Meeting the Balance of Electricity Supply and Demand in Latin America and the Caribbean

Meeting the Balance of Electricity Supply and Demand in Latin America and the Caribbean

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Over the coming decades, the supply of electric power will need to expand to meet the growing demand for electricity, but how the production and use of electricity develops will have broad ramifications for the diverse economies and societies of Latin America and the Caribbean. This report discusses the critical issues for the power sector considering a baseline scenario to 2030 for countries and sub-regions. Among these critical issues are the demand for electricity, the total new supply of electric generating capacity needed, the technology and fuel mix of the generating capacity, and the CO2 emissions of the sector. Under modest GDP growth assumptions, the demand for electricity in Latin America and the Caribbean would more than double by 2030. The analysis suggests that under any economic scenario, it will be challenging for the Region to meet future electricity demand.
The report shows that meeting the demand for electricity in Latin America and the Caribbean can be achieved by not only building new generating capacity by the expansion of hydropower and natural gas, but by relying on an increased supply of non-hydro renewables, expanding electricity trade, and making use of supply and demand-side energy efficiency to lower the overall demand for electricity. Some recommendations derived from the report are the need for strengthening regulations and market design of hydropower and gas power generation projects and the need to design supportive policies to develop renewable energy technologies and promote energy efficiency measures.
The primary audience to which this report is addressed are policy makers, power sector planners and stakeholders.

