COUNTRIES IN the Caribbean and Latin America, including Trinidad and Tobago, have set a collective goal of 70 per cent of renewable energy (RE) by 2030, the most ambitious plan in terms of a global regime.
Colombian energy minister, Maria Fernanda Suarez, has said that Chile, Peru, Ecuador, Costa Rica, Honduras, Guatemala, Haiti, the Dominican Republic and Colombia are all part of the pact and Panama and Brazil are considering joining.
She insisted that 70 per cent of RE by 2030 is a realistic goal for the Caribbean and Latin America.
What are signatory countries doing to achieve the target and how much will market dynamics dictate outcomes? How do other global regions compare with the Caribbean and Latin America?
Atirsula Cassinerin, analyst at Moodys, says that “most countries in the Caribbean and Latin America have committed to clean energy targets that support a transformation of the energy matrix towards non-conventional renewables.”
He points out that some countries, such as Brazil, “are already close to meeting their targets.”
It is estimated that, within the next 20 years, the penetration of renewable in the Caribbean and Latin America will be more than 70 per cent.
Various factors underpin the conversion of the energy mix.
In addition to growing social sensitivity pressuring governments to gradually retire coal-fired plants, the development of RE projects is increasingly supported by fundamental economic drivers.
As technology advances and competition intensifies, RE projects are less onerous to develop and operate, as compared to traditional carbon-based plants, even without subsidies.
Moreover, as market perception towards climate change shifts and demand for sustainable investment increases, clean energy generators will have more funding options than conventional power generators.
In addition, there is a growing share of consumers demanding services with a lower carbon footprint.
Nevertheless, the speed of the transition will depend on countries institutional strengths, operating environment and market access.
In Argentina, for example, despite the successful auction of power purchase agreements for non-renewable capacity, the development of the projects is now halted because of tighter financing conditions, foreign exchange controls and policy continuity uncertainties.
Likewise, the shift will depend on improved battery storage, increased regional transmission connectivity, evolution of distributed energy regulation and a larger, more diversified and more flexible, power system that can rapidly respond to fluctuations of demand and supply in real time.
Marcelo Alvarez, president of Camara Argentina de Energia Renovables (CADER) says the goal of 70 per cent of electricity coming from RE sources in the Caribbean and Latin America is possible only in scenarios advanced through active stimuli policies and adequate financing, both in terms of rates, time periods and requirements.
The current auction model, he says, is the fastest form of growth in terms of installed capacity, although it concentrates capital and income. The medium-term diversification of electricity and primary energy matrices in the region opens the opportunity not only to lower emissions of thermo-active gases but also allows de-centralisation of generation by bringing it closer to the centres of consumption, as well as generating local employment both in the manufacturing of components as well as in construction, operation and maintenance, thus increasing its impact on regional economies. Most countries in the region have recently modified their regulatory frameworks to boost distributed generation and the establishment of renewable power parks.
A high penetration objective (70 per cent) will demand the development of a new energy management scheme that adapts to emerging technologies, that, based on their variability (usually erroneously called intermittence), allows a system that reduces the reserve power.
Regional electricity integration and the drop in prices to accumulate energy will be milestones that will catalyse the adoption process in the 2025-2030 period.
The region’s relatively late adoption, compared to others, facilitates speed of penetration, based largely on the lessons learned and the greater maturity of learning curves in each technology.
Cecilia Aguillon, director of the energy transition initiative at the Institute of the Americas, says that “achieving 70 per cent RE by 2030 in the Caribbean and Latin America is realistic. This is particularly true given the huge gains in terms of technology and cost. However, certain countries must still grapple with significant infrastructure and regulatory challenges. Issues such as land availability can be overcome through distributed generation and roof-top solar solutions. Local utilities can become investors and work with technology providers. But to attain the ambitious target, the role of government is vital to provide an investment environment that provides certainty and allows for rapid market growth.”