracted, a new auction shall be called within 30 days. Furthermore, according to the legislation, the first auction shall not follow the percentage of RER participation of the energy matrix, but require 500 MW of power with a minimum capacity factor of 0.3 (1314 GWh per annum).
Legislative Decree No. 1058 This short Law determines that equipment and civil works "necessary for installing and operating a plant" based on renewable energy sources enjoy the possibility of accelerated depreciation at the beneficiary's choice, but at a maximum annual rate of 20% (i.e., accelerated depreciation in five years).
Organic Law on Geothermal Resources & Regulation Peru has a law to regulate exploitation of geothermal resources since 1997, Law No. 26,848/1997. This Law already has had several regulations, the most recent one being given by Supreme Decree No. 19/2010. The regulatory body for utilization of geothermal resources is the OSINERGMIN. The recognition activity is free throughout the country, while probing (drilling of wells to determine the potential) and exploitation require authorization and concession, respectively.
Prospecting investments are entitled to a special depreciation, by usage or by linear depreciation for at least five years. Moreover, importation of "goods and consumables" for prospecting is exempt from any tax, and authorized entrepreneurs or concessionaires enjoy fiscal stability (their taxation cannot be changed by a subsequent legislation).
Moreover, the permit holder must pay the validity right. There is one more contribution to be paid by the concession holder, which may not exceed 1% of the annual revenue of the entrepreneur. Finally, it is charged an annual fee payable to the State, corresponding to 1% of the electricity extracted from geothermal sources valued by the average price at the generation level.
Supreme Decree No. 37/2006 and Cogenerators Regulation Decree No. 37/2006, amended by Supreme Decree No. 82/2007, establishes the regulation for cogenerators' participation in the electrical system, qualifying cogenerators when plants meet minimum electrical efficiency requisites. According to these decrees, the cogenerator has dispatch priority in the electrical system, when generation is associated to production needs. When there is no useful heat production associated, the cogenerator is treated as a thermoelectric plant, and shall notify the COES if it is available for electricity generation.
Bid with Renewable Energy Resources No. 1/2010 - Announcement, Results and Second Call The first call for bids for generation of electricity with renewable energy resources (OSINERGMIN, 2009) determines the bidding of contracts for delivery of 1314 GWh annually (500 MW with a capacity factor of 0.3), as determined by Decree No. 1002/2008 and its regulation.
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Hydro renewable energy (under 20 MW of capacity) can also compete in the bidding up to a limit of 500 MW (if the energy required from other technologies are not attended by them). The tariff update is made according to the index "Finished Goods Less Food and Energy" of the American Department of Labor.
Wind projects have a maximum power in each authorized point of delivery (points of the transmission system with voltage between 60 and 220 kV, mostly 220 and 138 kV). Other projects may have the desired power, but always at set points, which include transmission system bars with voltages between 22.9 and 220 kV, also mostly 220 and 138 kV.
In the bidding held in February 2010, the maximum prices established and the obtained results were:
Table 64: Bid RER Nº 1/2010 Results
Results Biomass Wind Solar Total Hydraulic
Maximum Price (cUS$/MWh) 12.00 11.00 26.90 7.40
Required Energy (GWh/Year) 813.00 320.00 181.00 1314.00
Contracted Energy (GWh/Year) 143.30 571.00 172.94 887.24
Contracted Power (MW) 27.4 142.0 80.0 249.4 161.71
Proposed Projects 2 6 6 14 17
Contracted Projects 2 3 4 9 17
Source: OSINERGMIN (2010b)
It should be noted that the wind power projects selected have high capacity factors (c.f.) (43.46 and 52.93%), but these were located in areas with over 7.8 m/s average winds at 80 m height (for projects with c.f. of 43 and 52.93%) and 6-7 m/s (c.f. of 46%), according to the wind atlas of Peru46.
As the first auction was declared partially vacant of solar and biomass sources, it was determined to perform a second tender for these sources (and with the participation of hydroelectric power), with bid opening taking place in July 23, 2010. The required energy is 419 GWh/year for biomass and 8 GWh/year for solar energy. Hydroelectric power may participate, up to a limit of 338.29 MW.
Technical Standards The Peruvian technical normalization is performed by the INDECOPI. Until April 2010 standardization for use of renewable sources was scarce, with one standard on technical characteristics of PV panels up to 500 Wp (NTP 399.403:2006). In the listing of technical standards under preparation none refers to any renewable energy sources, although in a 2008 presentation among the issues being addressed were included hydraulic energy (sea and conventional), solar PV and wind normalization (Toro, 2008).
Considerations on the Peruvian Legislative Framework for Electric Generation from Renewable Sources of Energy The support of Peruvian law to the development of renewable sources can be seen since the 90's with the geothermal resources organic law, which by eliminating taxes on equipment importation, ensuring fiscal stability and allowing accelerated depreciation, provided
46www.dger.minem.gob.pe/AtlasEolico/PeruViento.html.
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a comparative advantage for using this resource for power generation. Moreover, the electrical concessions' law of 1992 included dispositions to facilitate equipment import for all technologies, therefore without comparative incentive advantages for renewable energy sources.
New legislation advances only came with the cogeneration activity regulation in 2006, which determined cogeneration dispatch priority when associated to production needs, establishing an important mechanism to the feasibility of surplus energy sale.
Legislative Decree No. 1002 and its regulation, enacted in 2008, represented an important milestone to the development of renewable energy, with important features. Indeed, by establishing clear promotion mechanisms that go beyond tax incentives - biddings - and determining dispatch priority for the energy contracted in auctions, the legislation is characterized by a clear definition that not always can be found in similar initiatives. Furthermore, it was determined the development of a national renewable energy plan with five- year participation targets, that however presents delays.
As other similar laws, Decree No. 1002 did not set penalties if goals are not met, and until June, 2010, the national plan had not yet been prepared. Ramírez (2009) points out that the contribution to Peru's sustainable development is marginal, the continuity of bids is limited, and non-interconnected systems are not considered. Furthermore, holding a first auction without a further goal would, of course, generate uncertainty.
Thus, altogether, the legislation is positive to promote the early development of renewable electric generation, but continuity signs by the government are needed to succeed, with network procedures adaptations and publication of a development plan.
Wholesale Energy Market Operation, Electric System and Relation with Renewable Sources The Peruvian electric energy market is organized by the Committee for Economic Operation of the Interconnected System, COES SINAC (Comité de Operación Económico del Sistema Interconectado Nacional). As already mentioned, renewable sources power plants have priority in the economic dispatch and receive a compensation for the generated energy (until the limit contracted in the bid) given by the difference between the market price and the contracted price, which is collected by the toll connection. The following Figure gives the short- term historical marginal cost at the Santa Rosa reference bus.
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Figure 24: Annual Average of the Marginal Short-Term Cost - Santa Rosa Bus Reference. Source: COES SINAC (2010a)
Finally, one important issue is the need for generators to associate themselves to participate in the COES. There is a requirement that only those generators (generators or associates) totaling at least 1% of the interconnected system installed capacity can be part of the COES (technical procedure No. 20).
Analysis of Net Procedures and Suitability for Integration of Renewable Energy Sources In January 2010, the technical procedure No. 21, Admission of Generation Units, Transmission Lines and Substations in the COESSINAC was modified to introduce new requirements for connecting wind farms to the system. According to Marticorena (2009), the COES SINAC opted by being conservative, limiting wind power electricity that could be connected to the system bars.
Primary Frequency Regulation, Secondary, and Voltage in the Interconnected Power System According to procedure No. 22 on rotating reserve, it is a responsibility of COES members to supply electricity with quality according to the standard. Thus, "the rest of COES members who do not regulate the frequency shall compensate the centrals that provide rotating reserve". Those generators that had their generation capacity restricted by COES to provide primary frequency regulation service receive a payment for energy supplied for this purpose (in addition to the value received by the supplied energy at the spot market valued by the difference between the short-term marginal cost and the lowest variable cost of all machines that perform the regulation service. Each SINAC generator shall pay for this regulation service in proportion to its own generated energy and the energy received by him from other generators. In January 2010, the total amount paid by companies for this limited power was S 33.9 millions (Or US$ 11,9 millions with an exchange rate of US$ 0.35/S).
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If it is necessary to dispatch a unit to perform a voltage quality adjustment, it will be paid by the energy supplied valued by the difference between its variable cost and the short-term marginal cost (the generator also receives the short-term marginal cost of the consumer to whom the energy was delivered). The total remuneration amount is prorated among the generators according to the active energy supplied during peak periods (as per item 9.4 of the Technical Procedure No. 15).
Connection and Operation of Electric Wind Centrals The procedure reserves to COES the prerogative to make "partial or total emergency disconnection of any wind farm connected to the SEIN". Wind farms with a power greater than 10 MW must participate of a Wind Control Center that provides COES in real time the active and reactive power, connection status and the voltage value. Furthermore, wind farms shall provide COES a forecast, 24 hours in advance, of the hourly foreseen wind power. Although not ruling out a technical procedure review due to the development of wind electrical generation technology, the code establishes a connection limit for each system bar of 5% of the short- circuit power.