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Published 24 June 2011
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EAN13 9780821388211
Language English
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DIRECTIONS IN DEVELOPMENT
Energy and Mining
Meeting the Balance of
Electricity Supply and Demand
in Latin America and
the Caribbean
Rigoberto Ariel Yépez-García, Todd M. Johnson,
and Luis Alberto AndrésMeeting the Balance of Electricity
Supply and Demand in Latin America
and the CaribbeanMeeting the Balance of
Electricity Supply and
Demand in Latin America
and the Caribbean
Rigoberto Ariel Yépez-García, Todd M. Johnson,
and Luis Alberto Andrés© 2011 The International Bank for Reconstruction and Development / The World Bank
1818 H Street NW
Washington DC 20433
Telephone: 202-473-1000
Internet: www.worldbank.org
All rights reserved
1 2 3 4 14 13 12 11
This volume is a product of the staff of the International Bank for Reconstruction and
Development / The World Bank. The findings, interpretations, and conclusions expressed in
this volume do not necessarily reflect the views of the Executive Directors of The World
Bank or the governments they represent.
The World Bank does not guarantee the accuracy of the data included in this work. The
boundaries, colors, denominations, and other information shown on any map in this work
do not imply any judgement on the part of The World Bank concerning the legal status of
any territory or the endorsement or acceptance of such boundaries.
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All other queries on rights and licenses, including subsidiary rights, should be addressed to
the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433,
USA; fax: 202-522-2422; e-mail: pubrights@worldbank.org.
ISBN: 978-0-8213-8819-8
eISBN: 978-0-8213-8821-1
DOI: 10.1596/978-0-8213-8819-8
Library of Congress Cataloging-in-Publication data have been requested.
Cover photo: Gerencia de Communications Social, Comisión Federal de Electricidad; trans-
mission lines in Cindad del Carmen, Campeche, Mexico.
Cover design: Naylor Design, Inc.Contents
Foreword xiii
Acknowledgments xv
Abbreviations xvii
Executive Summary 1
Introduction 1
Historical Development of the Electric Power
Sector in Latin America and the Caribbean 3
Baseline Electricity Supply Scenario 5
Options for Meeting Latin America and the
Caribbean’s Growing Electricity Needs 10
Summary and Conclusions 13
Recommendations 16
Notes 17
References 18
Chapter 1 Introduction 19
Electricity and Development 20
Latin America and the Caribbean’s Electricity
Challenge 21
v vi Contents
Scope of the Report and Methodology 23
Structure and Content of the Report 25
Notes 26
References 27
Chapter 2 Historical Trends in the Electricity Sector 29
Latin America and the Caribbean in a
Global Context 29
Energy Access in Latin America and the Caribbean 33
Electricity Capacity and Production Trends in
Latin America and the Caribbean 34
Regional Generation Mix 36
Regional Electricity Trade 42
Power Sector Structure in Latin America
and the Caribbean 47
Impact of the Financial Crisis in GDP Forecast 48
Notes 49
References 50
Chapter 3 Baseline Electricity Supply Scenario to 2030 51
Modeling Framework 52
Modeling Results 59
Implications for Investment Needs 77
Implications for CO Emissions 782
Carbon Taxes: Illustrative Effect on Choice
among Fossil Fuels 81
Notes 83
References 84
Chapter 4 Alternatives for Meeting Future
Electricity Needs 89
Renewable Energy Potential 90
Regional Trade and Cross-Border Integration 102
Energy Efficiency 113
Notes 129
References 131
Chapter 5 Conclusions 135
Baseline Electricity Supply Scenario 135Contents vii
Alternatives for Meeting Latin America
and the Caribbean’s Power Demand 136
Recommendations 138
Notes 141
References 142
Appendix A Country Data 143
Appendix B Price and Income Elasticity of Demand 161
Appendix C Electricity Supply Model and Fuel Price
Assumptions 173
Appendix D Comparison of ICEPAC Results with
Country Expansion Plans 179
Bibliography 187
Boxes
3.1 Price and Income Elasticity of Electricity Demand 55
4.1 Potential Obstacles to Cross-Border
Electricity Exchanges 110
Figures
ES.1 Market Share of Total Electricity Production, 2005 3
ES.2 Regional Electricity Demand Scenario 7
ES.3 Electricity Generation by Technology in Latin America
and the Caribbean, ICEPAC Scenario 9
ES.4 Electricity Supply Mix in Latin America and the
Caribbean, Various ICEPAC Scenarios 15
2.1 Electricity Production 30
2.2 World Generation Mix 32
2.3 Share of Total Electricity Production in Latin America
and the Caribbean, 2005 35
2.4 Electricity Production by Subregion, 1985–2005 36
2.5 Generation Mix, Latin America and the Caribbean 37
2.6 ation Mix by Subregion 38
2.7 Electricity Production and Domestic Demand in
Latin America and the Caribbean, 2007 46
3.1 Electricity Demand by Subregion 60viii Contents
3.2 Regionwide Electricity Generation Mix, 2008–30 61
3.3 Additional Capacity by Subregion 63
3.4 Additional Capacity by Technology in Latin America
and the Caribbean, 2008–30 64
3.5 Electricity Generation Mix in the Andean Zone, 2008–30 65
3.6 Technology in the
Andean Zone, 2008–30 67
3.7 Electricity Generation Mix in Brazil, 2008–30 68
3.8 Additional Capacity by Technology in Brazil, 2008–30 69
3.9 ation Mix in the Southern Cone,
2008–30 70
3.10 Technology in the
Southern Cone, 2008–30 71
3.11 Electricity Generation Mix in Mexico, 2008–30 72
3.12 Additional Capacity by Technology in Mexico, 2008–30 73
3.13 ation Mix in Central America,74
3.14 Technology in
Central America, 2008–30 75
3.15 Electricity Generation Mix in the Caribbean, 2008–30 76
3.16 Additional Capacity by Technology in the
Caribbean, 2008–30 77
3.17 Share of Investment Requirements by
Subregion, 2008–30 79
3.18 Average Investment Requirement in Electricity
Generation Capacity as a Share of GDP 79
3.19 ICEPAC Scenario CO Emissions, Latin America 2
and the Caribbean 80
3.20 ICEPA Emissions by Subregion 812
3.21 Sensitivity Analysis of CO Tax and Composition 2
Generation Mix, Fossil Fuels Only 82
3.22 Sensitivity Analysis of Greenhouse Gas Emissions in
Latin America and the Caribbean 83
4.1 The Impact of Trade in Central America 112
4.2 CO Emissions in the Base Case versus the Trade Case 1132
4.3 Total Distributional Electricity Losses in Latin America
and the Caribbean 116
4.4 Annual Electricity Sales and Distributional
Electricity Losses, 2005 117
4.5 Annual Electricity Savings from Reducing
Distributional Losses to Chile’s Level 127