The complexity of the Brazilian electricity system has evolved from a model based on hydroelectricity supplemented by thermoelectricity to a combination of diverse sources, without planning and with little control, whose excess intermittent generation threatens to cause blackouts. Credit: Mario Osava / IPS

By Mario Osava
RIO DE JANEIRO, Sep 25 2025 (IPS)

Wind and solar power sources, essential for the energy transition to mitigate the climate crisis, have become a risk of power outages in Brazil.

It is a remedy that, in excess, becomes poison. The rapid and unplanned growth of these alternatives has created operational difficulties for the Brazilian electricity system, which is nationally interconnected.“Brazil has one of the most complex electricity systems in the world. No other country has such a diversity of sources”–Luiz Barata.

A blackout on August 15, 2023, which affected 27% of the supply throughout most of the country, was a major wake-up call about insecurity. It began with the transmission of wind and solar power plants in the state of Ceará, in northeastern Brazil.

It almost happened again in April and August of this year due to excess generation, according to the  National System Operator (ONS), a private organization that represents consumers and all sectors involved, which coordinates and controls supply nationwide.

A functional electrical system requires surpluses; energy must be available at all outlets for eventual consumption. But “too much excess causes problems,” said Luiz Barata, former director general of the ONS and current president of the non-governmental National Front of Energy Consumers.

The proliferation of solar and wind power plants in Brazil has created imbalances between supply and consumption that caused operational difficulties in effective distribution, such as power outages in 25 of Brazil’s 26 states on August 15, 2023. Credit: Fotos Públicas

Renewables in question

The intermittent nature of wind and solar power, which have grown the most in the last decade, exacerbates the risks due to their uncontrollable origin. This type of energy depends on nature, on when there is wind and sun.

The plot thickens with distributed generation, also known as decentralized generation, which turns consumers into producers of their own electricity in 3.8 million residential micro-plants or groups of individuals or small businesses.

This dispersed generation already exceeds 43 gigawatts of power, according to data from the National Electric Energy Agency (Aneel), the sector’s regulatory body.

This amounts to 18% of the country’s total generating capacity, with solar photovoltaic power dominating the segment with a 95% share.

“In addition to being uncontrollable, because it depends on the sun, distributed generation cannot be interrupted, as it is beyond the control of the ONS,” warned Barata, an electrical engineer.

What the ONS does is curtail the contribution of some generating sources when excess supply threatens the system. In general, the interruption affects wind and solar generation, which are further away from the area of highest consumption.

The Northeast, favored by strong and regular winds and solar radiation, concentrates most of these sources, while the highest electricity consumption occurs in the Southeast, Brazil’s most populous and industrialized region.

Wind farms occupy hills and mountains throughout the Northeast region of Brazil, which has become a supplier of electricity for the entire country. The intermittency of this source, with generation concentrated at night, contributed to the risk of blackouts in the country. Credit: Mario Osava / IPS

Uncertain future

The trend is for operational problems in the electricity system to worsen because distributed generation continues to expand, due to the legal incentives it enjoys, and without planning, as it is the result of individual decisions.

From January to August 2025, the ONS discarded 17.2% of the country’s potential wind and solar generation, which corresponds to 7% of the country’s monthly consumption. This tripled the cuts compared to the same period in 2024, according to an analysis by Volt Robotics, an energy consulting firm.

In August, the rejection reached 57% of new renewable generation due to excess supply.

“Brazil has one of the most complex electricity systems in the world. No other country has the diversity of sources that we have,” Barata told IPS by telephone from Brasilia.

Of a total of 236 gigawatts of installed capacity at the end of 2024, hydroelectricity continues to account for a majority, with 46.5% of the total, according to the state-owned Energy Research Company. But it is no longer as dominant as it was in 2000, when it accounted for 89%.

Solar energy, with 20.5%, wind energy with 12.5% and thermal energy, which consumes fossil fuels and biomass, with 18.6%, already exceeded hydroelectricity in 2024, with a trend towards further growth.

Necessary reform

There has been a change in the electricity matrix, which has shifted from hydrothermal, basically hydroelectric and supplemented by thermal power plants, to a growing incorporation of new renewable sources, given the lower cost of their implementation and distributed generation, Barata pointed out.

However, legislation and regulations have not kept pace with this transformation, said the expert, who believes the sector needs a comprehensive structural reform in order to reduce risks and restore better operating and planning conditions.

“It is a complex system that cannot be solved with simple measures,” he said.

Joilson Costa, coordinator of the non-governmental Front for a New Energy Policy for Brazil and also an electrical engineer, considers it “incorrect” to attribute systemic risks solely to excess wind and solar generation.

“Excess supply is only part of the problem, not the only one. Another cause is the deficiency of the transmission system, which makes it impossible to transport the energy generated in the Northeast to other regions at certain times. This then necessitates a cut in generation,” he argued.

Nor can it be said that distributed generation is outside the scope of planning. The Energy Research Company, part of the Ministry of Mines and Energy, does consider this modality in its plans because “its studies and simulations allow it to make estimates,” even though it cannot control the expansion of microplants, Costa noted.

Electricity distribution companies also monitor the evolution of distributed generation in their networks and can update their data monthly, he told IPS by telephone from São Luis, capital of the northeastern state of Maranhão.

Distributed generation, which is small-scale and generally consists of photovoltaic panels on residential or commercial roofs, already accounts for 43 gigawatts of installed capacity in Brazil. There are 3.8 million plants benefiting seven million consumer units, without the necessary control over the operation of the national electricity system. Credit: Mario Osava / IPS

Daily asynchrony

The major risk factor, however, is the lack of synchrony between the generation and consumption of new sources of electricity in their daily cycles.

Solar generation occurs during the day, peaking around noon, when consumption is low. It declines just as consumption increases at the end of the day and beginning of the night, when lights and household appliances are turned on, especially electric showers, which are widely used in Brazil.

Wind farms, concentrated in the Northeast, generate electricity mainly late at night, when consumption drops again.