Before the installation several tests shall be performed for the operation of an electric wind central. Wind farms should "have the necessary control devices" to meet COES's requests for supplied active power control and monitoring mechanisms to inform COES the total active power, deviation from the reference value and possible power as a function of wind speed. It shall also be capable of reducing the active power to 20% of the nominal, and have control of reactive power, capacity to resist under-voltage and over-voltage and ride-through. Finally, the normal operating frequency range for wind farms is determined as 59.4 - 60.6 Hz and must remain connected by minimum times for frequency ranges as 58.4 - 59.4 Hz and 60.6 - 61.6 Hz.
Analysis of Procedures and Requirements for Installation of Wind Farms Analyzing network procedures common to all generators, a question arises on the compensation mechanism for firm power, distributed among generators in proportion to their firm energy. The primary and secondary frequency regulation and voltage regulation (through the provision of reactive power) must be paid by those generators that cannot meet the set up requirements.
Thus, one can consider that while the payment for firm power is a mechanism conducive to the development of renewable electricity generation many alternative sources are marked by inconstancy, seasonality or unpredictability, which cause uncontrollable oscillations in the supplied energy for a given period, and require frequency and voltage regulation, which can be a burden to the non-conventional generator, even though costs are prorated according to the total active power availability.
Thus, a generator using renewable energy that implies additional costs to the system for maintenance of ancillary services must pay costs only in proportion to its participation in energy generation, which, initially at least, will probably be small, compared to conventional sources installed capacity. Additionally, costs for connection to the net are borne by the generator, what will increase the project cost.
Furthermore, the need for association to participate of COES (that requires the association to have, at least, 1% of the system installed capacity) may represent a major hindrance to the entry of renewable energy generator units, since their size is usually small.
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On the requirements for operation of wind power stations connected to the SINAC, as already mentioned, COES made a conservative option. Indeed, in addition to limiting the admitted wind power at each system point to 5% of the short-circuit power, the robustness requirements against network failures are substantial (more stringent than the Brazilian requirements, for instance). On the other hand, the voltage range excursion of 0.9 to 1.1 p.u. is appropriate, and we must consider that robust wind farms should be preferred, since a greater ability to control generated power allows to obtain more resources due to the firm power payment that can be made available, and due to the increased farm use, although more stringent requirements entail higher costs due to the need to purchase additional, mainly electronic, devices for wind turbines. Thus, regulations' adequacy will vary depending on the COES policy for wind farms operation, but initially, the overall assessment is negative due to limited network access.
Energy Generation in Non-Interconnected Zones As indicated, the bidding process for development of energy generation from renewable sources does not consider non-interconnected areas of the Peruvian system, which, nevertheless, are significant (according to the Ministry of Mines and Energy, about a fifth of the population lacks access to electricity services). Measures concerning the use of renewable sources in the rural environment are listed in the Master Plan Study for Rural Electrification with Renewable Energy and in the National Plan for Rural Electrification (DGER, 2008; DGER, 2009), who would require 13 MW of PV solar power to be installed until 2020 and 2.655 MW from small hydroelectric exploitations by 2018, assuming 50 Wp PV panels per home, although this cannot be confirmed due to the panels' power hypothesis.
Bills Three bills that were circulating in the Peruvian Congress by 2008, Projects No. 1887, 1799 and 1588 originated the Legislative Decree No. 1002/2008. Thus, the only remaining bill in Congress is the project No. 3.074/2008.
This bill establishes that final concessions should be granted only to projects with at least 50 wind turbines, present since the operation start. Manufacturers of wind turbines and manufacturers of other goods necessary to wind generation would be exempt from any import duty, as well as other non-manufacturer importers (for a period of ten years). It also allows accelerated amortization of investments in wind generation for income tax purposes (20% annual maximum, i.e. in, at least, 5 years).
Accelerated amortization has already been established by decree No. 1058/2008, and by the Law of Electrical Concessions (LCE No. 25.844/1992) the import tax on equipment for power generation can be divided into 36 payments. Thus, this project innovation is limited to wind equipment exemption from import taxes, but due to the existence of the LEC this benefit is reduced. Moreover, the requirement of a minimum number of wind turbines for wind farms (50) can easily create more difficulties for wind power generation than the possible benefits of the project.
Therefore, in the Peruvian Congress, there is no project of great interest for the development of renewable energy. However, the existing legislation is quite important, and next efforts should be concentrated on changing the COES technical procedures.
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3.2.8 VENEZUELA
Principal Regulations and Programs
Development Plan for Renewable Sources of Energy The Development Plan for Renewable Sources of Energy, which includes the PPGE, is a part of the PDESON 2007-2013 (slide 14) (Márquez, 2009).
The Development Plan for Renewable Sources of Energy considers the following renewable sources of energy: solar (PV and thermal), wind, biomass, mini-micro hydropower and geothermal (slide 14) (Márquez, 2009).
According to the USB (2010), this is the first time that the alternative energy theme is part of a development plan of the Venezuelan government. For this purpose were created in July 2007 the "Committee for Renewable Energy" and the "Sub-Committee on Wind Energy".
The information obtained on the plan is detailed in the chapter on the current market of renewable sources and trends in Venezuela.
Resolution No. 77 Resolution No. 77, among other things, creates the National Register of Renewable Energy, to be conducted by the Department of Alternative Energies of the "Ministry of People's Power for Energy and Oil".
The National Register of Renewable Energy objective is to provide a database for the State use that shall serve for informational purposes and control of activities related to renewable energy, including equipment, research and development projects (MENPET, 2007). The resolution includes the following renewable energies: solar, wind, hydro, biomass, geothermal, tidal, and hydrogen.
3.3 Partners and institutions
3.3.1 ARGENTINA The use of renewable sources in Argentina showed an important development in recent years, as illustrated by institutional analysis of relevant players. The recent installation of new industry players in the country and the creation of institutions to promote renewable electricity generation, plus the enactment of specific laws and a more active governmental and academic actors' participation has occurred, although it should be noted that the process is just beginning, and many actors have no tradition in developing renewable energy in the country.
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Table 65: Analysis of main institutions fomenting alternative renewable sources in Argentina
Local Installation Consulting Class Environment Partners/ Manufacturers and NGOs Research and Funders Associations Agencies Government Maintenance Engineering
Solar PV
CSP Biomass
SHP Geothermal
Oceans
Wind
Caption: Good Regular Insufficient Non-existent No information
The biggest breakthrough came in with the introduction of new players related to biofuels (mainly biodiesel) and wind power generation, while other technologies for electricity generation were less noticed, and with unequal development. Thus, wind energy and biomass had a major development related to the existent potential in Argentina, while the actors, as well as projects, involved in the development of concentrated solar energy or geothermal energy are less numerous. Thus, most energy consultants in Argentina specialize in one of two sources of energy: biodiesel or wind power. Moreover, sources such as oceans and seas are little mentioned, and hardly any institution deals with them.
Faced to this reality, it is interesting to note the importance of the ENARSA bidding No. EE 001/2009, for the number of covered sources. Indeed, given the diversity of sources (nine) to contract the generation capacity, it is expected to occur a diversification of the country's players to include less well-established sources such as solar, PV, and geothermal. However, given the fact that of the nine sources only four projects were contracted, it is necessary that next bidding announcements by the Argentine government be successful, mainly because three of the technologies that were contracted are already well developped (wind, small hydro, and biofuels for power generation) (ENARSA et al., 2010; SEN, 2010a).
Another trend noticed by the institutional analysis of the Argentine energy sector is the diversification of energy companies in the oil and gas sector, which recently lead to the development of wind farm projects and to biodiesel production.
Argentina has some domestic manufacturers, especially for wind and hydraulic energy, besides some prototypes of small equipment, some in experimental phase, for concentrated solar power and wind power.
As for class associations, although few, CADER's work is significant and its recent effort to broaden the scope interesting. On the other hand, the wind sector already counts with an adequate number of associations. The presence of a Greenpeace representation in the country indicates a stronger actuation together with environmental organizations, whose efforts are supported by research organizations such as the Argentine Institute of Energy.
A shortcoming of the Argentine framework is the lack of NGOs focused on renewable energy dissemination, in contrast to Peru, for example. On the other hand, this may be an indication of Argentine projects' characteristic for these sources, which are much larger in scale than Peruvian, what can be a significant advantage in technology diffusion. So, coherently,
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there are a high number of private actors such as consultancies and engineering firms that have recently established themselves in the country intending to develop generation projects for the electric net. Frequently of foreign capital, the knowledge that these actors can bring to Argentina is important. Moreover, some national consulting firms have already established themselves precisely to exploit this potential market.
Finally, the number of potential financiers is great in Argentina, but the World Bank focuses on rural electrification, as well as some other financial institutions, and funding for research and development could be more extensive. This deficiency in research is partially compensated by companies of the sector, such as IMPSA.
3.3.2 BRAZIL The development of renewable alternatives depends on the strength of various local institutions such as research centers, manufacturers and trade associations.
Hydroelectricity, which is already part of the national culture, has a consolidated structure of institutions. Wind source electric generation is beginning its expansion in the country, and has attracted several manufacturers. It has major research centers and general services companies, unlike other Latin American countries. Despite the present low utilization of biomass in Brazil, the country has the technology and local industries, besides active associations for promotion of electricity generation from biomass (mainly sugar cane bagasse). Solar source electricity generation is starting in Brazil with the construction of a CSP plant in Paraíba and a PV in Ceará, but the country still is short of expertise for both PV and CSP generation. Generation of energy from the sea is represented by only one specialized institution in the country.
