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    Renewable energies in the Americas move between promise and actual development

    March 28, 2023 - CE Noticias Financieras


      Although the commitments adopted and the legislation approved in most of the countries of the Americas show a clear trend in favor of renewing the energy matrix to gradually leave fossil fuels behind, the use of renewable energies still struggles between promise and development.

      One of the most recent and far-reaching examples is the U.S. Inflation Reduction Act passed last year, which, despite its name, is more about energy transition than price stability.

      The bill, heir to the "Build Back Better" plan introduced in 2020 by then-presidential candidate Joe Biden, although less ambitious, will involve the largest investment in renewable energy and climate measures in the country's history.

      "It's by far the most ambitious plan," says Sierra Club environmental organization president Ramon Cruz. "It's a turning point," Cruz assures in relation to an initiative that recognizes precedents but, according to his reading, the magnitude of the projects involved puts the standard at a level never before reached.

      The plan foresees an investment of some US$ 370 billion in climate finance, most of it dedicated to encouraging the production of clean energy and the purchase of electric vehicles. Of the total, some US$ 11 billion has already been granted, according to the Climate Action Campaign, a U.S. NGO that recently launched an interactive map to monitor the destination of the investments.

      The enthusiasm, however, leaves room for caution. Despite the impressive figures, Cruz is cautious. "We want to make sure that the clean energy journey is completed as quickly as possible. Is it enough? It's a big step forward, but no, it's not enough for the urgency of the problem," says Cruz.

      Official data justifies the caution. According to the U.S. Department of Energy, 60% of the electricity consumed by the country last year came from fossil fuels. Only 21% is accounted for by renewable sources.

      Latin America

      In Mexico, for example, the situation is not very different. Twenty-five percent of its energy comes from renewable sources. Geographical conditions, however, mean that the country still has a lot of potential to exploit, according to Paul Alejandro Sánchez, a professor at the Monterrey Institute of Technology.

      His reading, like that of other specialists, points out that President Andrés Manuel López Obrador began his term in office with a clear fixation on traditional energy models and continues to bet heavily on fossil fuels.

      Only in the last stretch of his term has he made a small shift towards renewable energy with projects such as Plan Sonora, of which the Puerto Peñasco solar plant stands out with an investment of US$ 1.6 billion that the Government considers "the largest plant in Latin America" with an extension of 2,000 hectares of solar panels.

      "If we had started with this dynamic from the beginning we would have a different situation", laments Sánchez in reference to López Obrador's initial decision to bet on an increase in oil production and refining through the state-owned Petróleo Mexicanos (Pemex), a strategy that is completed with the use of natural gas imported from the United States.

      Meanwhile, in Brazil some 20 companies, mainly large oil companies, have applied for licenses to develop some 70 projects for the construction of offshore wind farms with the capacity to generate 170 gigawatts (GW) of energy. A capacity that represents virtually all of the current installed generation capacity of 190 GW, of which 103 GW is hydroelectric, 26 GW is solar and another 23 GW is wind power.

      "In the last two years we have been strongly preparing the Brazilian market to receive offshore technology and we are working on the regulatory apparatus, which should be ready in June" explains the president of the Brazilian Wind Energy Association (ABEEólica), Elbia Gannoum.

      Among the interested companies are the state-owned Petrobras, the multinationals Shell, Equinor and Total Energy, and the electric company Neoenergia (Iberdrola). Immediately after the presidential inauguration of Luiz Inácio Lula da Silva, Petrobras and Equinor signed an agreement to evaluate the construction of seven offshore wind farms with an installed capacity of 14.5 GW.

      According to official studies, Brazil has the capacity to generate up to 700 GW of offshore wind energy. Gannoum points out that the installation of offshore wind farms will be essential for the development of green hydrogen, a technology that requires a huge amount of electricity and is expected to partially replace fossil fuels and thus help decarbonize economies.

      In addition, last week Iberdrola inaugurated in Santa Luzia, in the northeast of the country, the Neoenergia Renewable Complex, its largest renewable energy project in Latin America, a wind and solar complex with 0.6 GW of installed capacity and involving an investment of US$ 665 million.

