Latin America must increase its investment in clean energy

Entrepreneurs and financiers of the Brazilian energy sector met at the International Seminar on Clean Energy and Technological Challenges in Latin America, organized by the Comisión de Integración Energética Regional (CIER) (Commission for Regional Energy Integration), to review the planning challenges for the implementation of the climate agreements of the Paris COP 21.

The forum highlighted that the focus will be on balancing the "Energy Trilemma", the well known diatribe between simultaneously achieving energy security, universal access to energy services, and environmental sustainability. The key lies in the expansion of clean energies. 

In this respect, CIER highlighted the potential of non-developed renewable resources in Brazil and in all of Latin America, giving special importance to the physical and commercial integration of the regional energy systems to guarantee the energy security of the region.  

Different innovative examples were presented for the expansion of the networks with a high contribution of renewable sources, as well as of the state of investment in clean energies in Latin America and the Caribbean.

It was stated that the current share of investments in infrastructure is insufficient to cover the 66 percent increase in demand forecasted toward 2030. According to data from the Inter-American Development Bank (IDB), Latin America is the region with the lowest investment in infrastructure in the world. According to the IDB, the requirement to close the infrastructure gap would be 5 percent of the regional GDP, while on average, only 1,5 percent of the regional GDP has been contributed during the last decade.  

CAF, represented by Mauricio Garrón, Director of Energy Analysis and Strategy, highlighted two key issues that are necessary to increase the contribution of clean energies to the Latin American energy matrix. 

On the one hand, the importance of strengthening investments in hydroelectric generation, as this is the most economic, reliable, and abundant in the region, able to satisfy the electricity needs of Latin American several times.

On the other hand, he emphasized the importance of multilateral support for clean energy projects. The reason is that, in the absence of favorable regulations to prioritize these types of investments, multilateral entities are not only capable of providing financing, but they also act as risk mitigators that enable the entry of third parties, providing specialized technical assistance that adds value to investments.