Table 66: Analysis of main institutions fomenting alternative renewable sources in Brazil
Local Installation Consulting Class Environment Partners/ Manufacturers and NGOs Research and Funders Associations Agencies Government Maintenance Engineering
Solar PV
1 CSP
Biomass
SHP
Geothermal
Oceans
2 Wind Notes: 1 The Canadian company Naanovo Energy intends to build a factory for solar panels to meet the demand of the first solar thermal plant in Brazil to be built in the city of Coremas, Paraiba; 2 Many wind turbine manufacturers have shown interest in opening factories in the country, but so far there are only two factories. The deficiency of the Brazilian wind industry park is pointed out by many authors as a cause for the delay in the Proinfa projects..
Caption: Good Regular Insufficient Non-existent No information
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3.3.3 CENTRAL AMERICA Among all existing institutions in Central America to use renewable energy, the government institution is the most powerful and well organized than the others, either civilian or research and development institutions.
Table 67: Analysis of main institutions fomenting alternative renewable sources in Central America
Local Installation Consulting Class Environment Partners/ Manufacturers and NGOs Research and Funders Associations Agencies Government Maintenance Engineering Solar PV CSP Biomass SHP
Geothermal
Oceans Wind
Caption: Good Regular Insufficient Non-existent No information
Specifically, the names of agencies and organizations identified in Central America are:
• Ministries and National Energy Commissions
o Ministry of Energy and Mines of Guatemala
o Ministry of Energy of Costa Rica
o National Energy Commission of El Salvador
o Secretariat of Natural Resources and Environment of Honduras
o National Energy Commission of Nicaragua
o Secretariat of Energy of Panama • Regional bodies
o System of Central American Integration (SICA - Sistema de Integração Centro-Americano)
o Study Commission for Latin America (CEPAL - Comissão de Estudos para a América Latina), Mexico Office.
• Groups and associations for the development of RE projects
o BUN-CA
o Alliance for Energy and Environment in Central America • Public electricity companies
o Costa Rica Electric Institute and National Company of Light and Force of Costa Rica
o National Company of Electric Energy of Honduras • Distribution Companies
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o Guatemala
o El Salvador
o Panama
o Nicaragua • Governments that maintain technical cooperation with Central America
o United States of America
o Germany
o Finland • International development banks
o IDB o World Bank • Companies with factories in Mexico
• Local distributors of materials and equipment
• Schools of mechanical and electrical engineering
• Project developers
o Association of Generators Using Renewable Energy (Guatemala)
3.3.4 CHILE The development of renewable alternatives depends on the strength of various local institutions. In Chile, there are research centers, trade associations and engineering firms focused on ERNCs development. However, one major obstacle to the development of renewable sources in the country is the absence of local manufacturers of major equipments, increasing costs, and delaying the start-up of various enterprises. Electricity generation from biomass, despite the great usage potential in the country, has an obvious lack of development institutions. Investments are being made in the country to develop electricity generation using solar and geothermal energy.
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Table 68: Analysis of main institutions fomenting alternative renewable sources in Chile.
Local Installation Consulting Class Environment Partners/ Manufacturers and NGOs Research and Funders Associations Agencies Government Maintenance Engineering
Solar PV 1
CSP Biomass
SHP 2 Geothermal
Oceans
Wind Notes: 1 The Korean manufacturer of solar PV panels Daekyeonsolar plans to install a plant in the country to provide the technology required by the plant that shall be installed in Copiapó; 2 Two international manufacturer of turbines installed in the country were found, but no information was found on the availability of turbine factories for PCHs installed in Chile.
Caption: Good Regular Insufficient Non-existent No information
3.3.5 COLOMBIA The framework for generation of energy from renewable sources in Colombia is interesting because of the country's sector characteristics, a result of government policy for the sector, of the opportunities for expansion of electricity generation in the country, and of the focus given by national research institutions.
Table 69: Analysis of main institutions fomenting alternative renewable sources in Colombia.
Local Installation Consulting Class Environment Partners/ Manufacturers and NGOs Research and Funders Associations Agencies Government Maintenance Engineering
Solar PV CSP
Biomass SHP
Geothermal
Oceans
Wind
Caption: Good Regular Insufficient Non-existent No information
ESMAP (2007) indicates the primacy of hydroelectricity in the Colombian energy matrix. Therefore, competition with this form of generation requires considering the benefits of hydroelectric generation, and the UPME (2009a) reports that the electric system expansion in Colombia will be mainly based on hydropower until 2024. Thus, the governmental focus on non- interconnected zones to use renewable non-conventional energy sources, as indicated in the legislation analysis contained in this report is consistent with its plan to expand the interconnected system, and this is reflected in the performance evaluation of governmental actors in the development of generation from non-conventional sources. Thus, the development
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of this type of generation on a larger scale in Colombia occurs with little financial support from the Colombian government, despite the fact of his actuation in other ways such as, for example, in making studies of the various sources' potentials such as wind and solar, already available, and biomass, in preparation, or maintaining the SI3EA information system. However, this does not mean that public companies do not actuate to implement renewable generation projects, such as is the case of EPM and ISAGEN.
Due to the low development level of renewable generation in Colombia, the state of the domestic industry is not surprising, except for the PV industry, the most advanced, but still only with low power equipment. Typically, manufacturers produce smaller equipment such as small wind turbines, gaseificators, and PV panels. International manufacturers' representatives and service firms follow the same trend, although there is a good diversity in the PV panels' market.
The Colombian class associations' group is composed mainly of conventional actors of generation, transmission, distribution and commercialization sectors, but these groups can exert influence in the process of drafting the system regulations and procedures. Articulation of actors involved in the generation of renewable energy is still insufficient, as for example, in the Alternative Energy Network, but it is worth mentioning the association of the sugar industry Asocaña, and its measures to increase cogeneration adopted by its members. The presence of NGOs is still insufficient, and confuses itself with the actuation of research institutions and manufacturers of small size equipments.
The research areas of the Colombian academic institutions are more diversified, with operations also in less conventional areas such as ocean energy. Nevertheless, low power systems have a significant importance, but are not overwhelming, and wind energy, which normally attracts interest in research, is one of the least studied.
Consulting and engineering firms working in the country are not numerous, with major participation of public companies as ISAGEN, EPM and EMCALI. The energetic use of biomass also receives particular attention in Colombia because of the possibilities of obtaining resources through the CDM, particularly for urban waste and sugar cane usage.
Another source with a large participation in the CDM is small hydro, with a significant number of registered projects, making hydro and biomass sources the ones with better funding opportunities. There are fewer projects for the development of wind energy studies, for example, and even fewer funding for technologies such as oceans or concentrated solar energy. Fund raising for enterprises is impaired by the short funding horizon available in the country, according to ESMAP (2007).
Thus, the development of renewable energy sources is slow, especially for large generation projects (except hydro), while the generation for non-interconnected systems has a more favorable picture, despite that research potential exists for all technologies. In Colombia, sources with the largest development are those that could properly use the CDM, or who show a great potential and greater tradition, as in the case of small hydro.
3.3.6 MEXICO Among all existing institutions in Mexico to use renewable energy, the government institution is the most powerful and well organized than the others, either civilian or research and development institutions.
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Local Installation Consulting Class Environment Partners/ Manufacturers and NGOs Research and Funders Associations Agencies Government Maintenance Engineering Solar PV CSP Biomass
SHP
Geothermal
Oceans Wind
Caption: Good Regular Insufficient Non-existent No information
Specifically, the names of agencies and organizations identified in Mexico are:
• Government
o Secretariat of Energy
o National Commission for Efficient Use of Energy
o Energy Regulatory Commission
o Trust Fund for Electric Energy Economy
o Shared Risk Consignment
o State energy commissions • National Electric Company
o Federal Electricity Commission • National Association of Solar Energy
• Academic groups on energy issues
o Centre for Energy Research, UNAM
o Engineering Institute of UNAM
o Autonomous Metropolitan University (Azcapotzalco and Iztapalapa)
o National Polytechnic Institute
o Mexico City University
o Technology Institute of Monterrey (in Monterrey) • Environmental organizations
o Greenpeace-Mexico
o Center for Environmental Law in Mexico
o Civic Alliance • Promoters of "green" technology
o Green Impulse • Governments that maintain technical cooperation with Mexico
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o United States of America
o Germany
o UK
o Italy • International development banks
o IDB
o World Bank • Manufacturers
o National Chamber of Electrical Products Manufacturers (CANAME)
o National Chamber of the Manufacturing Industry (CANACINTRA) • Developers of renewable energy projects
o Mexican Association of Wind Energy (AMDEE) • Distributors of materials and equipment
o National Association of Resellers of Electric Materials and Equipment, A.C. (ANCOMEE)
• Designers and installers
o National Chamber of Consulting Firms (CNEC)
o Schools of mechanical and electrical engineering
o Builders Association of Western Electric Works (ACOEO)
3.3.7 PERU The Peruvian government recently instituted a generation program through renewable energy sources by Legislative Decree No. 1002/2008 and Supreme Decree No. 50/2008, with execution of the selection process in February 2010. Thus, players who had their projects selected will exert a considerable influence on the development of the energy sources (biomass, wind, solar, and hydro).
