This presentation aims to identify the strengths and challenges related to renewable energy development in Latin America and the Caribbean and to develop recommendations to guide future IDB activity.
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The Development of the Renewable Energy Market in Latin America and the Caribbean
1. The Development of the
Renewable Energy Market
in Latin America and the Caribbean
Alexander Ochs Brown-Bag Lunch, IDB Headquarters Washington DC, 24 September 2014
2. Worldwatch in the Region
โขDominican Republic Wind and Solar Roadmap EEP, 2012
โขC-SERMS Phase I Baseline Report CARICOM & IDB, 2013 (first draft)
โขSustainable Energy Roadmaps in the Dominican Republic, Haiti and Jamaica ICI of the German Government, 2013 & 2014
โข10 Islands Profiles & Regional Matrix Carbon War Room, 2014
โขThe Way Forward for Renewable Energy in Central America (with INCAE Business School) EEP, CDKN, 2013
โขStudy on the Development of the Renewable Energy Market in LAC IDB, 2014
โขStudy of Water and Energy Regulatory Systems in Four Caribbean Islands and Lessons Learned for the Pacific ADB, 2014
3. Overview
Purpose:
To identify the strengths and challenges related to renewable energy development in LAC and to develop recommendations to guide future IDB activity
Contents:
1.Renewable Energy for Power Generation: Global Trends
2.Renewable Energy in LAC
3.Barriers to the Advancement of Renewable Energy in LAC and Opportunities to Overcome Them
4.Vulnerability to Climate Change and Adaptation Strategies in the Power Sector in LAC
5.How the IDB Can Support Renewable Energy Development in LAC
5. Global Growth in Energy by Source 2007โ2012
-2.1%
0.6%
2.4%
3.5%
3.7%
17.6%
25.0%
69.0%
-3%
7%
17%
27%
37%
47%
57%
67%
77%
Growth Rate (%)
Nuclear
Oil
Natural Gas
Hydro
Coal
Biofuels
Wind
Solar
Source: BP
1. Renewable Energy for Power Generation: Global Trends
6. 40
65
100
146
171
168
227
279
250
214
0
50
100
150
200
250
300
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Billion USD
Source: BNEF
1. Renewable Energy for Power Generation: Global Trends
Global Investment in Renewable Energy
2004โ2013
7. Global Levelized Cost of Energy for Renewable Power Generation, 2013
0
0.1
0.2
0.3
0.4
0.5
0.6
LCOE (USD/kWh)
Source: REN21
1. Renewable Energy for Power Generation: Global Trends
9. Electricity Generation by Source in LAC, 1970, 1990, and 2013
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1970
1990
2013
Others
Hydro
Nuclear
Coal
Natural Gas
Oil & Diesel
Source: Tissot, OLADE
2. Renewable Energy in LAC
10. Population Without Access to Electricity in LAC, 2013
0
1
2
3
4
5
6
7
8
9
10
Central
America
Mexico
Caribbean
Andean
Zone
Brazil
Southern
Cone
Million People
Source: ClimateScope 2013
2. Renewable Energy in LAC
11. Net Renewable Capacity Additions by Source in LAC, 2007โ2012
2. Renewable Energy in LAC
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2007
2008
2009
2010
2011
2012
GW
solar
geothermal
small hydro
wind
biomass & waste
Source: MIF and BNEF
12. Renewable Energy Investment by Technology in LAC ($B,%)
36.5, 56%
16.8, 26%
8.3, 13%
1.9, 3%
1.5, 2%
0.03, 0.05%
Wind
Small Hydro
Biomass & Waste
Solar
Geothermal
Small Scale Dist
Source: MIF and BNEF
2. Renewable Energy in LAC
13. Renewable Energy Policy Trends
2. Renewable Energy in LAC
โขRenewable energy targets
โขRenewable energy tenders or auctions
โขFITs
โขQuota obligations
โขNet metering
โขFiscal incentives
โขPublic funds for renewable energy projects
14. 3. Barriers to the Advancement of Renewable Energy in LAC and Opportunities to Overcome Them
15. Technological Barriers
3. Barriers to the Advancement of Renewable Energy in LAC and Opportunities to Overcome Them
โขLack of available data and information
โขTransmission and distribution challenges
๏Need for integrated resource planning
16. Market Barriers
3. Barriers to the Advancement of Renewable Energy in LAC and Opportunities to Overcome Them
โขRestricted grid and power market access
โขLack of economies of scale
โขHigh transaction costs
โขCounterparty risk
โขFossil fuel subsidies
๏Need to create open, fair, and competitive electricity markets
17. Finance Barriers
3. Barriers to the Advancement of Renewable Energy in LAC and Opportunities to Overcome Them
โขCurrency risks
โขInadequacy of financial products
โขUnderdeveloped financial sectors
๏Need for financial sector development
18. Social Barriers
3. Barriers to the Advancement of Renewable Energy in LAC and Opportunities to Overcome Them
