This presentation aims to identify the strengths and challenges related to renewable energy development in Latin America and the Caribbean and to develop recommendations to guide future IDB activity.

1. The Development of the
Renewable Energy Market
in Latin America and the Caribbean
Alexander Ochs Brown-Bag Lunch, IDB Headquarters Washington DC, 24 September 2014

2. Worldwatch in the Region
•Dominican Republic Wind and Solar Roadmap EEP, 2012
•C-SERMS Phase I Baseline Report CARICOM & IDB, 2013 (first draft)
•Sustainable Energy Roadmaps in the Dominican Republic, Haiti and Jamaica ICI of the German Government, 2013 & 2014
•10 Islands Profiles & Regional Matrix Carbon War Room, 2014
•The Way Forward for Renewable Energy in Central America (with INCAE Business School) EEP, CDKN, 2013
•Study on the Development of the Renewable Energy Market in LAC IDB, 2014
•Study of Water and Energy Regulatory Systems in Four Caribbean Islands and Lessons Learned for the Pacific ADB, 2014

3. Overview
Purpose:
To identify the strengths and challenges related to renewable energy development in LAC and to develop recommendations to guide future IDB activity
Contents:
1.Renewable Energy for Power Generation: Global Trends
2.Renewable Energy in LAC
3.Barriers to the Advancement of Renewable Energy in LAC and Opportunities to Overcome Them
4.Vulnerability to Climate Change and Adaptation Strategies in the Power Sector in LAC
5.How the IDB Can Support Renewable Energy Development in LAC

4. 1. Renewable Energy for Power Generation: Global Trends

5. Global Growth in Energy by Source 2007–2012
-2.1%
0.6%
2.4%
3.5%
3.7%
17.6%
25.0%
69.0%
-3%
7%
17%
27%
37%
47%
57%
67%
77%
Growth Rate (%)
Nuclear
Oil
Natural Gas
Hydro
Coal
Biofuels
Wind
Solar
Source: BP
1. Renewable Energy for Power Generation: Global Trends

6. 40
65
100
146
171
168
227
279
250
214
0
50
100
150
200
250
300
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Billion USD
Source: BNEF
1. Renewable Energy for Power Generation: Global Trends
Global Investment in Renewable Energy
2004–2013

7. Global Levelized Cost of Energy for Renewable Power Generation, 2013
0
0.1
0.2
0.3
0.4
0.5
0.6
LCOE (USD/kWh)
Source: REN21
1. Renewable Energy for Power Generation: Global Trends

8. 2. Renewable Energy in LAC

9. Electricity Generation by Source in LAC, 1970, 1990, and 2013
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1970
1990
2013
Others
Hydro
Nuclear
Coal
Natural Gas
Oil & Diesel
Source: Tissot, OLADE
2. Renewable Energy in LAC

10. Population Without Access to Electricity in LAC, 2013
0
1
2
3
4
5
6
7
8
9
10
Central
America
Mexico
Caribbean
Andean
Zone
Brazil
Southern
Cone
Million People
Source: ClimateScope 2013
2. Renewable Energy in LAC

11. Net Renewable Capacity Additions by Source in LAC, 2007–2012
2. Renewable Energy in LAC
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2007
2008
2009
2010
2011
2012
GW
solar
geothermal
small hydro
wind
biomass & waste
Source: MIF and BNEF

12. Renewable Energy Investment by Technology in LAC ($B,%)
36.5, 56%
16.8, 26%
8.3, 13%
1.9, 3%
1.5, 2%
0.03, 0.05%
Wind
Small Hydro
Biomass & Waste
Solar
Geothermal
Small Scale Dist
Source: MIF and BNEF
2. Renewable Energy in LAC

13. Renewable Energy Policy Trends
2. Renewable Energy in LAC
•Renewable energy targets
•Renewable energy tenders or auctions
•FITs
•Quota obligations
•Net metering
•Fiscal incentives
•Public funds for renewable energy projects

14. 3. Barriers to the Advancement of Renewable Energy in LAC and Opportunities to Overcome Them

15. Technological Barriers
3. Barriers to the Advancement of Renewable Energy in LAC and Opportunities to Overcome Them
•Lack of available data and information
•Transmission and distribution challenges
Need for integrated resource planning