Table 70: Analysis of main institutions fomenting alternative renewable sources in Peru.
Local Installation Consulting Class Environment Partners/ Manufacturers and NGOs Research and Funders Associations Agencies Government Maintenance Engineering
Solar PV
CSP
Biomass
SHP
Geothermal
Oceans
Wind
Caption: Good Regular Insufficient Non-existent No information
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PV power generation projects have an important participation of Spanish companies with expertise in this type of development, while the share for wind generation of Iberian companies is lower, standing out the company Iberoperuana Inversiones and other companies of national capital. The few biomass projects are under the responsibility of a sugar industry established company, and one company operating in solid waste treatment, a conversion of a methane-burning project that already counts with CDM credits.
As for research and technological development in Peru, the country has an adequate number of development agencies, but only lately these have adopted research on renewable energy as a priority (e.g. CONCYTEC). Given the low index of access to electricity in the country, it is not strange the fact that most research institutions focus on the study of alternatives for the electrification of rural and/or isolated communities, studying, therefore, small size technologies, such as small-scale hydroelectric, PV and wind generation. However, the focus on wind and solar power is also evident due to the significant number of consultancies and engineering firms that deal exclusively with projects related these two forms of energy. The state-owned company ADINELSA is an important knowledge reservoir on the operation of these systems in isolated communities.
It is important to note that although there are existing studies of potentials conducted by government institutions, each form of energy is analyzed by one institution. For example, while the General Direction of Rural Electrification conducted the study of wind and solar potentials, another direction of the Ministry of Energy and Mines evaluated the hydraulic potential and INGEMMET was responsible for assessing the geothermal potential. Thus, it might be interesting to group the responsibility for the development of alternative sources in a central coordinating institution, since another related activity, the coordination of generation capacity from renewable sources contracting program is a responsibility of the OSINERGMIN.
There are few national manufacturers of equipment or service providers in the country, with only the production of small wind turbines, bio-digesters to produce bio gas and hydraulic mini turbines, plus the possibility of acquiring domestic boilers, and therefore the national manufacturing is also focused on small exploitations. On the other hand, representatives of foreign manufacturers are more numerous in the country, with the possibility of obtaining of wind, solar PV, and geothermal equipment as well as related consulting services. Effectively, there are several engineering firms or consultants established in the country, because of the development of wind projects, solar PV, biomass and hydroelectric already mentioned and resulting from the government program, and there are also firms that develop projects for the exploitation of the geothermal potential such as Magma Energy Corp.
The sector performance regarding renewable energy generation is not as strong as might be desired, as NGOs direct their focus to caring to the rural population and the existent class associations for renewable energies are very recent.
Nevertheless, there are institutions that could easily make an integrative work between the different actors in the industry on a larger scale, i.e. the Sustainable Alternatives Network, particularly when considering the large number of potential financiers for projects in the country: in the foreground the multilateral international financial institutions like the World Bank, the Interamerican Development Bank and national banks such as the Japan Bank for International Cooperation, which have already financed several projects in the country. In fact, while small projects and research are funded through national institutions, more ambitious projects for a
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larger scale implementation in Peru must rely on international financial institutions, primarily to conduct initial studies.
3.3.8 VENEZUELA Venezuela is currently facing a severe energy crisis. With an energy matrix based on hydropower and fossil fuels, the country has little experience in implementing projects of renewable alternatives.
The main government actions to promote renewable energy alternatives focus on wind power and solar generation (for rural electrification). However, the promotion of renewable energy in the country seems far from tangible with the current stakeholders' shortage in the country (see Table 70).
Table 71: Analysis of main institutions fomenting alternative renewable sources in Venezuela.
Local Installation Consulting Class Environment Partners/ Manufacturers and NGOs Research and Funders Associations Agencies Government Maintenance Engineering
Solar PV CSP
Biomass SHP
Geothermal Oceans
Wind 1 Note: 1 The Venezuelan oil company PDVSA conducts studies for installation of two factories in the country.
Caption: Good Regular Insufficient Non-existent No information
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3.4 Demand for copper
Based on the researched literature, Table 71 shows the additional maximum and minimum installed capacity per analyzed country and source. Table 72 shows the amount of copper per installed capacity per source according to information provided by ICA. Multiplication of one Table by the other results in the estimated demand for copper in the presented horizons (Table 73).
Table 72: Additional installed capacity per source and country (MW)
Central Argentine Peru Colombia Venezuela Mexico 1 3 America Brazil (2020) 2 Chile (2020) 4 5 6 (2020) (2020) (2020) (2013) (2020)7 (2015)8
Wind energy 6000 - 7800 200 – 8000 1000 – 6122 0 - 403 9 – 100 172 1724 115
SHP( <20 MW) 6966 1004 616 - 676 0 – 509 512 – 601 0 465 0
Biomass 8521 300 - 1000 380 – 1742 101 180 0 100 110
Geothermal energy 0 100 – 200 0 – 488 125 – 400 55 0 126 25.5
Solar photovoltaic 0 250 - 500 4 80 0 0 0 0
Ocean energy (waves 0 0 0 0 0 0 0 0 and tides)
CSP 195 300 0 - 970 0 0 0 0 0
Sources: 1Table 22;2Table 19; 3Table 36; 4Table 47; 5Table 44; 6Table 4; 7Table 46; 8Table 33.
Table 73: Amount of copper for each source power
Plant Kg/kW
Wind 2.5
Hydraulic 2.0
Biomass 1.2
Geothermal 4.0
PV 8.8
Oceans 1.5
CSP 4.0 Source: ICA (2010). In red: consultant's estimate.
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Table 74: Minimum and maximum quantity of additional copper projected for 2020 (in tonnes)
Central Argentina Colombia Venezuela Mexico Total Brazil (2019) Chile (2020) Peru (2020) America (2020) (2020) (2013) (2020) (min-max) (2015)
Wind energy 15000-19500 500-20000 2500-15310 0-1010 20-250 430 4310 290 23050-61100
SHP 13930 2010 1230-1350 0-1020 1020-1200 0 930 0 19120-20440
Biomass 10230 360-1200 460-2090 120 220 0 120 130 11640-14110
Geothermal 0 0-800 0-1950 500-1600 220 0 500 100 1320-5170 energy
Solar PV 0 0-4400 40 700 0 0 0 0 740-5140
Oceans 0 0 0 0 0 0 0 0 0
CSP 780 1200 0-3880 0 0 0 0 0 1980-5860
Total 39940 – 44440 4070 – 29610 4230-24620 1320-4450 1480-1890 430 5860 520 57850-111820
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uguese. Universidad de Chile, Programa de Estudios e Investigaciones en Energía del Instituto de Asuntos Públicos, e Núcleo Milenio de Electrónica Industrial y Mecatrónica, Centro de Innovación en Energía de la Universidad Técnica Federico Santa María UTFSM. 2008. Aporte Potencial de Energías Renovables No Convencionales y Eficiencia Energética a la Matriz Eléctrica, 2008 - 2025. http://www.eula.cl/doc/chile_new_renewables.pdf. UNSL, Universidad Nacional de San Luis. [s.d.]. UNSL - Página Web. http://www.unsl.edu.ar/. UPME, República de Colombia, Unidad de Planeación Minero Energética. [s.d.]. Anexo C - Mapa de Potencial de Geotermia. ———. [s.d.]. Sistema de Información de Eficiencia Energéctica y Energías Alternativas. http://www.si3ea.gov.co/. ———. [s.d.]. UPME - Página Web. http://www1.upme.gov.co/. ———. 2003. Potencialidades de los Cultivos Energéticos y Resíduos Agrícolas en Colombia. ———. 2005a. Atlas de Radiación Solar de Colombia. www.upme.gov.co/Atlas_Radiacion.htm. ———. 2005b. Costos Indicativos de Generación Eléctrica en Colombia. ———. 2006. Atlas de Viento y Energía Eólica de Colombia. ———. 2007a. Plan de Expansión de Referencia - Generación-Transmisión 2008-2022. ———. 2007b. Plan Energético Nacional - Contexto y Estrategias 2006-2025. ———. 2008. Escenarios de Generación con Energía Eólica. ———. 2009a. Plan de Expansión de Referencia - Generación-Transmisión 2010-2024 - Preliminar. ———. 2009b. Plan de Expansión de Referencia - Generación-Transmisión 2009-2023. ———. 2010. Formulación de un Plan de Desarrollo para las Fuentes No Convencionales de Energía en Colombia (PDFNCE) - Términos de Referencia. USB, Universidad Simón Bolívar. 2010. Cuatro parques eólicos tendrá Venezuela en 2013. http://elpapeldelabolivar.dsm.usb.ve/index.php?id=4771. Usinagem Brasil. 2010. Usinagem Brasil- Página Web. http://www.usinagem- brasil.com.br/materias.asp?c=27/2/2010%2018:36:02. UTFSM, Universidad Técnica Federico Santa María. 2008a. Estudio de contribución de las ERNC al SIC al 2025- Potencial de Biomasa en Chile. http://www.neim.utfsm.cl/arch/20080808-02-Biomasa.pdf. ———. 2008b. Estudio de contribución de ERNC al SIC al 2025. ERNC-Tecnologías Nuevas y Emergentes en Chile. http://www.neim.utfsm.cl/arch/20080808-08-Solar.pdf. Valente, Marcela. 2010. Latin America: Moving Towards Renewables. Inter Press Service, Março 17. http://www.alertnet.org/thenews/newsdesk/ips/e27501dd4ad7b221cbf353c15a29e7 72.htm. Varella, Fabiana Karla de Oliveira Martins. 2009. Estimativa do indice de nacionalização dos sistemas fotovoltaicos no Brasil. Universidade Estadual de Campinas. http://libdigi.unicamp.br/document/?code=000438118. Velazco, Cesar. 2008. Proyecto Geotermal Aguas Calientes - Tacna - Perú apresentado em Situación y Perspectivas para el Desarrollo de la Geotermia en América Latina y el Caribe: El Caso de Perú, Dezembro. Venezuela, Diário Crítico de. 2010. 60 días más durará el decreto de emergencia eléctrica. Abril 9. http://www.diariocritico.com/venezuela/2010/Abril/noticias/202368/60-dia-mas- durara-decreta-emergencia-electrica.html. Vestas. 2006. Local Press Release from Vestas Mediterranean A/S -n° 13/2006. Outubro 31. http://www.vestas.com/files//Filer/EN/Press_releases/Local/2006/061031LPMUK13C hile.pdf. Vibhava. 2010. Vibhava. http://www.vibhava.com.br/downloadfiles/gvep/bcodados.html#Fundo_Nacional_de _Desenvolvimento_%E2%80%93_FND.