Pericles Pinheiro, director of New Business at CHP, a gas generation equipment and solutions company in Rio de Janeiro, identifies a trend toward crisis in the Brazilian electricity system in his ongoing analysis of the sector. “Every summer, new emotions,” he jokes.

In previous years, he identified a risk in the proliferation of diesel generators that many companies used to avoid the higher cost of electricity during peak consumption hours in the early evening.

But they abandoned this resource because they migrated to the free market, which has expanded in Brazil in recent years, lowering energy costs for large consumers by allowing them to choose their supplier.

Diesel generators, which helped reduce the upward curve of consumption during peak hours, disappeared or declined, exacerbating daily fluctuations in demand, in cycles opposite to those of wind and solar sources, Pinheiro told IPS.

Distributed generation reduces demand on the grid and the share of electricity managed by the system operator, in a trend that exacerbates insecurity, he added.

The ONS estimates that by 2029 it will control less than half of the country’s installed generation capacity, increasing the operational uncertainty of the national interconnected system.

The proliferation of digital data centers in Brazil, which the government is trying to promote, is seen as a way to balance electricity consumption and supply in the country.

But these huge energy sinks would consume the excess during the day but increase demand at night, as they operate 24 hours a day, warned Pinheiro, who identifies another risk in electric vehicles whose batteries consume the electricity of several homes when recharging.

The first harvest of Amazonian fish from one of the ponds contributing to the food security of indigenous families, using solar energy. The initiative is expected to be replicated in a second phase, reaching more indigenous communities in two provinces of the Peruvian Amazon. Credit: Corpi-SL

By Mariela Jara
LIMA, Aug 8 2025 (IPS)

“Our organization is showing that it is indeed possible to move toward energy transition and not depend on oil,” said Elaina Shajian, president of the Regional Coordinator of Indigenous Peoples of San Lorenzo (Corpi-SL), in the Peruvian Amazon.

Shajian is an Awajún leader, one of the 51 indigenous peoples of the Amazon in Peru, a South American country known for its multicultural and multiethnic diversity. With an estimated population of 34 million, nearly 17% speak a native language as their mother tongue."Due to oil spills, our people have nothing to eat because fish in the rivers are dwindling, and those that remain are contaminated. Now we have two ponds with over two thousand fish, which we manage using solar energy," -Elaina Shajian.

Despite stable macroeconomic indicators, poverty affects nearly a third of Peru’s inhabitants, with indigenous populations bearing the brunt. This includes the eight indigenous groups represented by Corpi-SL in the provinces of Datem del Marañón and Alto Amazonas.

These provinces are part of the eight that make up the Amazonian department of Loreto, the country’s largest region, covering 28% of its territory. Of its population of just over one million, 43% live in poverty, according to official data. In the two provinces where Corpi-SL operates, the poverty rates reach 52% and 56%.

Food insecurity in the area is worsened by water source contamination from spills in the Norperuano oil pipeline, which has crossed their territory for 50 years. This reality inspired an initiative to provide food for the population, generate income for the organization, and utilize solar energy.

“The idea of the fish farm arose from a need, in dialogue with the organization Mocicc. Because of the oil spills, our people have nothing to eat—fish in the rivers are disappearing, and those left are polluted. Now we have two ponds with over two thousand fish, managed through solar energy,” Shajian told IPS from San Lorenzo, the capital of Datem del Marañón.

Elaina Shajian, an Awajún indigenous leader and president of the Regional Coordinator of Indigenous Peoples of San Lorenzo in Peru’s Loreto region. Her organization leads a sustainable fish production initiative supported by solar energy. Credit: Corpi-SL

The effects of climate change and extractive industries are harming the well-being of indigenous communities in the area. Finding food is a challenge—fish, a staple of their diet, is increasingly scarce and expensive. It is harder to catch in rivers, and its market price is unaffordable, sometimes exceeding US$12 per kilogram, explained the president of Corpi-SL.

The impact on children’s health and well-being is direct. Official figures report that in 2024, anemia among children aged six to 35 months living in rural areas of the country, such as the two provinces mentioned, reached around 52%, exceeding the national average of 43%.

Beyond being an alternative to improve their nutrition through autonomous decisions tailored to their communities’ needs, the fish farming initiative is local proof that other energy sources beyond fossil fuels—which cause environmental damage and harm human health, as evidenced in the area—can be utilized.

“Corpi-SL is like the father of indigenous peoples, encompassing 579 communities that can now see that energy transition is possible. It’s not just talk—they can see real solutions to ensure our food security today and in the future, without depending on oil for the energy needed to develop and replicate our initiatives,” emphasized Shajian.

Solar panels installed by the technical team of the Regional Coordinator of Indigenous Peoples of San Lorenzo, in Peru’s Amazonian Loreto region, in partnership with the Citizens’ Movement Against Climate Change, to promote sustainable fish farming in their communities. Credit: Corpi-SL

Solar Energy as an Ally 

At the Yachaykuna farm (meaning “school of knowledge” in Kichwa, one of the Amazonian languages), a 51-hectare property owned by Corpi-SL near San Lorenzo, two fish farming ponds operate with solar energy as a key ally.

The initiative is supported by the Citizens’ Movement Against Climate Change (Mocicc), a Peruvian civil society platform with 16 years of experience promoting responses to the climate crisis and community development.

Augusto Durán, coordinator of its energy transition area, told IPS at the institution’s headquarters in Lima that it is crucial to link public policy proposals with on-the-ground work in areas affected by extractive industries like oil.

This is how the proposal with Corpi-SL came together to implement a pilot project that would make use of a space where fish farming had been attempted before but failed, partly because the farm lacked electricity.

“We agreed to install a small solar panel system to provide electricity to the fish farming center in its first phase. And to complete the energy transition experience, this renewable energy would serve as an alternative to oil,” Durán explained.

He explained that with the center energized and the first pond operational, they purchased 3,000 fingerlings of two Amazonian species: paco (Piaractus brachypomus) and gamitana (Colossoma macropomum). With the second pond, the fish were distributed in a larger space and fed balanced feed, allowing them to grow up to 600 grams.