      Argentina, another of the region's large economies, is lagging far behind. Last year, it only supplied 13% of its energy demand with renewable sources. The figure, although lower in absolute terms, is a large increase compared to the 2% it recorded in 2017 and the goal is to reach 20% by 2025, according to the law passed in 2015 to encourage renewable energies.

      The country's situation contrasts with neighboring Uruguay, where 94% of electricity generation originated from renewable sources between 2017 and 2021. The country is a positive anomaly in the region and is at the global forefront. An official report presented last October highlights that the think tank Renewable Energy Policy Network for the 21st Century (REN21) ranked it as the country with the second highest share of this type of energy.

      The key: the almost total decarbonization of its energy grid, which began in 2010 and was achieved thanks to a public-private investment of some US$ 8 billion. Walter Verri, Deputy Minister of Industry, Energy and Mining, points out that with this decarbonization the country has already completed the first energy transition. For the second, among the objectives are the decarbonization of transport and industry, in addition to the development of a green hydrogen economy.

      Popularized as "the fuel of the future", green hydrogen is also one of the big bets of Chile, which wants to become a world exporter. According to experts, the country's advantageous geographical position, as well as the climatic conditions and competitive solar and wind energy production needed to obtain green hydrogen, position Chile as a potential export powerhouse.

      By 2023, the country wants to completely eliminate the use of coal to produce electricity, a fuel that generated 79% of electricity in northern Chile a decade ago and now accounts for less than 15%.

      In Colombia, meanwhile, the renewable energy sector "is taking its first steps," according to the executive director of the Colombian Renewable Energy Association, Alexandra Hernández. Although hydroelectric energy represents 58.8% of the energy matrix, of the nearly 19,000 MW of installed capacity, only 200 MW come from renewable sources, such as wind and solar energy, equivalent to 1% of the total.

      The state-owned oil company Ecopetrol, which is leading the energy transition, plans to have a total of 19 solar plants in operation this year. It also seeks to develop the potential of biomass generation in three points of the territory, while it is moving forward with an agreement with two companies to carry out feasibility studies for a geothermal energy project in the vicinity of the Nevado del Ruiz volcano.

      For the time being, according to the Global Energy Monitor, an initiative originated in 2007 in response to climatologist James Hansen's call for action, if one adds up the projects that have already been announced by companies, those that are in the pre-construction stage or are actually being built, large-scale wind and solar capacity in Latin America and the Caribbean will increase by more than 460% by 2030.

      By then, according to the entity's projections, the region would produce some 319 gigawatts of solar and wind power, an estimate that only takes into account solar farms generating more than 20 MW and wind farms of more than 10 MW, without taking into account the power produced by hydroelectric plants.

      Underlying fragilities.

      "The current cascading crisis and its effects, including increased poverty, a new lost decade in growth, high inflation and fiscal constraints, have highlighted the fragility and vulnerability of countries' energy systems, with negative impacts on energy security, equity and sustainability," the Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), José Manuel Salazar-Xirinach, said a few days ago.

      He made the warning during the High-Level Expert Workshop for the Special Report on Latin America of the World Energy Outlook 2023 of the International Energy Agency (IEA). In this context, Salazar-Xirinach recalled that there are still 16 million people in the region who do not have access to electricity. This situation is compounded by the high fragility of the countries that depend on fossil fuel imports, which reveals the scarce diversification of the energy matrix.

      "All this distances us from the sustainable development goal of ensuring access to affordable, safe, sustainable and modern energy for all, whose progress is insufficient or very slow to achieve the goals of renewability ratio and energy efficiency in the region as a whole," said Salazar-Xirinach.

      In the immediate future, the focus is on the Annual Latin American Energy Summit to be held on April 19 and 20 in Santiago de Chile. The event will bring together regional energy companies, engineering companies, infrastructure project developers, construction companies and investors, as well as government officials.

      (With information from EFE, IEA and ECLAC).


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