How Are Renewables Faring in South America’s Southern Cone?
Clean Energy Comparison between Brazil, Argentina, Chile, and Uruguay
In its latest Renewables Annual Report, the International Energy Agency (IEA) estimated an increase in renewable capacity in Latin America of 46 to 55 GW (2019–2024). Even if these numbers sound promising, they are relatively small compared to China’s forecast growth of 489GW and EU growth of 182 GW.
But the region is home to some success cases. Costa Rica, for instance, reported 300 days of fossil-fuel-free electricity last year. In the Southern Cone, Uruguay is another example of major accomplishment in the renewables arena, while Brazil, Argentina, and Chile are still struggling to improve the sustainability of their grids.
Brazil’s Heavy Reliance on Large Hydro
In the largest Latin American economy, 65 percent of electricity comes from hydro, making it the second global producer after China. That’s largely thanks to the Itaipu Dam, which together with the Three Gorges Dam is the largest hydroelectric plant and holds the record of generating 103.1 million MWh in 2016.
President Jair Bolsonaro has pledged to speed environmental impact reviews for new large-scale hydro projects, despite fears they could negatively impact Amazonian ecosystems and indigenous communities.
In the meantime, Brazil has made strides in wind and solar projects. According to its 2018 energy plan, non-hydro renewables will grow 3 percent annually, to reach 28 percent of the domestic energy mix by 2027. It is important to note, however, that half of Brazil’s non-conventional renewable production comes from burning solid biomass, such as sugar cane byproducts, which has been proved to negatively affect air quality and health conditions.
Argentina’s Renewable Push
With steady winds in southern Patagonia and year-round solar power in the semiarid northwest, Argentina has promising geography for unlocking clean energy. But so far, progress has been incredibly slow, especially compared to the massive investments in Vaca Muerta, the world’s second-largest shale gas deposit.
However, things have improved during President Macri administration. Among other policies, the government implemented a Renewable Energy Term Market (MATER) that allows generators and large users to negotiate energy deals directly, as an alternative to the government-regulated electricity market. Argentina also passed a Distribution Generation Law that permits individuals to sell surplus energy from private renewable sources. Finally, the government created a very successful public bidding process called RenovAR for renewable energy projects.
If this progress continues under the newly elected government of Alberto Fernández, it would help meet a range of policy objectives, improving Paris agreement compliance, lowering energy subsidies, and increasing the reliability of the national grid.
Chile’s Playing Catch-up
Across the Andes, Chile is struggling to increase its clean energy, given its relatively plentiful and cheap coal reserves, which makes the cost of opportunity of investing in renewables higher than in countries that lack fossil fuels.
However, its current government is pursuing an aggressive policy of phasing out coal in favor of solar and wind, and aims to be carbon neutral by 2050. According to the IEA, Chile’s renewable capacity is forecast to expand 36%, with onshore wind increasing the most.
Additionally, Chile is leading the way of public electric transportation in Latin America. So far, the capital has incorporated more than 200 electric buses to its float, and it aims to replace all 5,300 of them in the next three years.
Uruguay, the Renewable Energy Champion
By contrast, Argentina and Brazil’s resource-poor neighbor, Uruguay, leads the region with 54 percent of its energy mix from non-conventional renewables and almost 99% from overall renewables if we account for electricity generation from large-scale hydroelectric plants. Since 2015, Uruguay has been periodically exporting electricity to Argentina and Brazil.
After experiencing severe droughts that impacted their hydro-supplied electricity, the country’s government, with ample support from the opposition at the time, put together a series of initiatives that in less than 10 years managed to slash the carbon footprint and lowered electricity costs, without requiring government subsidies.
Uruguay’s next steps towards decarbonization are to increase the electrification of the primary energy consumption. One way is by incentivizing electric mobility. In September, the government presented a call to grant subsidies to the purchase of electric buses, but still more public policies are needed to accelerate the process.