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Walter, Arnaldo, e Adriano Ensinas. 2010. Produção de eletricidade a partir da biomassa da cana de açúcar. http://www.feagri.unicamp.br/energia/ABIMAQ/cogeracao.pdf. Acesso em: 24.10.2010 Wartsilla. 2010. Wartsilla – Página Web. www.wartsila.com WB, World Bank. [s.d.]. The World Bank - Página Web. http://www.worldbank.org/. ———. 2010. PE Huaycoloro Landfill Gas Recovery. Abril 4. http://web.worldbank.org/external/projects/main?projid=P094739&theSitePK=40941 &piPK=51351143&pagePK=51351001&menuPK=51351213&Type=Overview,%202010. WOBBEN. 2010. WOBBEN WINDPOWER- Página Web. http://www.wobben.com.br/. WWF Brasil. 2010. WWF Brasil - Página Web. http://www.wwf.org.br/. XM, Compañía de Expertos en Mercados. [s.d.]. XM Compañía - Página Web. http://www.xm.com.co/Pages/default.aspx. ———. 2007. El Mercado de Energía Mayorista y su Administración Janeiro 22. Zilles, Roberto. 2010. Geração Distribuída com Sistemas Fotovoltaicos Conectados à Rede (SFCR). http://www.ufpa.br/inct-ereea/ZillesCYTED.pdf.
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5 Annex
5.1 Description of multicriteria analysis
The purpose of this section is to present a multicriteria methodology for analysis or Multicriteria Decision Aid (AMD) for selection of technologies in preferable Latin America countries from ICA's point of view to assist in the assembly of its investment plan for the next five years. To illustrate the proposed methodology, an exercise in its use is presented.
Multicriteria analysis is a tool that can be very useful in decision making processes, whether in public or private, in situations where decisions must be based on objective, technical, transparent criteria and also to incorporate subjective and political nature judgments of public or private managers involved.
Multicriteria analysis techniques are being widely used to assist the decision making process on energy and environmental problems involving multiple and often conflicting objectives (Pohekar & Ramachandran, 2004). Also, frequently problems include the need for evaluations with strong qualitative or subjective components that must be incorporated into the decision process.
Unlike optimization techniques, that seek the optimal solution for a specific objective, the multicriteria analysis seeks a compromise solution, negotiated in the face of multiple objectives that must be met. It seeks, therefore, not strictly optimal solution, but the consensus solution (JANNUZZI et al., 2009).
This section is divided into two parts: presentation of the method and its application based on the work results.
5.1.1 METHOD AND PHASES
The method For the present work, it was chosen one of the most popular solutions "ranking" (or prioritization) technique known as PROMÉTHÉE47 implemented through a public domain application - PRADIN 3.0 - Program to Support Decision Making Based on Indicators (National Association of Financial, Planning, Research and Statistic Institutions - ANDIPES, 2007). The major aspect for the method adoption is the fact that it considers subjectivity, based on the set of values/interests of each decision maker, and has the ordering of alternatives as its purpose.
The Prométhée II method, used by the PRADIN 3.0 application consists in achieving an alternatives ranking evaluated by a preference system. This method also consists in confronting the alternatives' performance criterion by criterion (where the criteria refer to the decision factors, see section 0), from binary comparisons and uses the pseudo criterion concept associating them to indifference limits (q) and limits of relative preference (p). From comparisons of alternatives' performance criterion by criterion, according to a given preference
47 The PROMÉTHÉE method designates one family of methods of the French school of Multicriteria Decision Aid (AMD). It was developed to address discrete multicriteria problems, i.e. when the set of possible alternatives is finite.
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function, the Prométhée II seeks to examine the assertion that the alternative xi is strictly preferable to the alternative xk.
The method uses a preference function Pj(a,b) which is a function of the dj difference between two alternatives for criterion j, i.e. dj = f(a,j) - f(b,j), where f(a,j) and f (b,j) are values of two alternatives, a and b, for criterion j.
The limits of the accepted values for preferring one alternative to another, or show indifference q' or p' are defined depending on the criterion function. Two alternatives are indifferent by criterion j if dj does not exceed the limit of indifference q'. If dj is greater than p', then we say that there is a strict preference for the alternative a. A multicriteria preference index is built for the alternatives a and b:
(a,b) (a,b)= 퐽 ∑푗=1 푃푤푗푃푗 π 퐽 �푗=1 푤푗 ( ) = ( , ) + ∅ 푎 � 휋 푎 푏 퐴 ( ) = ( , ) − ∅ 푎 � 휋 푏 푎 ( ) = ( 퐴) ( ) + − ∅ 푎 ∅ 푎 − ∅ 푎
Where wj is the weight given to criterion j, (a) and (a) are positive and negative overshoot flows of alternative a. The positive overshoot+ flow −expressed how alternative a ∅ ∅ overcomes the others. And the negative expressed how alternative a is surpassed by the others. Alternative a is preferred to alternative b if ( ) > ( ). If ( ) = ( ), they are indifferent.<0} ∅ 푎 ∅ 푏 ∅ 푎 ∅ 푏 Phases48 Decision-making methods based on multiple criteria involve a series of phases in which clear and objective definition of the problem-situation to be solved is crucial. This phase is essentially qualitative, for which different techniques to involve participants, as group discussion, Delphi panel, literature search of previous studies, can provide inputs to reach the basic definitions on the addressed problem, various alternative solutions, different judging criteria, other decision-makers that should participate in the process, etc.
Thus, the implementation of AMD in any of the typical problems faced by the public49 or private50 manager requires:
48This section was largely based on Jannuzzi et al. (2009). 49 How to choose one among several projects of urban intervention, select one of several proposed services in a public bidding process, evaluate concessionaires of public services with respect to operating performance, identify pockets of social vulnerability in the territory to receive public investment or social programs. 50The choice(s) of best investment(s) between several alternatives, select the best development strategy for the product or service, identify bottlenecks in production or service to receive investments and actions, identify priority geographic areas for investment in expansion or strengthening of infrastructure.
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• Clearly specify the question to address - choose the best investment, select the best strategy or programs, identify key bottlenecks and more attractive geographic areas for investment;
• Identify valid alternatives to solve or address the problem - the submitted projects, the different programs under consideration, the different locations and/or infrastructure that may be the object of acting;
• List the different decision makers and their respective degrees of influence (or power/ political clout) who may have interest or relevance in the technical-political choice process - shareholders, managers from different departments or directories, technicians of the involved sector, consumers or their institutional representatives on dealers assessment, technicians, specialists and agents with experience in implementing projects and programs;
• Define, with each decision maker, the criteria or indicators for evaluating alternatives, as well as the relative importance of each one (weight) - cost, economic, social and environmental impact, operational complexity, value, technical capability of service renders, quality potential of services, level of indebtedness, duration of benefits, quality and regularity of services rendered to consumers;
• Assign the reached value or search the referred to index for each evaluation criterion of each identified alternative.
With the problem clearly defined, and raised the alternatives for its solution, the set of decision makers identified and specified the criteria for alternatives' evaluation, one shall pass to the application of the quantitative procedure of multicriteria analysis.
Figure 25 outlines the phases for implementing the method.
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Especify the problem
Define objectives
Indentify actors
Establish potential actions
Select indicators-criteria
Define indicators-criteria weights
Determine the multiccriteria method
Apply the multicriteria method
Figure 25: Phases for implementation of multicriteria analysis
5.1.2 METHOD APPLICATION EXAMPLE This section presents an illustration of multicriteria analysis application for "ranking" the most attractive markets related to the use of copper in renewable energy technologies in Latin America. Importantly, this example is merely illustrative and its results are not consistent with reality, because values for weights and scales were assumed and these are upon the decision maker(s).
In following, each of the phases shown in Figure 25 is performed with focus on this work goals. We stress the importance of complying with each phase because the best defined is the scope, boundaries and input data of the given problem, the more effective will be the tool aid in decision making.