After six months of stocking the fish in their two ponds, members of the eight indigenous peoples that make up a corporation in the Peruvian Amazon shared a lunch on June 14 at a collective farm, featuring the two harvested species: paco and gamitana. Credit: Corpi-SL

Their delicious flavor was enjoyed during the first harvest on June 14, at a communal lunch following the assembly of the expanded council of the 31 federations that form Corpi-SL. Six months had passed since the first fish were stocked.

Durán highlighted the system’s performance: six solar panels with 900 kilowatts were installed on a four-legged structure, while the farm’s security hut housed the batteries that store solar energy during the day and redistribute it at night.

“The system is automatic—as soon as the sun rises, it generates electricity, which is gradually stored in three large batteries that can power appliances, a freezer, TV, radio, lighting for the area, and maintain the two oxygenation units and other pond equipment,” he added.

He also explained that the lithium batteries have a lifespan of 10 years, extendable to 20 with proper care, while the panels can last over a decade.

“The kit of panels, batteries, converter, and cables cost around 6,000 soles (about US$1,675). It’s a significant investment because it provides low-cost energy to develop productive initiatives and replicate them,” Durán noted.

The farm previously had no electricity, and if they had to pay for the service, the cost would average US$28 per month—meaning they would recoup their investment in six years.

Augusto Durán, energy transition coordinator of the Citizens’ Movement Against Climate Change, believes it is a priority to advance toward an energy transition that considers the unique conditions of Peru’s territories, particularly its Amazonian indigenous communities. Credit: Mariela Jara / IPS

Round-the-clock Energy 

To make the initiative sustainable, Corpi-SL developed a plan that includes selling paco and gamitana in local restaurants and markets. The income will be used to purchase another 3,000 fingerlings to replenish and expand the harvest while strengthening the organization.

“A second phase of the project includes a fingerling breeding center that will also operate on solar panels,” Durán revealed.

The proposal also involves training the federations under the Coordinator so they can eventually establish their own fish farming centers, multiplying the initiative’s impact.

Alan Ruiz, a Corpi-SL technician, oversees fish production, pond preparation, stocking, monitoring, and harvesting, as well as training communities for technology transfer.

From San Lorenzo, he explained to IPS that the key is having 24-hour photovoltaic energy through the solar panels.

Regarding the organization’s plans, he stated that the goal is to establish an Amazonian fish reproduction center—not just for fattening—which will require upgrading the panels and batteries to meet new demands.

“Solar energy is an ally in aquaculture. The indigenous movement manages Amazonian fish, and it helps us improve processes at different stages of cultivation and production,” he emphasized.

One of the water sources where fingerlings of two Amazonian fish species were stocked for fattening and later harvest, in an initiative led by an indigenous peoples’ coordinator with solar energy support, in Datem del Marañón province, Loreto region, Peru. Credit: Corpi-SL

A Fair and Popular Energy Transition 

Moving away from fossil fuels and embracing renewable energy is part of Mocicc’s agenda, aligned with two priorities: reducing greenhouse gas emissions and halting ecosystem loss in the Amazon, which is harming residents’ quality of life.

Micaela Guillén, the institution’s national coordinator, explained this in an interview with IPS.

“A fair energy transition, driven by the people, is urgent. That’s why we call it a fair and popular energy transition. It’s a process to ensure communities have energy while also addressing remediation, reparation, and improving living conditions in impacted areas,” she said.

She explained that this is how the idea emerged, developed together with Corpi-SL, that the political demand for energy transition cannot be separated from economic issues.

“We’re talking about communities that have historically depended on oil extraction due to the economies built around it, and the state’s position that the only way to continue supporting them is by maintaining the current extractive model,” she stated.

Guillén emphasized that, like the fish farming center, other alternative economic initiatives exist in the Amazon to counter the precarious conditions faced by communities due to extractivism.

Given this reality, “it is shocking that the state denies the potential of these local economies and the revitalization of alternatives—even for something as basic as food security,” she said.

She criticized the government’s lack of political will, reiterated in the latest presidential address by Peru’s widely unpopular leader, Dina Boluarte.

“She spoke of further expanding extractive activities, even linking them to the Global North’s energy transition—where they’re changing their energy mix but not their consumption patterns,” Guillén noted.

She condemned how “they’re pursuing renewables, but to meet the energy demands of big corporations and cities, they need massive quantities of solar panels and wind turbines.”

Wind power installation in the impoverished desert peninsula of La Guajira in northern Colombia. Credit: Giampaolo Contestabile / Pie de Página

By Humberto Márquez
CARACAS, Nov 13 2024 (IPS)

The Latin American and Caribbean region is a student with good grades in renewable energy, but not in energy efficiency, and has a long way to go in contributing to global climate action and overcoming the vulnerability of its population and economies.

The recent energy crises in Ecuador and Cuba, with power outages ranging from 14 hours a day to days at a time, and the threats posed by droughts – which this year hit Bogotá and the Brazilian Amazon, for example – to the hydroelectric systems that power the region, are proof of this.

Among the 660 million Latin Americans and Caribbeans enduring the various impacts of climate change, there are at least 17 million people, some four million households, who still lack access to electricity.“Countries in the region are very much affected by barriers in their investment ecosystems, access to financing, whether due to institutional problems, policies or legal security”: Alfonso Blanco.

That scenario comes under new scrutiny at the 29th Conference of the Parties (COP29) to the United Nations Framework Convention on Climate Change (UNFCCC), which began its two-week run on Monday 11 in Baku, capital of oil-rich Azerbaijan.

The annual conference of 196 states parties has climate action financing as its main theme and will also review the global commitment made a year ago to triple renewable energy capacity and double energy efficiency.

The COP28 in Dubai proposed a global installed capacity of 11,000 gigawatts (Gw, equivalent to 1,000 megawatts, Mw) of energy from renewable sources by 2030, 7,000 Gw more than today. This is unlikely, judging by the Nationally Determined Contributions (NDCs).

