South America has seen significant demand for hydropower development in recent years, making it one of the fastest-growing regions in the world. In several countries hydropower provides more than half of total electricity supply, and it is expected to remain the largest renewable source across the region for years to come. With many hydropower facilities decades-old, modernisation is a priority for plant operators and grid operators. Drought conditions in some parts of the continent have resulted in low water levels and reduced hydroelectric output.
Argentina met 13 per cent of its power demand with renewable energy in 2021, an increase from the 10 per cent mark recorded in the previous year. This was due to the connection of 26 large-scale renewable power plants to the grid, most of which were wind and bioenergy, but the number also included 115 MW of small hydropower plants. Construction was suspended on the Santa Cruz project, comprising two new hydropower plants, due to financing issues.
Work continued on the expansion of the Yacyreta hydropower plant, which straddles the border of Argentina and Paraguay. The addition of three new turbines will increase the output of the plant by 10 per cent. Paraguay closed its last thermal power plant in December 2021, and, mainly thanks to hydropower, is now the only country in the world with a 100 per cent renewable electricity supply.
Brazil has been suffering drought conditions for many years, and 2021 saw its worst drought in 91 years. The consequences of this are significant, as the country relies on hydropower reservoirs to generate over 60 per cent of its electricity. In 2021, Brazil introduced a “water scarcity” electrical rate, increased energy imports from Argentina and Uruguay, accelerated infrastructure projects that can distribute power from the less-affected north-east to the south, and created a national committee that can swiftly reverse regional rules to optimise power and water usage. It also increased generation from gas-fired plants to compensate and stabilise electricity prices.
Brazil also plans to add more solar to its energy mix, including the 15-hectare floating solar plant at the Batalha hydropower plant, which will have an installed capacity of 30 MW. This project is currently in the permitting phase, and is expected to be commissioned in 2022.
In Chile, work continued on the Los Lagos project (53 MW), which is expected to be commissioned in 2022. However, other hydroelectric projects have faced difficulties, including a steep drop in power prices paid by the system due to the growth of wind and solar projects, lower water availability, and community opposition. Projects facing delays include the Los Cóndores run-of-river project (51.6 MW), the Rucalhue run-of-river project (90 MW) and the Ñuble hydroelectric project (136 MW), which was suspended when its owner reassessed its financial situation in light of low price forecasts.
Colombia, where hydropower currently accounts for about 70 per cent of electricity production, has moved forward with plans to rapidly increase the share of wind and solar in its energy mix. By diversifying, the government seeks to strengthen the resilience of the system while maintaining one of the cleanest electricity systems in the world. Work also continued on the Ituango hydropower project following a major construction incident in 2018. Owner Empresas Publicas de Medellin (EPM) received insurance payouts of more than US$1 billion for civil liability claims related to serious design and construction problems. An independent study concluded that it has no choice but to continue remediation and finish the project.
A milestone in Colombia's energy transition plan came through the congressional approval of the Energy Transition Bill in June 2021 to promote investment in hydrogen, renewable energy and sustainable transport. It incentivises renewable energy development (including small hydropower) through a comprehensive regulatory framework, and auctions for renewable energy and storage were held in 2021. The energy ministry also published the country's hydrogen roadmap to consolidate Colombia's energy transition for the next 30 years.
In Peru, the Covid-19 pandemic caused a slowdown in construction on a number of hydropower plants, resulting in delays to planned commissioning dates. The affected power plants include the Lluclla hydro project (288 MW), Alcaparrosa (9.5 MW), Anto Ruiz III (102.1 MW), Casca (8.4 MW), Marca (9 MW), Miraflores (9.9 MW), San Gabán III (205.8 MW), San Juan (88 kW) and Tulumayo (83.2 MW). The country’s overall electricity generation in 2021 actually surpassed pre-pandemic levels, with 56 per cent of it being supplied by hydropower.
In Ecuador, where hydropower accounts for about 80 per cent of electricity generation, surplus generation is exported to Colombia and Peru, which has been the case since 2015. The government updated the 2031 electricity master plan to add 1,440 MW of renewable energy capacity (excluding hydropower projects over 50 MW) in addition to what is already planned to come online by the end of the planning period. It launched a tender for a block of 500 MW of renewable energy, including 150 MW of small hydropower (less than 50 MW) to come online by 2024. Technical and financial problems continued to plague the construction of the Toachi Pilatón power plant.
Bolivia announced the reactivation of hydroelectric projects in March, and its state power company Ende issued a call for expressions of interest for the pre-investment technical study of the 380 MW Cañahuecal hydro project. The consultancy work falls under a pre-investment support program for the country, financed by the Inter-American Development Bank (IADB). The government’s roadmap for the basin envisions a cascade system of seven hydropower plants on the Grande River.
