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Energy Infrastructure in Latin America the View of the IDB May 6, 2011 Miami, Florida Sustainable Energy for all.

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Presentation on theme: "Energy Infrastructure in Latin America the View of the IDB May 6, 2011 Miami, Florida Sustainable Energy for all."— Presentation transcript:

1 Energy Infrastructure in Latin America the View of the IDB May 6, 2011 Miami, Florida Sustainable Energy for all

2 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. 2

3 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. 3

4 Energy Sector is Capital Intensive Sector World Energy Outlook (2010) estimates that LAC needs approximately US$2.8 Trillion between 2010 and 2035 Accumulated Investment on Energy Infrastructure per Region 2010-2035 Source: World Energy Outlook (2010). 4 Electricity Oil Gas Carbon Biofuels US$ trillons, 2009 OECD Pacific Basin Others East Europe / Eurasia Russia Middle East Asia Others India Africa Latin America OECD Europe China OECD North America

5 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 5

6 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 6 OECD China Middle East Asia Ex Soviet Union Africa Latin America Europe non OECD OECD Middle East Asia Ex-Soviet Union Africa Europe no OECD Bunker China Latin America

7 7 Rehabilitation of Hydroelectric Power Projects Rehabilitation of Existing Renewable Hydroelectric Plants

8 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 8

9 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 9 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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