The NDCs serve as commitments by states to adopt measures to reduce greenhouse gas emissions so that global warming does not exceed 1.5 degrees Celsius above pre-industrial averages, as stated in the 2015 Paris Agreement, which concluded the COP21.

Large solar power plant in the Sertao region, in the arid northeast of Brazil, installed by the Spanish company Naturgy. Credit: Naturgy

In the case of Latin America and the Caribbean, “the installed capacity for electricity generation is already 58% renewable energy, and in 11 countries it exceeds 80%,” Uruguayan expert Alfonso Blanco, director of energy transition and climate at the Washington-based think tank Inter-American Dialogue, told IPS.

According to the Latin American Energy Organisation (Olade), the region’s installed electricity generation capacity was 480,605 megawatts (MW) in 2022, with about 300,000 MW produced from renewable sources – 200,000 MW from dams – and the rest from non-renewable sources, mainly fossil fuels.

The International Renewable Energy Agency (Irena) put the region’s installed electricity generation capacity at 342,000 MW last year, with advances in solar energy installations, with a capacity of 64,513 MW, and wind power, which reached 49,337 MW, as the hydroelectric source remains stable at 202,000 MW.

The Latin American and Caribbean region “can increase its capacity to generate electricity from sources such as solar or wind, but it can’t triple its hydroelectric capacity,” said Blanco, who was executive secretary of Olade in the period 2017-2023.

Diana Barba, coordinator of energy diplomacy at the Colombian think tank Transforma, also believes that “tripling renewable energy capacity by 2030 does not apply to Latin America and the Caribbean”.

“The next step is to maintain the proportion… until 2040, and in general to reduce the trend towards the use of fossil fuels,” Barba told IPS.

An auto parts factory in the Mexican state of Coahuila. Credit: México Industry

Elusive efficiency

Green energy capacity figures are improving every year in the region, but energy efficiency figures are not keeping pace. Experts from the Economic Commission for Latin America and the Caribbean (ECLAC) have shown that only the Caribbean sub-region has made significant progress compared to the first decade of this century.

Measured in kilograms of oil equivalent (kgoe) per 1,000 dollars of gross domestic product (GDP), the Caribbean consumed 110 kgoe during the 2001-2010 decade and decreased that expenditure to 67 units in 2022, while the region as a whole fell from 95 to 87 kgoe.

In that period, the Andean sub-region was able to fall from 108 kgoe to 90, Central America and Mexico from 85 to 70, and the Southern Cone remained at 90, although the figure is 80 kgoe if Brazil is excluded.

Efficiency, in which the region shows more modest results, is fundamental for the triple purpose of saving resources, reducing costs and, a primary objective at climate COPs, reducing the carbon emissions that pollute the environment and heat the atmosphere, precipitating climate change.

In this regard, the World Economic Forum, which each year gathers political and economic leaders, advocates electrifying transport, and above all stresses that NDCs should focus on demand and supply to improve industrial energy efficiency, only mentioned in 30% of the world’s NDCs.

In transport, an Olade study highlights that the fleet of electrified light-duty vehicles multiplied more than 14 times in the region in 2020-2024, with a total of 249,079 units in circulation by the first half of 2024.

This market – which entails greater energy efficiency and drastic reductions in carbon emissions – is led by Brazil with 152,493 vehicles, followed by Mexico, Costa Rica, Colombia and Chile, but Costa Rica has the best per capita figure, with 34 electrified cars per 10,000 inhabitants, followed by Uruguay with 17.

However, as far as manufacturing industry is concerned, with an annual GDP of 874 billion dollars (14% of regional GDP), ECLAC records that it consumes more renewable energy each year and less fossil fuels such as residual fuel oil.

But its energy intensity – an indicator that measures the ratio of energy consumed to GDP – went from 232 tonnes of oil equivalent per million dollars of value added in the 1990s to 238 TOE in 2022, suggesting that the region’s industrial sector has not improved its energy efficiency.

Rows of solar panels on the roofs of Metrobús stations in Buenos Aires, Argentina. Credit: Caba

Four South Americans

To assess the necessary and possible efforts of each country to contribute to global renewable energy capacity targets, Transforma studied four cases, those of Argentina, Brazil, Chile and Colombia.

Barba explained that Argentina and Brazil were considered for their membership of the G20 (Group of 20 industrialised and emerging economies), Colombia for its capacity for action and Chile for its decision to accelerate the end of the operation of thermal power plants, while insufficient information was received from Mexico.

Argentina could take advantage of its onshore wind energy potential and large-scale solar energy, but Barba argues that “it would be super-difficult” to triple its energy matrix in a few years, which is only 37% covered by renewables, and that its current president, Javier Milei, “is betting on fossil fuels”.

Brazil can take advantage of its large-scale renewable energy potential, but Barba notes “contradictory signals” regarding its NDCs, by favouring hydrocarbon exploration and exploitation in the Amazon “instead of sending a very clear signal to close these projects in strategic ecosystems”.

Chile could reach 96% renewable generation in its electricity matrix by 2030, taking advantage of sources such as solar, wind, thermal and geothermal, and Colombia could reach 80% renewables in installed electricity capacity if it continues to multiply its solar and wind energy installations.

Of the countries analysed, Chile is the only one with a specific target of 10% reduction in its energy intensity, established in its national energy efficiency plan 2022-2026, and Transforma suggests that the other countries adopt similar targets in their plans for 2030.

On the other hand, there are calls for savings, considering that energy efficiency is “the first fuel”, the most cost-effective source or, in other words, that the cleanest energy is the one that is not used.

Oil exploitation in the Brazilian Amazon at the Urucu base in the Coari area along the Amazon River. Credit: Petrobras

A question of finance

Giovanni Pabón, Director of Energy at Transforma, has stated that “the issue of financing covers everything. If we don’t have secure financing, we can talk about a lot of things, but in the end it is very difficult to achieve the goals we require” in the Paris Agreement.