Specification of the problem, setting of objectives, and actors identification ICA needs to define its five-year investment plan in Latin America for the renewable sources electric generation area. The use of copper is the main leveler.
The objective is, therefore, to choose within a set of potential markets, those in which the potential use of copper is both larger and more effective under Procobre's point of view.
The actors involved are the ICA decision makers. Other actors, as its associates may also be included.
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Table 75: Specification of the problem, setting of objectives, and actors' identification
Problem Define the next five-year investment plan in Latin America for power generation from renewable specification energy sources. The use of copper is the main leveler.
Objectives To choose within a set of potential markets, those in which the potential use of copper is both larger and more effective.
Decision makers ICA LA decision makers.
Considered alternatives Table 9 presents the technologies listed by ICA and the countries in focus. They are the decision object-units. They are seven technologies and seven countries and an aggregate region (Central America and The Caribbean). So there are 56 alternatives (country-technology pairs) to be evaluated, each represented by a pair of acronyms. For example, BR_eo represents the wind energy in Brazil, CO_g geothermal energy in Colombia and so on.
Table 76: Technologies and countries in study
Country Acronym Technology Source Acronym
Brazil BR Wind energy eo
Argentina AR Hydraulic: SHP pch
Chile CH Biomass energy bio
Peru PE Geothermal energy g
Colombia CO FV Solar energy fv
Venezuela VE Oceans energy (waves and tides) oc
Mexico MX CSP csp
Central America and The AC Caribbean
Criteria selection, their weights and preference functions To choose some of the alternatives of the choice set, in this case pairs of source and country, the decision maker has multiple evaluation axes - the quantity of copper, for example. These axes of evaluation are the elements that drive the analysis and should represent the relevant dimensions of the problem. From these axes, it is possible to compare the alternatives. The valuation of these evaluation axes can be quantitative (amount in tonnes, revenue in dollars) or qualitative (amount of copper very high, very low, high, low).
There are three axes of evaluation or criteria used here: market, regulation and actors. The market criterion represents the estimated amount of copper based on the projected additional installed capacity of the study horizon in tonnes, i.e., a quantitative criterion. The other two criteria are qualitative and represent, respectively, the degree of development and the importance of the legal framework and existing players.
To the decision maker, in general, and because of his preferences, some criteria will be more important than others. The measure of relative importance (higher or lower) of the criteria for the decision maker is called weight or weighting. For example, the product cost criterion for a company may be more important than the investment criterion in research and development in a time of crisis, i.e., the product cost will have a greater weight than the investment in research when considering the various alternatives with respect to these criteria.
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In comparing alternatives, the decision maker's preferences for each criterion may have rules, which are represented by what is called "relative preference functions". For example, the decision maker may be indifferent to cost differences between two alternatives if this is less than 10%, i.e., in relation to this cost criterion, the alternatives are indifferent when the difference is equal or less than 10%. Likewise, if the difference is greater than, for example, 20%, alternative A is strictly preferred to alternative B. It is said, therefore, that the limit of indifference is 10% and the preference limit is 20%. The region in between is called weak preference.
As mentioned above, the valuation of country-technology pairs of this Roadmap is done through indicators or quantitative and qualitative criteria. The quantitative indicators are data related to projections of installed capacity (MW) of the various sources analyzed, mainly taken from literature. The closer the data are from reality, the better the results of multicriteria analysis.
For qualitative criteria, one searches the reaction of the respondent in accordance to a scale whose function is to translate qualitative information into a value, for example, the scale presented in Table 76. The numerical correspondence is the one used for multicriteria analysis.
Table 77: Scale for assessing levels to quantitative criteria 1 2 3 4 5 Very Little A lot Quite Extremely
Table 77 presents the criteria used, the respective scales, and weights taken. It is worth noting that these criteria and their definitions are not exhaustive. The decision maker(s) should propose their own criteria and their own definitions according to their own perspective.
For this exercise, it was considered that the values of preference and indifference are zero, i.e., it is what is called a preference function of a true or usual criterion.
Table 78: Proposed criteria and corresponding weights and scales Criteria (abbreviation) Scale Market Quantitative (tons of copper) 1 2 3 4 Regulation + advanced -advanced 0 1 3 5 Actors Non- Insufficient Regular Good existent
Table 78 shows the minimum and maximum amount of copper according to the projection of the estimated additional capacity for each source (see section 3.4). The analysis will be made for the upper and lower limits of these quantities of copper.
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Table 79: Minimum and maximum quantity of additional copper projected for 2020 (in tonnes)
Central Argentina Colombia Venezuela Mexico Total Brazil (2019)1 Chile (2020) Peru (2020) America (2020) (2020) (2013) (2020) (min-max) (2015)
Wind energy 15000-19500 500-20000 2500-15310 0-1010 20-250 430 4310 290 23050-61100
SHP 13930 2010 1230-1350 0-1020 1020-1200 0 930 0 19120-20440
Biomass 10230 360-1200 460-2090 120 220 0 120 130 11640-14110
Geothermal 0 0-800 0-1950 500-1600 220 0 500 100 1320-5170 energy
Solar PV 0 0-4400 40 700 0 0 0 0 740-5140
Ocean energy 0 0 0 0 0 0 0 0 0
CSP 780 1200 0-3880 0 0 0 0 0 1980-5860
Total 39940 – 44440 4070 – 29610 4230-24620 1320-4450 1480-1890 430 5860 520 57850-111820
The valuation of countries legislation for renewable energy sources is presented in Table 79. The evaluation aspects of the legislation are divided into type of legal mechanism (legislation and regulation), and type of action (economic incentive and market creation).
For each of these aspects, a weight is assigned. The weights of Table 80 were given by Procobre representatives in a workshop. The final score for each country-technology pair is given by the sum of columns plus the General Legislation score. There are general nature laws, not specific to the particular source. A country can have a general law independent of the renewable energy source and no specific one for a given source.
For example, in the case of Brazil for wind energy. Each value of Table 79 is multiplied by its weight. Therefore, for the law whose value is assigned four, multiplying by the corresponding weight (3), results the value 12 (3 x 4). The same procedure applies to the General category. The end result is the sum of the general value with the sum of valuations of the source itself: 16 (General: 6 +6 +2 +2) plus 24 (12 +12 +0 +0), totaling 40.
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Table 80: Valuation of legislation for the countries of study according to scale
Economic Market Regulatory Mechanisms incentives Creation Legislation Regulation
General 2 3 3 1
Wind 2 2 2 SHP Biomass Geothermal Argentina Solar PV 2 2 2 Oceans CSP 2 2 2 General 2 2 2 2 Wind 4 4 SHP 4 4 Biomass 4 4 Geothermal Brazil Solar PV Oceans CSP General 4 4 3 2 Wind
SHP Biomass Geothermal Chile Solar PV Oceans CSP General 3 3 2 2 Wind 1
SHP Biomass 2 2
Peru Geothermal 4 4 Solar PV Oceans CSP General 1 1 1 Wind SHP Biomass 2 2 Geothermal Solar PV 2 2 Colombia Oceans CSP General 1 Wind SHP Biomass Geothermal Solar PV Venezuela Oceans CSP General 1 3 2 Wind 3
SHP Biomass Geothermal
Mexico Solar PV 3 Oceans
CSP General 2 3 Wind SHP 1 Biomass Geothermal Solar PV 2 Oceans
Central America Central CSP
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Table 81: Valuation of legislation for the countries of this study from weights given by type of regulatory tool
Economic Market Regulatory Mechanisms incentives Creation Weight 3 3 1 1 Final Legislation Regulation score General 19 6 9 3 1 Wind 33 6 6 2 0 SHP 19 0 0 0 0 Biomass 19 0 0 0 0 Geothermal 19 0 0 0 0 Solar PV 33 6 6 2 0 Argentina Oceans 19 0 0 0 0 CSP 33 6 6 2 0 General 16 6 6 2 2 Wind 40 12 12 0 0 SHP 40 12 12 0 0 Biomass 40 12 12 0 0 Geothermal 0 0 0 0 0 Brazil Solar PV 16 0 0 0 0 Oceans 0 0 0 0 0 CSP 16 0 0 0 0 General 29 12 12 3 2 Wind 29 0 0 0 0
SHP 29 0 0 0 0 Biomass 29 0 0 0 0 Geothermal 29 0 0 0 0 Chile Solar PV 29 0 0 0 0 Oceans 29 0 0 0 0 CSP 29 0 0 0 0 General 22 9 9 2 2 Wind 25 0 3 0 0
SHP 22 0 0 0 0 Biomass 34 6 6 0 0
Peru Geothermal 46 12 12 0 0 Solar PV 22 0 0 0 0 Oceans 22 0 0 0 0 CSP 22 0 0 0 0 General 7 3 3 1 0 Wind 7 0 0 0 0 SHP 7 0 0 0 0 Biomass 19 6 6 0 0 Geothermal 7 0 0 0 0 Solar PV 19 6 6 0 0 Colombia Oceans 7 0 0 0 0 CSP 7 0 0 0 0 General 3 0 3 0 0 Wind 3 0 0 0 0 SHP 3 0 0 0 0 Biomass 3 0 0 0 0 Geothermal 3 0 0 0 0 Solar PV 3 0 0 0 0 Venezuela Oceans 3 0 0 0 0 CSP 3 0 0 0 0 General 14 3 9 2 0 Wind 23 0 9 0 0
SHP 14 0 0 0 0 Biomass 14 0 0 0 0 Geothermal 14 0 0 0 0
Mexico Solar PV 23 0 9 0 0 Oceans 14 0 0 0 0
CSP 14 0 0 0 0 General 9 6 0 3 0 Wind 9 0 0 0 0 SHP 12 3 0 0 0 Biomass 9 0 0 0 0 Geothermal 9 0 0 0 0 Solar PV 11 0 0 0 2 Oceans 9 0 0 0 0
Central America Central CSP 9 0 0 0 0
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Table 82: Consolidated valuation of legislation for the studied countries
Central Brazil Argentina Chile Peru Colombia Venezuela Mexico America (2015) Wind energy 40 33 29 25 7 3 23 9 SHP ( <20 MW) 40 19 29 22 7 3 14 12 Biomass 40 19 29 34 19 3 14 9 Geothermal energy 0 19 29 46 7 3 14 9 Solar PV 16 33 29 22 19 3 23 11 Ocean energy (waves and tides) 0 19 29 22 7 3 14 9 CSP 16 33 29 22 7 3 14 9
Due to the large number of different types of actors, each of them was established a valuation based on Table 77, which results are shown in Table 82. For each actor a weight was assigned chosen by ICA in a workshop (Table 83). The sum of the scales assigned to the actors for each country is the value used by multiple criteria. Table 82 presents the weights assigned and the consolidation of these values.
