Energy Intelligence Latin America

We acknowledge the uncertainties about the political appetite to decentralize natural gas operations, however, we expect Mexico to continue to encourage investments across the value chain including exploration, production, and transport infrastructure.

While Guyana’s oil resources are impressive, political uncertainty remains an issue. The opposition People’s Progressive Party/Civic (PPP/C) has been critical of the governing APNU+AFC coalition’s deal with Exxon. Disputes over the outcome of the March 2020 elections could further complicate the situation in Guyana.

The vulnerability of the Caribbean to oil price fluctuations, hurricanes, and climate change creates a high demand for renewable energy in the region. By pursuing renewable energy, Caribbean countries can dramatically reduce their dependence on imported oil, increase economic diversification, and stabilize the business cycle.

We believe that full-cycle costs in the pre-salt area are likely to be higher than expected. While Petrobras has substantial experience in deep-water drilling, the pre-salt area presents new technical challenges. Other firms may face even more difficulties. At lower oil prices, the development of the area may not be cost-effective.

Public-private partnerships (PPPs) have become a common practice among Latin American and the Caribbean Countries. The need for infrastructure and the lack of public funds are the main reasons for governments to use this financing structure.

Honduras has the largest solar share generation in the world at 10%, followed by Italy with 7.6%, Germany with 5.9% and Japan with 4.8%. This is exceptional when compared to the global solar share of 0.04%. Also, it is remarkable considering the size of its economy and regional socio-political uncertainties.

The Dominican electricity sector runs a deficit and is dependent on the government to stay financially afloat. Between 2010 and 2015, the Dominican government transferred over $5 billion to state-owned electricity generator companies.

Haiti’s electricity grid is in need of immediate upgrades so that power can be available to the country’s 11 million citizens. Haiti has no centralized electricity grid system, but it is instead separated into nine separate grids, each of which includes one of Haiti’s major cities.

Colombia has been way behind other Latin American countries when it comes non-traditional renewable energies, such as solar or wind. Colombia has 18.42 MW of wind installed capacity and 96 MW of solar installed capacity, together accounting only for 0.7% of the total installed generating capacity.

Haiti has one of the lowest electrification rates in the world and the lowest in the Latin America and Caribbean region. Addressing energy poverty in Haiti will require commitment and persistence but it can be achieved by harnessing Haiti’s natural resources.

Electricity is traded in Brazil via the Environment for Regulated Costumers (ACR), the Environment for Free Regulation (ACL), or the Wholesale Market or Settlement Price for the Differences (PLD).

Limited to no electricity access throughout the country makes Haiti particularly vulnerable to environmental degradation. Currently, Haitian citizens derive 90% of their energy needs from wood biomass.

In the last decade, IDB spent $67.3 million through technical support on 112 different projects. They were focused not only on renewable energy, but also on the electrification of rural areas and energy efficiency.

In 2018 Uruguay ranked second only to Denmark in wind and solar power market share. We expect this dramatic growth in Uruguay to continue over the next two to three years.

Honduras has made a great effort to adopt solar energy at large scale. Its success is due mainly to three combined factors: renewable energy policies, fiscal incentives, and support from international financial agencies.

We expect Honduras to achieve its national clean energy goals, and fossil fuels will likely serve as baseload capacity. Developers may find the investment opportunities related to renewable energy robust because of the increased transparency and the opportunity to sign PPAs for 10, 15 and 20 years.

By the end of 2017 Mexico was the sixth largest country by installed geothermal capacity after the United States, Philippines, Indonesia, Turkey and New Zealand. Across Mexico, geothermal was the 3% of the total energy supply, with significant upside for growth.

Wheeling and “banking” instruments played a fundamental part in the deployment of renewable generation projects in Mexico. The main strength of these structures is that they enable renewables to compete against conventional generation, without involving additional costs to consumers.