Blanco highlights that, in order to tackle their transition to green energy, countries in the region “are very much affected by the existing barriers in their investment ecosystems, access to financing, whether due to institutional problems, policies or legal security”.

“Overcoming that barrier is not impossible, but it requires work and political will, which is often lacking,” he added.

He recalled that countries with strong extractive industries, which are more oriented towards fossil fuels and allocate subsidies to them, stand out in that scenario.

Finally, Blanco considered that COP29, the second consecutive one in an oil-producing country, is “a transitional summit”, preparatory to COP30, which will be held in 2025 in the Amazonian city of Belém do Pará, with Brazil as host and leader, and could produce clearer and firmer results and commitments in terms of renewable energies and energy efficiency.

The Peñasquito mine, owned by U.S. company Newmont Goldcorp and located in the state of Zacatecas in northern Mexico, produces gold, silver, lead and zinc, the latter two of which are essential for the energy transition. CREDIT: Courtesy of Lucía Vergara

By Emilio Godoy
MEXICO CITY, Feb 22 2022 (IPS)

The debate in Mexico and at an international level is focused on certain minerals that are fundamental to the energy transition, such as cobalt, lithium and nickel. But there are other indispensable minerals that remain in the background.

In addition to lithium deposits, Mexico has proven resources of bismuth, copper, fluorspar, graphite, molybdenum and zinc, involved in one way or another in the different processes of the transition to a low-carbon economy.

Beatriz Olivera, founder of the non-governmental organization Energy, Gender and Environment, stressed that Latin America’s second largest economy has the mining potential to make this transition possible.

“But we have an extractive model, the mineral is extracted and developed elsewhere,” she said, criticizing Mexico’s current mining policies, and in particular the elements that take on special value on the path towards energy decarbonization, a formula to contain global warming.

“If these minerals are extracted, where is the value chain, the benefit for countries like Mexico? We are only going to be left with the negative consequences and sacrifice zones are going to be created to satisfy technologies in other parts of the world,” she said in an interview with IPS.

Olivera is co-author of a forthcoming report on Mexico’s strategic transition metals that identifies 23 minerals for applications such as electrical installations, solar and wind power plants, as well as energy storage devices such as batteries.

The group identified 803 mining projects, of which 237 have a mineral granted in concession that is usable in the transition, most of them inactive, but still in force.

Almost half are in the initial stage, nearly a third in exploration, 13 percent in pre-production and the rest are in pre-feasibility, expansion or closed.

Meanwhile, 58 of the ventures belong to companies from Canada, 29 from Mexico, 26 from the U.S., seven from Australia, three from the United Kingdom, one from China, and in 113 cases the origin of the company is unknown.

Only 10 percent of Mexico’s territory has been granted in concession for mining activities, but these resources are present almost everywhere in the country. Several of these minerals play a vital role in the energy transition to a low-carbon economy. Map: Mexican Ministry of Economy

Mexico’s mining portfolio

Mexico is currently the world’s leading silver producer and is also a major player in the 12 minerals market.

In 2020, the country ranked second in world fluorspar production, fifth in bismuth, molybdenum and lead, sixth in zinc, ninth in copper and tenth in manganese.

In 2020, Mexican deposits produced 1.07 million tons of fluorspar, 732,863 tons of copper, 688,461 tons of zinc, 260,390 tons of lead, 198,448 tons of manganese, 18,562 tons of molybdenum and 1844 tons of graphite, according to the official Statistical Yearbook of Mexican Mining.

The country has 38 clay deposits containing lithium, potassium, magnesium and sodium, of which at least 10 contain five billion tons of these minerals, although their extractive and economic viability has yet to be analyzed, independent expert José Parga told IPS.

The U.S. Geological Survey (USGS) estimates that Mexico has lithium reserves of 1.7 million tons.

Part of the government’s electricity reform proposal for the public sector to regain control of this industry includes the nationalization of lithium and the creation of a state-owned company to mine it.

Mexico has reserves of 53,000 tons of copper, 68,000 tons of fluorspar, 5,000 tons of manganese, 5,600 tons of lead and 19,000 tons of zinc, according to the USGS.

The mining law in force in Mexico since 1992 prohibits state-owned entities from mining discovered minerals, which in practice means the privatization of the sector, since the activity remains in their hands and the State merely regulates it.

Although there is no exploitation of cerium, dysprosium, erbium, scandium, europium, gadolinium, holmium, ytterbium, yttrium, lanthanum, lutetium, neodymium, praseodymium, promethium, samarium, terbium and thulium – the so-called rare earths, the set of 17 elements that have become fundamental for the transition – exploration is advancing for a project in the northern state of Coahuila.

In addition, zinc deposits could provide indium, gallium and germanium – other important elements for the energy transition that Mexico does not currently produce.

Most of the veins are located in the northern part of the country.

The manufacture of electric vehicles requires the use of several minerals that are abundant in Mexico. In the photo, an electric cab recharges its battery at a public station in a neighborhood on the south side of Mexico City. CREDIT: Emilio Godoy/IPS

Partially harnessed potential

Parga underscored Mexico’s potential, which has been only partially tapped.

“There is certainty that the materials are there, but they have not actually been the subject of an evaluation that would allow us to really know their potential and the eventual technical-economic viability of their exploitation,” he stated in his dialogue with IPS.

The expert said, “the first step to take advantage of the country’s mineral resources is to investigate their existence, quantify and classify them to make the best possible use.”

For at least a decade, international organizations have been warning about the consumption of raw materials for the energy transition, which could lead to their depletion or “peak consumption”.

In addition, the mining industry has triggered protests and resistance in communities throughout the country where it operates, due to the environmental damage caused, the low number of local jobs generated and its small contribution to the Mexican economy.

In fact, there are currently more than 50 conflicts between local populations and mining companies in the country.

In Mexico, the energy transition has been at a standstill since 2019 due to the policies of President Andrés Manuel López Obrador, who favors support for fossil fuels and hydroelectric power plants, to the detriment of renewable sources such as wind and solar.

