South America has seen significant demand for hydropower development in recent years, making it one of the fastest growing regions. In several countries hydropower provides more than half of total electricity supply and it is expected to remain the region’s largest renewable source for years to come.
With many hydropower facilities decades-old, modernisation remains a priority for plant operators and grid operators, as was highlighted in a recent joint study by IHA and the Inter- American Development Bank (IDB).
Due to the impact of the Covid-19 pandemic, South America saw a decrease in energy demand in 2020. This led to a drop in greenhouse gas emissions and pollution, however this impact was expected to be temporary as countries remain heavily reliant on fossil fuels. Covid-19 recovery plans were developed in response in order to decarbonise economic sectors, increase renewable energy and accelerate the transition to a low carbon economy.
Brazil has suffered from chronic drought in recent years, which has caused the lowest levels of precipitation in the wet season (from October to March) since record lows in 1991. Moving into the dry season in March 2021, the government declared that Brazil is undergoing a major hydrological crisis. The consequences of this are significant as the country relies on hydropower reservoirs to generate over 60 per cent of electricity. Reservoirs are currently operating at extremely low capacity due to decreased in-flow at similar levels last seen during a severe drought in 2015. Energy supply is at stake and the regulator is warning that the electricity tariff may increase in 2021 given the necessity to produce more expensive electricity from thermal power plants. The government is also authorising electricity imports from Uruguay and Argentina.
The Itaipu Dam, on the Paraná River on the border between Brazil and Paraguay, continues setting records in accumulated production and production efficiency. In 2020, the plant celebrated the milestone of 2.7 TWh of electricity produced since it began operations in 1984. Itaipu is the only plant in the world with accumulated production above 2 TWh.
Brazil is becoming a leader in hybrid energy projects with recent development of a solar floating photovoltaic plant on the Furnas-owned 52 MW Batalha hydropower project reservoir. Tractebel has been awarded the contract to build the 15-hectares floating plant of 30 MW installed capacity.
Colombia has moved forward with plans to rapidly increase the share of wind and solar in its energy mix, where hydropower currently accounts for about 70 per cent of electricity production. By diversifying, the government seeks to strengthen the resilience of the system while maintaining one of the cleanest electricity systems in the world.
Colombia’s government published a 2050 roadmap in the Energy National Plan with a two-fold challenge: increase access to energy and tackle climate change by reducing greenhouse gas emissions. The target is to diversify the energy matrix by substantially increasing energy supply from natural gas and from renewable energy sources such as wind and solar, to surpass fossil fuels generation. In the short-term, wind and solar installed capacity is expected to grow to 2,500 MW in 2022. Decarbonisation of transportation is also Ecuador aims to attract private investment to construct and operate hydropower projects to achieve its Electricity Master Plan by 2027. The country is seeking US$5,300 million for the 2,400 MW Santiago project currently in the feasibility study stage and for the 596 MW Cardenillo and the 487 MW Sopladora project in the bidding process. Bolivia resumed construction on the 290 MW Ivirizu hydropower project in Cochabamba and the 204 MW Miguillas hydropower project in La Paz, with a total combined investment of nearly US$1,000 million. Venezuela continues with the rehabilitation of the electromechanical equipment units that were out of service vital to reduce Colombia’s reliance on fossil fuels.
Small-scale hydropower developments have strategic advantages due to Colombia’s geography. The 19.9 MW San Andrés de Cuerquia became operational in September 2020. The Minister of Mining and Energy announced proposals for three more small-scale hydropower projects: Retiro I, Retiro II, and Chorreritas (each nearly 20 MW). In addition, the country’s Ituango hydropower project received an additional US$100 million from its insurer after a serious construction incident in 2018; studies are ongoing to determine the causes and meanwhile the IDB has approved an extra US$900 million in financing.
In Peru, a US$438 million contract for the construction of the 187 MW San Gabán III in Puno was given the go ahead. Peru’s renewable energy portfolio continues to expand, with over 2,000 MW in additions planned. Most of these are hydropower schemes, including the 84 MW La Virgen project to be commissioned in 2021, as well as Tulumayo IV (56.2 MW), Tulumayo V (83.2 MW), Anto Ruiz III (102.1 MW) and Anto Ruiz IV (103.8 MW) expected to start after 2022. Other projects include Lluclla (288 MW) and Tarucani (49 MW) in Arequipa, and Huallaga I (392 MW) in Huánuco. The investment cost of these ventures totals more than US$2,200 million.
Ecuador aims to attract private investment to construct and operate hydropower projects to achieve its Electricity Master Plan by 2027. The country is seeking US$5,300 million for the 2,400 MW Santiago project currently in the feasibility study stage and for the 596 MW Cardenillo and the 487 MW Sopladora project in the bidding process.
Bolivia resumed construction on the 290 MW Ivirizu hydropower project in Cochabamba and the 204 MW Miguillas hydropower project in La Paz, with a total combined investment of nearly US$1,000 million.
Venezuela continues with the rehabilitation of the electromechanical equipment units that were out of service since outages allegedly caused by cyberattacks in 2019.
Among the growing interconnections across the South America, the long-distance high-voltage interconnections between Ecuador and Peru have now resumed development after being stalled due to the Covid-19 crisis. In addition, Itaipu Binational has offered to help develop binational projects between Bolivia and Brazil with an estimated capacity of up to 6,000 MW.