Energy Infrastructure in Latin America the View of the IDBMay 6, 2011 Miami, Florida

Sustainable Energy for all

Investment in Infrastructure in LAC

Total

Public

Private

Source: Calderon y Servén (2010).Note: Investment in infrastructure includes: telecommunications, electricity, transport (roads and railroads), and water and sanitation. This graph includes the average of Argentina, Brazil, Chile, Colombia, México y Peru.

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Latin-America Investments Needs in Infrastructure• Latin-America is Investing in Infrastructure Below the

Required Demand– The LAC Region invest 1.9% of GDP in Infrastructure (US$43.9

billion), the average investment in the developing world is 5% of the GDP.

– Investment Requirements:• 1.0% of the GDP to maintain the existing Infrastructure• 1.6% of GDP for new investments related to demand (totaling a

2.6% of the GDP or US$81.2 billion).– Example - if LAC were to achieve universal electricity coverage -

needs to invest an additional to the above 0.05 % of the GDP per-year.

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Energy Sector is Capital Intensive Sector

World Energy Outlook (2010) estimates that LAC needs approximately US$2.8 Trillion between 2010 and 2035

Accumulated Investment on Energy Infrastructure per Region2010-2035

Source: World Energy Outlook (2010).

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Electricity

Oil

Gas

Carbon

Biofuels

US$ trillons, 2009

OECD Pacific Basin

Others East Europe / Eurasia

Russia

Middle East

Asia Others

India

Africa

Latin America

OECD Europe

China

OECD North America

Latin America Investment Needs in the Energy Sector

• The projected annual energy demand growth is 4.8%.• LAC would have to invest approximately US$28 billion

per year (2009 – 2026) in the electricity sector alone:– Generation US$15 billion (100,000-MW)– Transmission from US$4,5 billion– Distribution US$8,5 billion

• Would also have invest between US$80 to US$90 billion in the Oil & Gas sector– Conventional production US$68 billion– Unconventional production US$9 billion– Refining US$5 billion– Transport US$4 billion

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Latin-America is the cleanest region in the world in Power Generation

Emissions of CO2 per Region

Hydro power generation per Region

LAC has the 20.5% of the world hydro power generation, while generating just the 3.6% of CO2 emissions.

Key World Energy Statistics, 2010. Data 2008.

The challenge is to keep the clean mix of LAC energy matrix in the context of economic economic and population growth

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OECD

China

Middle East

Asia

Ex Soviet Union

AfricaLatin America

Europe non OECD

OECD

Middle East

Asia

Ex-Soviet Union

Africa

Europe no OECD Bunker

ChinaLatin America

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Rehabilitation of Hydroelectric Power Projects

Rehabilitation of Existing Renewable Hydroelectric Plants

Potential of Rehabilitation [MW]

Energy Efficiency• LAC lags in investments in Energy Efficiency:

– To reduce consumption– To lower peak demands, avoiding less efficient generation and more GHG

• Most countries have only implemented CFL bulb replacement• It is estimated that a reduction of 10% of consumption in LAC through

Energy Efficiency could cost some US$17 billion. To supply that energy with capacity expansion would cost some US$53 billion.

• Areas where more effort is needed:– Public Sector Energy Efficiency (buildings and roads)– Variable speed motors– Efficient cooling & heating– Commercial and Residential insulation– Load coordination and peak disconnection

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Regional Energy Integration: Central American Isthmus Electric Interconnection Project SIEPAC

• Estimated expenditures required without SIEPAC (2011-2025):

– Investments: US$11.7 Billion– O&M: US$10.1 Billion

• Savings with a joint planning of the expansion of capacity and joint operation of the grid:

– Investments: US$1.2 Billion– O&M: US$0.3 Billion

• Savings with an interconnection with Colombia and a second SIEPAC circuit (2014):

– Investments: US$2.1 billion– O&M: US$1.7 billion

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• Achieving these savings has required:– Participation of Panamá, Costa Rica,

Honduras, Guatemala, Nicaragua and El Salvador (1996); Colombia (2005); and Mexico (2009).

– Legal Framework: Treaty among countries (1992).

– Governance mechanisms: Regional Regulator (CRIE); Grid Operator (EOR); Owner of the Interconnection line Transitory Regulatory framework (2002); Regional Electricity Market regulation (2011).

– Investments: US$494 million (MDBs, IFIs, Commercial

Banks, Countries); Grants from IDB: US$24 million.

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