Furthermore, this Latin American country, with a territory of 1.96 million square kilometers, 10 percent of which has been granted in concession to mining companies, lacks a national industry linked to the transition or a strategy for its development.

As a result, there is no production of wind turbines, solar cells or electric cars, as the raw material is exported and returns in the form of components to assemble solar panels or electric vehicles.

At a slow pace

However, there are already some attempts in the Mexican market, such as the assembly of electric units in the central state of Puebla, neighboring Mexico City.

In addition, the foreign ministry, with support from the University of California, launched on Feb. 8 the U.S.-Mexico Electrification Working Group, which seeks “to ensure a coordinated and strategic transition towards electromobility.”

In 2022, the parties will design a binational roadmap, which includes a diagnosis of the automotive sector in both countries and their opportunities in the electric transition. Electromobility refers to the introduction of vehicles that use electricity, instead of fossil fuels, and whose manufacture requires the so-called transition minerals.

But Mexico is undertaking this initiative without the National Electromobility Strategy, ready since 2018 but halted for “review” by the environment ministry under the López Obrador administration after it took office in December of that year.

Although some cities such as Mexico City have introduced electric urban transport vehicles, it is not yet a national trend. Moreover, the energy supply for these units still comes from fossil fuels.

Since 2016, the marketing of new hybrid and electric cars has increased fivefold in Mexico, according to the private consulting firm TResearch Mexico. In 2021, those sales exceeded 39,000 units, representing four percent of the total.

During the Glasgow Climate Summit in December, Mexico signed the Glasgow Agreement on Zero Emission Vehicles, signed by 37 countries, 46 metropolitan and regional governments, as well as 11 vehicle manufacturers, 28 fleet owners, 13 institutional investors in the automotive sector, two financial entities and 21 signatories from other segments, to eliminate the production of internal combustion vehicles between 2035 and 2040.

In January, fossil fuel-based generation in Mexico accounted for 76 percent of the total, followed by wind energy (seven percent), hydroelectric (6.67 percent), solar (4.4 percent), nuclear energy (3.87 percent), geothermal (1.55 percent) and biomass (0.07 percent), according to data from the non-governmental Observatory of the Energy Transition in Mexico.

Olivera and Parga highlighted the concerns about the role of minerals in the energy transition, both at the Mexican and global level.

“They are not necessarily going to be enough to make the transition to 100 percent renewable, we have to take it with a certain amount of moderation. But neither can we continue burning fossil fuels left and right,” said Olivera.

In her view, “there must be benefits for the people, with environmental and social controls, respect for the collective rights of peoples, mitigation measures for socio-environmental impacts and a fairer and more equitable distribution of benefits.”

For his part, Parga suggested building a value chain in Mexico that leads to the production of finished products, such as lithium batteries, and the participation of local communities in mining regions in the different stages of the production process.

“Apart from taking care of the ecological balance, preserving the environment and the cultural environment of the people and communities, it must also ensure that they obtain an economic benefit that allows them to raise their standard of living,” he argued.

The dilemma revolves around internal combustion vehicles, whose economic, environmental and health costs are high, and electric vehicles, whose footprint is also significant.

The rise in coal prices can partly be attributed to the rising electricity demand, especially in Asian coal-producing countries. Credit: Wikimedia Commons

By Sara Bardhan
MUMBAI, India, Feb 18 2022 (IPS)

Coal—considered to be one of the most polluting fossil fuels and, therefore, one of the biggest contributors to climate change—took centre stage at COP 26. A last-minute intervention by India during the negotiations resulted in a crucial amendment to the coal pledge in the Glasgow Climate Pact.

While earlier drafts of the pact mentioned completely quitting coal power, India’s push for a change in the final text resulted in a watered-down commitment to ‘phase down’ instead of ‘phase out’ coal—this means that India pledged to cut down its total projected carbon emission by 1 billion tonnes by 2030, and achieve net-zero carbon emissions by 2070.

At COP 26, India pledged to achieve net-zero carbon emissions by 2070. However, its coal expansion plans and lack of investment in renewable energy sources tell a different story. What will it take for India to quit coal?

While this controversial decision has sparked acerbic debate worldwide, in India, it comes on the heels of the country’s recent coal shortage. Despite Union Finance Minister Nirmala Sitharaman’s dismissal, recent data by the Central Electricity Authority shows that coal stockpiles have dwindled to their lowest in years and coal-fired power stations have either reported outages or had stock worth only a few days on average.

The reasons cited for the coal crunch include:

1. Increased energy demand during COVID-19
During the pandemic, India’s power demands shifted considerably. While demand dropped during the first lockdown, by September 2020, India’s electricity demand was 3.4 percent higher than in September 2019. This happened primarily because of a rise in demand for electricity from the industrial, agricultural, and commercial sectors.

2. Extended monsoons in coal-rich central and eastern states of India
Spells of heavy rain in India’s largest coal-producing states of Odisha, Jharkhand, and West Bengal disrupted the coal supply chain by affecting mining sites and transportation networks.

3. Global fluctuations in the price of coal
According to reports, coal prices quadrupled during the lockdown. The rise in prices can partly be attributed to the rising electricity demand, especially in Asian coal-producing countries.

This acute power shortage invited unwitting comparisons to countries from the Global North, most of which are currently working towards increasing their use of renewable energy. India’s total annual coal demand in 2021 stood at 1.05 billion tonnes. In fact, the India Energy Outlook 2021 suggests that, in the next two decades, India is set to see the largest increase in energy demand by any country.

In addition, the Climate Action Tracker (CAT) has rated India’s non-fossil fuel electricity capacity target (40 percent) as ‘critically insufficient’ and its emissions intensity (volume of emissions per unit of GDP) target of 33 percent–35 percent by 2030 as ‘highly insufficient’.

Why is weaning off coal so difficult for India?

1. India has a coal-dependent economy
Bhupendra Yadav—India’s minister for environment, forest, and climate change—rationalised the country’s climate strategy by stating, “Every country will arrive at net-zero emissions as per its own national circumstances, its own strengths and weaknesses.