16. Market Barriers
3. Barriers to the Advancement of Renewable Energy in LAC and Opportunities to Overcome Them
•Restricted grid and power market access
•Lack of economies of scale
•High transaction costs
•Counterparty risk
•Fossil fuel subsidies
Need to create open, fair, and competitive electricity markets

17. Finance Barriers
3. Barriers to the Advancement of Renewable Energy in LAC and Opportunities to Overcome Them
•Currency risks
•Inadequacy of financial products
•Underdeveloped financial sectors
Need for financial sector development

18. Social Barriers
3. Barriers to the Advancement of Renewable Energy in LAC and Opportunities to Overcome Them
•Lack of public acceptance
•Vested interest in business as usual
•Not in my backyard
Need for up-to-date, fully inclusive data gathering and communication

19. 4. Vulnerability to Climate Change and Adaptation Strategies in the Power Sector in LAC

20. Climate Change Impacts in the Region
4. Vulnerability to Climate Change and Adaptation Strategies in the Power Sector in LAC
•Changes in precipitation
•Temperature increase
•Ocean warming
•Sea-level rise
•Increase in frequency of extreme weather events

21. Power Sector Vulnerability
4. Vulnerability to Climate Change and Adaptation Strategies in the Power Sector in LAC
•Climate change affects the whole energy supply chain
•For example:
–Water scarcity affects hydropower, biomass, fossil fuels and nuclear power generation
–Higher temperatures decrease thermal efficiency for fossil fuels and nuclear power generation
–Extreme weather events and sea level rise put infrastructure at risk
–Rising temperatures lead to higher energy demand

22. The Need for Adaptation Measures
4. Vulnerability to Climate Change and Adaptation Strategies in the Power Sector in LAC
•LAC depends on hydropower for 50% of its electricity, so water availability is a major concern
•It has already experienced decreases in hydropower due to extreme droughts
•Need in-depth assessments of impacts of climate change on non-hydro energy sources, vulnerability studies at a national level, and the development of adaptation strategies

23. 5. How the IDB Can Support Renewable Energy Development in LAC

24. How the IDB Can Support Renewable Energy Development in LAC?
•Building Enabling Infrastructure for the Grid of the Future
•Securing Private Sector Investment
•Engaging in Energy Policy Design and Development
•Helping to Establish Supply Chains for Current and Emerging Technologies

25. Building Enabling Infrastructure for the Grid of the Future
5. How the IDB Can Support Renewable Energy Development in LAC
•Help governments address important infrastructure and technical barriers to building a smart, low-carbon, and low-cost energy system.
•Assist governments in carrying out critical infrastructural investments, as well as aid in capacity building of system operators throughout the region.
•Support countries in coordinating infrastructure expansion with the establishment of smart grids, weather forecasting, and energy efficiency technologies.
•Assist governments in carrying out feasibility and environmental impact studies of potential large-scale renewable energy generation sites and in planning for their integration to the grid.
•Provide technical and policy assessments for the most cost-effective regional integration strategies and aid countries in harmonizing national-level energy plans and regulations.

26. Securing Private Sector Investment
5. How the IDB Can Support Renewable Energy Development in LAC
•Assist governments in lowering market and financial barriers that prevent the private sector from investing in small-, mid-, and large-scale renewable energy, energy efficiency, and smart grid projects.
•Help leverage private sector investment through risk mitigation of renewable energy projects.
•Aid small-scale projects in meeting equity requirements and help build the capacity of local financial institutions, increasing their familiarity with renewable energy projects and lowering perceived risks.
•In markets with limited private sector involvement, the IDB can stimulate engagement by providing support for public-private partnership (PPP) projects.

27. Engaging in Energy Policy Design and Development
5. How the IDB Can Support Renewable Energy Development in LAC
•Continue to play an important role in assisting governments through capacity building, institutional development, and policy design.
•The IDB, with its extensive knowledge of the region, is ideally positioned to support national governments in developing sustainable energy plans that are suitable to their needs and goals.

28. Helping to Establish Supply Chains for Current and Emerging Technologies
5. How the IDB Can Support Renewable Energy Development in LAC
•The IDB can support the growth of local supply chains for clean energy technologies through capacity building and technical cooperation, as well as through financing of pilot projects, local businesses, and emerging clean energy technologies.

29. Thank you!
Alexander Ochs
Director
Climate and Energy Program
aochs@worldwatch.org