Latin America must double its annual investment in energy to achieve the energy transition by 2030

Latin America and the Caribbean are leading the world in the energy transition process.

Between 2015 and 2022, the region increased its renewable capacity by 51% to reach 64% of electricity generation, mainly with hydroelectricity, solar and wind energy.

However, to reach the goal of net zero emissions by 2050, the pace must accelerate.

It is one of the messages that the Inter-American Development Bank (IDB) has raised at the Annual Meeting of Governors of the institution that began this Wednesday in the Dominican city of Punta Cana.

The financing of new projects, both in electromobility, development of transmission networks, green hydrogen, storage technologies and energy integration is a challenge that governments cannot face alone today.

The mobilization and execution of new and large investments is required “like perhaps never seen in the region,” warns an IDB expert.

The organization estimates that if in recent years Latin America has spent an average of around 30 billion dollars annually in the electricity sector, to accelerate the energy transition it must at least double that amount to 60 billion dollars per year. anus.

Alejandra Bernal-Guzmán, Latin American program officer at the International Energy Agency;

Jordan Schwartz, executive vice president of the IDB;

Silvia Alvarado de Córdoba, president of the board of directors of Mayorista de Guatemala;

Gabriel Melguizo, president of the ISA Group of Colombia;

Marsha Atherley-Ikechi, CEO of the Barbados Fair Trade Commission and Aurelio Bustilho de Oliveria, CEO of ENEL Americas of Brazil, during the seminar 'Transforming the future: Accelerating the energy transition in Latin America and the Caribbean'.CHELO CAMACHO

It is an investment that, the entity points out, should come mostly from the private sector, considering the little capacity that the governments of the region have today to undertake this challenge.

“The private sector is called upon to fulfill a very important role in the execution of these new investments.

In a context where Latin American governments experience strong fiscal restrictions and little debt capacity, it is the private sector that should execute these new investments,” the organization mentions.

Along these lines, the proposals to decisively advance the transformation aim to advance in the decarbonization of various sectors of the economy, such as the provision of electricity, heating, transportation, industrial and construction.

Likewise, the organization emphasizes, it is key to develop regulatory frameworks that facilitate the transition in the countries and accelerate permits that in many cases are slowing down the faster progress of projects.

This point is especially worrying in the field of transmission, which today is advancing with a decoupling from new generation projects.

Gabriel Melguizo, president of ISA Group, one of the main transmission groups in the region, warned about this point, who during his presentation at the seminar

Accelerating the Energy Transition in Latin America

, pointed out that “transmission is the great enabler of energy transition”.

“We need more networks, the world is going to have to double the size of its networks 2.5 times because it is going to become more and more electric,” he explained.

The problem, he added, is that the delay of the projects is slowing down this progress.

“Generation is built in two to three years and networks take up to eight years to be built, there is a decoupling in the speed at which renewable energy and transmission projects can be built, and it is a global problem, In the US and Europe these projects take 12 years,” he warned.

Gabriel Melguizo (center), president of the ISA Group of Colombia, in Punta Cana (Dominican Republic) on March 6, 2024.CHELO CAMACHO

But this is only one of the efforts necessary to achieve the proposed goals.

Alejandra Bernal-Guzmán, Latin American program officer of the International Energy Agency, mentioned in her presentation at the seminar held within the framework of the IDB annual meeting that to achieve an accelerated energy transition by 2030, it is necessary to focus on three major challenges.

The first is to make the transformation with a focus on people.

Closing gaps in access to electricity, avoiding deaths caused by poisoning by people who do not have clean cooking processes and generating more than one million jobs in clean energy are some of the benefits that can be obtained under this approach.

Another challenge, he explained, is to position the region within the global energy transition process by pushing the development of biofuels, green hydrogen and critical minerals, such as lithium, copper and rare earths, key in the development of batteries, technology and cables. .

The third challenge, he noted, is to double investments in clean energy and advance energy efficiency.

“The region is lagging behind in energy efficiency.

One in three countries has measures to have efficiency equipment in homes and buildings, it is a great challenge.

A 20% reduction in consumption would be achieved only in efficiency in buildings, transportation and industry,” added the expert.