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Table 83: Valuation of the actors per technology per analyzed countries
Local Installation Consulting Class Environment Partners/ Manufacturers and NGOs Research and Funders Associations Agencies Government Maintenance Engineering Solar PV 1 0 3 3 5 3 1 3 5 CSP 1 0 1 1 5 3 3 1 1 Biomass 5 3 5 3 5 3 3 5 5 SHP 5 5 3 5 5 3 5 5 5 Geothermal 3 0 1 3 5 3 1 3 3 Argentina Ocean 0 0 1 5 3 0 0 1 Wind 5 5 5 5 5 3 5 5 5 Solar PV 1 1 5 5 5 5 5 1 1 CSP 1 1 5 5 5 5 1 1 Biomass 5 5 5 5 5 5 5 5 1 SHP 5 5 1 5 5 5 5 5 1
Brazil Geothermal 0 0 1 0 5 5 0 0 1 Ocean 0 1 5 5 5 1 Wind 5 5 5 5 5 5 5 5 3 Solar PV 3 1 5 1 5 5 1 1 3 CSP 3 0 5 1 5 5 1 1 1 Biomass 3 1 3 1 5 5 1 1 1 SHP 3 0 5 3 5 5 3 1 1 Chile Geothermal 3 0 3 1 5 5 1 1 1 Ocean 3 0 3 1 5 5 1 1 1 Wind 3 0 3 3 5 5 1 1 1 Solar PV 5 0 5 3 5 5 3 3 5 CSP 0 0 1 0 5 0 0 1 Biomass 1 1 1 3 5 3 1 1 3 SHP 5 1 1 3 5 5 3 3 5 Peru Geothermal 5 1 1 5 0 1 5 5 Ocean 0 1 5 0 0 0 1 Wind 3 1 3 3 5 5 3 5 5 Solar PV 1 1 1 5 3 1 3 1 1 CSP 0 0 1 3 1 3 1 Biomass 1 1 3 1 3 3 5 3 5 SHP 5 1 1 1 3 1 3 5 5 Geothermal 3 0 1 0 3 1 3 1 3 Colombia Ocean 0 1 3 1 1 0 1 Wind 1 0 1 1 3 1 1 1 1 Solar PV 3 0 0 1 0 0 1 1 1 CSP 1 0 0 1 0 0 1 1 1 Biomass 1 0 0 1 0 0 1 1 1 SHP 1 0 0 1 0 0 1 1 1 Geothermal 1 0 0 1 0 0 1 1 1
Venezuela Ocean 1 0 0 1 0 0 1 1 1 Wind 3 1 1 1 0 0 1 1 1 Solar PV 3 1 3 3 1 3 3 1 1
CSP 1 0 1 0 3 0 3 1 1 Biomass 3 1 1 1 3 3 3 1 3 SHP 3 1 0 1 1 0 1 1 3
Mexico Geothermal 5 0 0 1 1 0 3 1 1 Ocean 1 0 0 0 1 0 1 0 0 Wind 5 3 3 5 3 0 3 3 3 Solar PV 3 0 1 3 3 3 1 1 3 CSP 1 0 1 0 0 0 0 0 0 Biomass 3 0 3 1 3 3 1 1 3 SHP 3 0 1 1 1 0 0 0 3 Geothermal 5 0 0 0 1 3 0 0 1 Ocean 1 0 0 0 0 0 0 0 0
Central Ame rica Wind 5 0 3 0 3 3 0 0 3
Renewable Energy for Electricity Generation in Latin America Page 168
Table 84: Valuation of the actors per technology per analyzed countries for different weights
Weight 3 3 3 2 1 2 2 2 1
Local Installation Consulting Class Environment Total Partners/ Manufacturers and NGOs Research and Funders Associations Agencies Government Maintenance Engineering Solar PV 42 3 0 9 6 5 6 2 6 5 CSP 28 3 0 3 2 5 6 6 2 1 Biomass 77 15 9 15 6 5 6 6 10 5 SHP 85 15 15 9 10 5 6 10 10 5 Geothermal 40 9 0 3 6 5 6 2 6 3 Argentina Ocean 15 0 0 3 0 5 6 0 0 1 Wind 91 15 15 15 10 5 6 10 10 5 Solar PV 59 3 3 15 10 5 10 10 2 1 CSP 49 3 3 15 10 5 10 2 0 1 Biomass 91 15 15 15 10 5 10 10 10 1 SHP 79 15 15 3 10 5 10 10 10 1
Brazil Geothermal 19 0 0 3 0 5 10 0 0 1 Ocean 29 0 0 3 0 5 10 10 0 1 Wind 93 15 15 15 10 5 10 10 10 3 Solar PV 51 9 3 15 2 5 10 2 2 3 CSP 46 9 0 15 2 5 10 2 2 1 Biomass 43 9 3 9 2 5 10 2 2 1 SHP 54 9 0 15 6 5 10 6 2 1 Chile Geothermal 40 9 0 9 2 5 10 2 2 1 Ocean 40 9 0 9 2 5 10 2 2 1 Wind 44 9 0 9 6 5 10 2 2 1 Solar PV 68 15 0 15 6 5 10 6 6 5 CSP 9 0 0 3 0 5 0 0 0 1 Biomass 33 3 3 3 6 5 6 2 2 3 SHP 59 15 3 3 6 5 10 6 6 5 Peru Geothermal 42 15 0 3 2 5 0 2 10 5 Ocean 9 0 0 3 0 5 0 0 0 1 Wind 63 9 3 9 6 5 10 6 10 5 Solar PV 33 3 3 3 10 3 2 6 2 1 CSP 15 0 0 3 0 3 2 6 0 1 Biomass 47 3 3 9 2 3 6 10 6 5 SHP 49 15 3 3 2 3 2 6 10 5 Geothermal 28 9 0 3 0 3 2 6 2 3 Colombia Ocean 11 0 0 3 0 3 2 2 0 1 Wind 18 3 0 3 2 3 2 2 2 1 Solar PV 16 9 0 0 2 0 0 2 2 1 CSP 10 3 0 0 2 0 0 2 2 1 Biomass 10 3 0 0 2 0 0 2 2 1 SHP 10 3 0 0 2 0 0 2 2 1 Geothermal 10 3 0 0 2 0 0 2 2 1
Venezuela Ocean 10 3 0 0 2 0 0 2 2 1 Wind 22 9 3 3 2 0 0 2 2 1 Solar PV 43 9 3 9 6 1 6 6 2 1
CSP 18 3 0 3 0 3 0 6 2 1 Biomass 37 9 3 3 2 3 6 6 2 3 SHP 22 9 3 0 2 1 0 2 2 3
Mexico Geothermal 27 15 0 0 2 1 0 6 2 1 Ocean 6 3 0 0 0 1 0 2 0 0 Wind 61 15 9 9 10 3 0 6 6 3 Solar PV 34 9 0 3 6 3 6 2 2 3 CSP 6 3 0 3 0 0 0 0 0 0 Biomass 36 9 0 9 2 3 6 2 2 3 SHP 18 9 0 3 2 1 0 0 0 3 Geothermal 23 15 0 0 0 1 6 0 0 1 Ocean 3 3 0 0 0 0 0 0 0 0
Central America Wind 36 15 0 9 0 3 6 0 0 3
Renewable Energy for Electricity Generation in Latin America Page 169
5.1.3 RESULTS As already commented, each alternative (country-technology) was evaluated according to the decision criteria to make a choice according to the decision maker (Procobre) perception. The Multicriteria indicator estimated using the application would represent the Procobre degree of interest on each considered alternative.