โขLack of public acceptance
โขVested interest in business as usual
โขNot in my backyard
๏Need for up-to-date, fully inclusive data gathering and communication
19. 4. Vulnerability to Climate Change and Adaptation Strategies in the Power Sector in LAC
20. Climate Change Impacts in the Region
4. Vulnerability to Climate Change and Adaptation Strategies in the Power Sector in LAC
โขChanges in precipitation
โขTemperature increase
โขOcean warming
โขSea-level rise
โขIncrease in frequency of extreme weather events
21. Power Sector Vulnerability
4. Vulnerability to Climate Change and Adaptation Strategies in the Power Sector in LAC
โขClimate change affects the whole energy supply chain
โขFor example:
โWater scarcity affects hydropower, biomass, fossil fuels and nuclear power generation
โHigher temperatures decrease thermal efficiency for fossil fuels and nuclear power generation
โExtreme weather events and sea level rise put infrastructure at risk
โRising temperatures lead to higher energy demand
22. The Need for Adaptation Measures
4. Vulnerability to Climate Change and Adaptation Strategies in the Power Sector in LAC
โขLAC depends on hydropower for 50% of its electricity, so water availability is a major concern
โขIt has already experienced decreases in hydropower due to extreme droughts
โขNeed in-depth assessments of impacts of climate change on non-hydro energy sources, vulnerability studies at a national level, and the development of adaptation strategies
23. 5. How the IDB Can Support Renewable Energy Development in LAC
24. How the IDB Can Support Renewable Energy Development in LAC?
โขBuilding Enabling Infrastructure for the Grid of the Future
โขSecuring Private Sector Investment
โขEngaging in Energy Policy Design and Development
โขHelping to Establish Supply Chains for Current and Emerging Technologies
25. Building Enabling Infrastructure for the Grid of the Future
5. How the IDB Can Support Renewable Energy Development in LAC
โขHelp governments address important infrastructure and technical barriers to building a smart, low-carbon, and low-cost energy system.
โขAssist governments in carrying out critical infrastructural investments, as well as aid in capacity building of system operators throughout the region.
โขSupport countries in coordinating infrastructure expansion with the establishment of smart grids, weather forecasting, and energy efficiency technologies.
โขAssist governments in carrying out feasibility and environmental impact studies of potential large-scale renewable energy generation sites and in planning for their integration to the grid.
โขProvide technical and policy assessments for the most cost-effective regional integration strategies and aid countries in harmonizing national-level energy plans and regulations.
26. Securing Private Sector Investment
5. How the IDB Can Support Renewable Energy Development in LAC
โขAssist governments in lowering market and financial barriers that prevent the private sector from investing in small-, mid-, and large-scale renewable energy, energy efficiency, and smart grid projects.
โขHelp leverage private sector investment through risk mitigation of renewable energy projects.
โขAid small-scale projects in meeting equity requirements and help build the capacity of local financial institutions, increasing their familiarity with renewable energy projects and lowering perceived risks.
โขIn markets with limited private sector involvement, the IDB can stimulate engagement by providing support for public-private partnership (PPP) projects.
27. Engaging in Energy Policy Design and Development
5. How the IDB Can Support Renewable Energy Development in LAC
โขContinue to play an important role in assisting governments through capacity building, institutional development, and policy design.
โขThe IDB, with its extensive knowledge of the region, is ideally positioned to support national governments in developing sustainable energy plans that are suitable to their needs and goals.
28. Helping to Establish Supply Chains for Current and Emerging Technologies
5. How the IDB Can Support Renewable Energy Development in LAC
โขThe IDB can support the growth of local supply chains for clean energy technologies through capacity building and technical cooperation, as well as through financing of pilot projects, local businesses, and emerging clean energy technologies.
29. Thank you!
Alexander Ochs
Director
Climate and Energy Program
aochs@worldwatch.org