Developing countries have a right to their fair share of the global carbon budget and are entitled to the responsible use of fossil fuels within this scope…Developing countries have still to deal with their development agendas and poverty eradication. Towards this end, subsidies provide much needed social security and support.”

Yadav’s sentiments reverberate across coal-dependent communities in India. According to Sandeep Pai of the Center for Strategic and International Studies in Washington, roughly 3,00,000 people are working directly with government-owned coal mines (earning fixed salaries and benefits), another 5,00,000 are reliant on coal for their pensions, and close to 4 million have livelihoods that are directly or indirectly linked to coal.

Evidently, in India’s coal belt, where families have depended on coal extraction for generations, quitting dependency on coal is not an option. This is primarily because these families do not own land where they can farm and, even if they do, research shows that mining operations usually generate acidic and chemically noxious environments that directly impact the quality of agricultural land and groundwater available in surrounding areas.

Consider the coalfields in Maharashtra’s Vidarbha region where land is barren and unproductive—covered in rubble, soot, dust, sand, waste, and debris; the Jharia coalfield in Jharkhand where accidental fires have been blazing for years, leaving the ground charred and land, is dotted with fatal sinkholes; or Chhattisgarh’s Hasdeo forest where coal mining has not only caused profound ecological damage but also displaced local elephant populations.

2. India’s energy is still largely coal-based
As millions of homes in the country still lack an electricity connection, Samantha Gross, director of the Energy Security and Climate Initiative at the Brookings Institution, points to the fact that India’s “energy policy currently focuses on bringing affordable electricity to all homes”.

Consequently, India’s increased investment in coal evacuation, infrastructure, project development, exploration and clean coal technologies is estimated to require 1 billion tonnes worth of coal production by 2023–24. Moreover, the CAT’s projections show that India’s coal capacity is expected to reach almost 266 GW, from the current 200 GW, by 2029–30.

Another key dimension in the discourse surrounding India’s climate policy is the role of energy in improving social development. Union Minister Yadav briefly mentioned it, and research has shown that modern energy services such as electricity and clean cooking fuels are critical in improving health and education outcomes, reducing poverty, and increasing productivity.

This means reliable and continuous access to electricity is crucial in building a better future for India’s marginalised. And since it is cheaper to produce electricity using coal than deploying renewable sources, the immediate trade-off in switching from coal to renewable sources is that we risk putting the country’s health and education outcomes in a precarious position.

Lastly, while India provides subsidies to both conventional and renewable energies, according to the CAT, coal subsidies are still approximately 35 percent higher than those for renewables such as solar energy and hydropower. It is no surprise then that climate professionals find India’s coal expansion plans counter-intuitive to its international climate commitments.

What is the way forward?

In its coal-rich central and eastern states, India has primarily implemented and expanded state-run mining projects by expropriating Adivasi lands. To compensate for the dispossession of land, local Adivasis are guaranteed jobs as assistants or labourers but the state’s compensation policies are famously ill-implemented. According to various reports, women and Adivasi workers have disproportionately suffered the impact of coal-induced displacement.

Repeated displacement and migration also lead to the breakdown of social support networks, cements inequalities and insecurities, and often leads to diminishing intra-community solidarity. As such, in more ways than one, India’s coal industry has always depended on Adivasi lands and labour and, without appropriate compensation or diversification, coal-dependent Adivasi communities are likely to face uncertainty once again in light of India’s energy transition.

While it is difficult to postulate a one-size-fits-all model for the entire country and the coal belt, here are some suggestions for how we can envision a post-coal India that is also sustainable and inclusive:

1. Develop a rehabilitation strategy on closure of coal mines
Since 2008, approximately 123 mines have been closed in India. However, there are still no proper guidelines to address the decommissioning of coal power plants. In 2020, the Supreme Court made it mandatory for mining companies to regrass mining areas on completion of mining projects.

However,  studies note that India still needs to plan a rehabilitation strategy to de-risk coal-dependent regions, rebuild their economies, and deploy adequate social protection measures.

At present, India is developing a framework for dealing with the closures of coal mines and undertaking pilot projects for the socio-economic transformation of the country’s coal mining areas with monetary assistance from the World Bank.

2. Diversify coal-dependent economies
One of the most important steps in building a robust post-coal economy is to invest in strengthening and re-training coal-dependent communities. There are currently no specific schemes that address or assist them in India.

However, American federal programmes such as Solar Training and Education for Professionals (STEP) and the Partnerships for Opportunity and Workforce and Economic Revitalization Dislocated Worker Grant set significant precedent for India to formulate its own. Attention also needs to be given to training displaced workers for employment in the renewable energy sector.

3. Promote entrepreneurship in rural coal-dependent regions
The Energy and Resources Institute of India (TERI) recommends the promotion of rural enterprise and microcredit financing, among other measures, to navigate post-coal revitalisation. Studies show that promoting entrepreneurship by microfinancing and adequate funds in rural areas is critical because it helps create networks, encourage community leadership, and build a diverse economy with a variety of employment options.

4. Leverage climate finance
India’s green transition could be financed by budget borrowing mechanisms such as development financial institutions (DFIs) and investments via the Climate Change Finance Unit (CCFU) to help facilitate the release of new policies, promote green finance, and aid capacity building.

There are several nationalised banks throughout the world that specifically focus on financing green technologies in their respective countries. In 2016, the Indian Renewable Energy Development Agency (IREDA) became the first such government-backed agency.

However, it is still unclear how effective it has been in promoting clean energy in India. Overall, there is an urgent need to develop a standardised framework of green finance investments and their monitoring and evaluation in the country.

Sara Bardhan is a multidisciplinary feminist researcher working at the intersection of gender, health, and governance in developing urban spaces. She has previously worked with the Social and Political Research Foundation and Transform Rural India Foundation among others. Her writings have appeared in publications such as The Wire, The Fuller Project, Citizen Matters, and Feminism in India. Find out more about her.