Table 84 presents the criteria corresponding values for each country-technology pair considered in this exercise: for the lower and upper limits of the estimated amount of copper. Quantitative indicators presented are derived from the available literature. The closer the data is to reality, the better the results of multicriteria analysis. Based on Table 84 valuations, four scenarios were simulated by varying the weights for each criterion:
• Scenario 1: equal weights: copper = 1; regulation = 1; actors = 1
• Scenario 2: Weights: copper = 2; regulation = 1; actors = 1
• Scenario 3: Weights: copper = 1; regulation = 2; actors = 1
• Scenario 4: Weights: copper = 1; regulation = 1; actors = 2
The following figures show the ranking resulting from valuations of Table 84 for each one of the four scenarios.
For whichever scenario, either for the upper and lower estimated amount of copper for the next 10 years, Brazil stood out compared to others in wind, biomass and SHP modes. The exception is Argentina in relation to the exploitation of wind power, which also showed a significant position in the ranking, especially when one considers the upper limit of the projected amount of copper, which is second only to Brazil-wind in 3 of the 4 scenarios.
The preferable country-technology pairs from the ICA standpoint were, considering the lower level of projected amount of copper:
1. Brazil_wind
2. Brazil_biomass
3. Brazil_PCH
4. Argentina_wind
5. Mexico_wind
6. Chile_PCH
From the list above, the three first pairs stand out in comparison to others. The latter three also showed a certain prominence, but were followed relatively closely by the next ones.
Now, when one considers the amount for higher levels of copper, technologies such as solar PV in Argentina and wind energy in Chile excel. The preferable country-technology pairs from the Procobre standpoint were:
1. Brazil_wind
2. Argentina_wind
3. Brazil_biomass
Renewable Energy for Electricity Generation in Latin America Page 170
4. Brazil_PCH
5. Chile_wind
6. Mexico_wind and Argentina_photovoltaic
Renewable Energy for Electricity Generation in Latin America Page 171
Table 85: Criteria and respective valuations for a minimum (left) and maximum (right) amounts of copper
Criteria Market Regulation Actors Criteria Market Regulation Actors BR_eo 15000 40 93 BR_eo 19500 40 93 AR_eo 500 33 91 AR_eo 20000 33 91 CH_eo 2500 29 44 CH_eo 15310 29 44 PE_eo 0 25 63 PE_eo 1010 25 63 CO_eo 20 7 18 CO_eo 250 7 18 VE_eo 430 3 22 VE_eo 430 3 22 MX_eo 4310 23 61 MX_eo 4310 23 61 AC_eo 290 9 36 AC_eo 290 9 36 BR_pch 13930 40 79 BR_pch 13930 40 79 AR_pch 2010 19 85 AR_pch 2010 19 85 CH_pch 1230 29 54 CH_pch 1350 29 54 PE_pch 0 22 59 PE_pch 1020 22 59 CO_pch 1020 7 49 CO_pch 1200 7 49 VE_pch 0 3 10 VE_pch 0 3 10 MX_pch 930 14 22 MX_pch 930 14 22 AC_pch 0 12 18 AC_pch 0 12 18 BR_bio 10230 40 91 BR_bio 10230 40 91 AR_bio 360 19 77 AR_bio 1200 19 77 CH_bio 460 29 43 CH_bio 2090 29 43 PE_bio 120 34 33 PE_bio 120 34 33 CO_bio 210 19 47 CO_bio 220 19 47 VE_bio 0 3 10 VE_bio 0 3 10 MX_bio 0 14 37 MX_bio 0 14 37 AC_bio 130 9 36 AC_bio 130 9 36 BR_g 0 0 19 BR_g 0 0 19 AR_g 0 19 40 AR_g 800 19 40 CH_g 0 29 40 CH_g 1950 29 40 PE_g 500 46 42 PE_g 1600 46 42 CO_g 220 7 28 CO_g 220 7 28 VE_g 0 3 10 VE_g 0 3 10 M X_g 500 14 27 M X_g 500 14 27 AC_g 100 9 23 AC_g 110 9 23 BR_fv 0 16 59 BR_fv 0 16 59 AR_fv 0 33 42 AR_fv 4400 33 42 CH_fv 40 29 51 CH_fv 40 29 51 PE_fv 700 22 68 PE_fv 700 22 68 CO_fv 0 19 33 CO_fv 0 19 33 VE_fv 0 3 16 VE_fv 0 3 16 M X_fv 0 23 43 M X_fv 0 23 43 AC_fv 0 11 34 AC_fv 0 11 34 BR_oc 0 0 29 BR_oc 0 0 29 AR_oc 0 19 15 AR_oc 0 19 15 CH_oc 0 29 40 CH_oc 0 29 40 PE_oc 0 22 9 PE_oc 0 22 9 CO_oc 0 7 11 CO_oc 0 7 11 VE_oc 0 3 10 VE_oc 0 3 10 MX_oc 0 14 6 MX_oc 0 14 6 AC_oc 0 9 3 AC_oc 0 9 3 BR_csp 780 16 49 BR_csp 780 16 49 AR_csp 1200 33 28 AR_csp 1200 33 28 CH_csp 0 29 46 CH_csp 3880 29 46 PE_csp 0 22 9 PE_csp 0 22 9 CO_csp 0 7 15 CO_csp 0 7 15 VE_csp 0 3 10 VE_csp 0 3 10 MX_csp 0 14 18 MX_csp 0 14 18 AC_csp 0 9 6 AC_csp 0 9 6
Renewable Energy for Electricity Generation in Latin America Page 172 For the LOWER limit projection of additional installed capacity
Bargraph os the Multicriteria Indicator per decision-object unit
Equal weights: copper = 1; regulation = 1; actors = 1
Multicriteria indicator
Decision object-unit
Figure 26: Ranking of evaluated countries-technologies - scenario 1: lower limit amount of additional copper
Renewable Energy for Electricity Generation in Latin America Page 173 For the LOWER limit projection of additional installed capacity
Bargraph os the Multicriteria Indicator per decision-object unit
Weights: copper = 2; regulation = 1; actors = 1
Multicriteria indicator
Decision object-unit
Figure 27: Ranking of evaluated countries-technologies - scenario 2: lower limit amount of additional copper
Renewable Energy for Electricity Generation in Latin America Page 174 For the LOWER limit projection of additional installed capacity
Bargraph os the Multicriteria Indicator per decision-object unit
Weights: copper = 1; regulation = 2; actors = 1
Multicriteria indicator
Decision object-unit
Figure 28: Ranking of evaluated countries-technologies - scenario 3: lower limit amount of additional copper
Renewable Energy for Electricity Generation in Latin America Page 175 For the LOWER limit projection of additional installed capacity
Bargraph os the Multicriteria Indicator per decision-object unit
Weights: copper = 1; regulation = 1; actors = 2
Multicriteria indicator
Decision object-unit
Figure 29: Ranking of evaluated countries-technologies - scenario 4: lower limit amount of additional copper
Renewable Energy for Electricity Generation in Latin America Page 176 For the UPPER limit projection of additional installed capacity
Bargraph os the Multicriteria Indicator per decision-object unit
Equal weights: copper = 1; regulation = 1; actors = 1
Multicriteria indicator
Decision object-unit
Figure 30: Ranking of evaluated countries-technologies - scenario 1: upper limit amount of additional copper
Renewable Energy for Electricity Generation in Latin America Page 177 For the UPPER limit projection of additional installed capacity
Bargraph os the Multicriteria Indicator per decision-object unit
Weights: copper = 2; regulation = 1; actors = 1
Multicriteria indicator
Decision object-unit
Figure 31: Ranking of evaluated countries-technologies - scenario 2: upper limit amount of additional copper
Renewable Energy for Electricity Generation in Latin America Page 178 For the UPPER limit projection of additional installed capacity
Bargraph os the Multicriteria Indicator per decision-object unit
Weights: copper = 1; regulation = 2; actors = 1
Multicriteria indicator
Decision object-unit
Figure 32: Ranking of evaluated countries-technologies - scenario 3: upper limit amount of additional copper
Renewable Energy for Electricity Generation in Latin America Page 179 For the UPPER limit projection of additional installed capacity
Bargraph os the Multicriteria Indicator per decision-object unit
Weights: copper = 1; regulation = 1; actors = 2
Multicriteria indicator
Decision object-unit
Figure 33: Ranking of evaluated countries-technologies - scenario 4: upper limit amount of additional copper
Renewable Energy for Electricity Generation in Latin America Page 180
5.1.4 CONCLUSIONS The Multicriteria Decision Aid tool shows to be important when the process of choosing between different programs and types of deployment has several criteria for quantitative and qualitative decision, turning the task into a complex one. Thus, the tool allows organizing preferences and value judgments of the decision maker in obtaining information to answer their questions during the course of a process.
5.1.5 REFERENCES Gomes, L.F.A.M.; Araya, M.C.G.; Carignano, C. Tomada de Decisões em Cenários Complexos. São Paulo: Pioneira Thomson Learning, 2004.
Jannuzzi, P.M.; Miranda, W.L. de; Silva, D.S.G da. Análise Multicritério e Tomada de Decisão em Políticas Públicas: Aspectos Metodológicos, Aplicativo Operacional e Aplicações. Informática Pública, ano 11 (1), p. 69 – 87, 2009.
Sanjay D Pohekar, M Ramachandran. "Application of Multicriteria Decision Making to Sustainable Energy Planning - A Review".Renewable and Sustainable Energy Reviews, Vol. 8, pp.365 – 381, 2004.
Renewable Energy for Electricity Generation in Latin America Page 181