This story was originally published by India Development Review (IDR)

Windmills in Calama, in the Atacama Desert, in northern Chile. The projects in Chile to take advantage of its high potential in unconventional renewable energies have managed to reduce the country's dependence on imported fossil fuels and to reach a fall in the general cost of energy. Image: Marianela Jarroud / IPS

By Emilio Godoy
MEXICO CITY, Oct 2 2020 (IPS)

The way forward for energy transition and its link to an economic recovery after the depression caused by the covid-19 pandemic is focusing attention in Latin America and Europe, according to the 2nd Madrid Energy Conference (MEC), which concluded this Friday 2.

The intercontinental forum was held since Monday, September 28, in this case virtually due to the pandemic, organized by the non-governmental Institute of the Americas (IA), which is headquartered in the coastal town of La Jolla, in western United States.

Jorge Rivera, Panama’s Secretary of Energy and one of the sector’s leaders in Latin America who participated in the Conference, stressed that the transition is not an automatic process, but depends on a political decision and on the sector’s corporations.

“We have a great opportunity. We have an energy transition agenda for the next 10 years, aligned with the Sustainable Development Goals (SDGs), which includes a series of national strategies, decarbonization, digitalization, and energy democratization. We have a lot to do in transportation, industry, in the uses of energy,” he said.

Rivera insisted that “these measures have the potential to become a tool for post-covid economic recovery.

The Conference, which lasted five days and whose first edition took place in 2019 in the Spanish capital, brought together virtually ministers from five American nations, more than 20 companies´ presidents and more than 400 delegates from international organizations and experts from both continents.

The agenda addressed issues such as the climate crisis in the context of the pandemic, the situation of renewable energy on both sides of the Atlantic Ocean, the financing of post-covid recovery, the energy transition towards lower carbon models, energy storage in batteries and power grids, as well as different aspects of mobility.

Topics such as transport, gas, the outlook for oil corporations or the digitalization of the sector were also tackled.

An important part of the debates was linked to the climate crisis, such as carbon capture and storage and greenhouse gas emissions generated by human activities responsible for global warming, as well as methane and the prospects of hydrogen, seen as an alternative to fossil fuels, on both continents.

For Alfonso Blanco, OLADE – Latin American Energy Organization’s executive secretary, the region has made significant efforts to accelerate the transition, but the impact of Covid-19 has generated an uncertain outlook.

One of the debate sessions of the Madrid Energy Conference, dedicated to the energy transition, which held its second virtual edition, between September 28 and October 2, organized by the Institute of the Americas. Image: IA

“Sustainability will depend on regional measures, but the region does not have a defined regional action. If we do not analyze the (financial) risk and develop a financing model for renewables, we will see problems of further incorporation of renewables. We have to think of specific strategies, according to the role of each sector,” he said.

In recent years, Latin America has advanced in the development of wind and solar sources as clean alternatives, but it faces the challenge of reducing the burning of fossil fuels in industry and transportation and improving energy efficiency.

This transition has come to a halt in nations such as Mexico, which prioritize support for hydrocarbons, as pointed out by Joost Samsom, partner and co-founder of the consulting firm Voltiq – Renewable Energy Finance, and Claudio Rodríguez, partner of the law firm Thompson & Knight LLP.

Stuart Broadley, executive director of the non-governmental Energy Industries Council (EIC) – based in London and which brings together energy companies – explained that phase I of the energy transition, currently underway, consists of the adoption of technologies such as wind and solar, and during which most countries have not invested much for different reasons.

The forthcoming future

Phase II, which the world has not yet entered, involves energy variations such as hydrogen and carbon capture and storage (CCS).

Broadley said that companies dedicated to promoting renewable sources are not going to invest in hydrocarbons and do not like oil companies jumping into their market, so they are not going to help each other. In view of this, regulations imply or should imply forcing them to work together and, for this, the government’s role is critical.

For Fernando Cubillos, head of Energy at IDB Invest, the private investment arm of the Inter-American Development Bank, renewable energies have shown resilience during the pandemic, competitiveness and attractiveness.

“The possibilities of reviving the economy may give a chance to introduce more renewable energy, which can help the recovery, and there is an opportunity to deploy more renewables. We see good conditions for renewables today. What is missing in some countries is the regulatory framework,” he said during the discussions.

The installation of photovoltaic panels in poor neighborhoods in Brazil, like these in Morro de Santa Marta, in Rio de Janeiro, which often respond to community and distributed generation projects. They also contribute to reducing the energy bill in these populations and moving towards sustainable generation and consumption. Credit: Mario Osava/IPS.

In nations such as Brazil, distributed (decentralized) and small-scale solar generation has become important on a commercial scale and has registered growth, which was possible thanks to the regulatory framework.

“We have seen that state-of-the-art technology is wind and solar, due to low costs, and it is very difficult to expand hydropower generation. We have seen potential for battery storage, but it’s not attractive yet”, Thiago Barral, executive president of Brazil’s state-owned Energy Research Agency, analyzed during the MEC.

Although the energy transition is in its first phase, Latin America is beginning to consider emerging technologies, such as CCS and hydrogen, whether from gas or renewables.

In the first case, CCS, the intergovernmental International Energy Agency (IEA), which brings together major industrial countries and is based in Paris, said that by 2020, governments and industry have committed around some $4 billion to such initiatives worldwide.

In the world, there are at least 15 projects in operation and seven under construction, but during the MEC experts estimated that at least 500 are needed globally.

The use of hydrogen is an unknown variant in the Latin American region. At the beginning of this century, Brazil was a pioneer in exploring this path, but abandoned it to develop sugar cane ethanol, renewable sources and hydro energy.

Chris Sladen, founder and director of the UK-based consulting firm Reconnoitre Ltd, said CCS “has been a dream for hydrocarbons. But it’s not a simple concept, it involves several joint projects” and the big question is how to take them to a commercial scale.

That technology, he proposed, should occur close to where carbon is generated, such as power plants, petrochemicals or cement factories.

Some 50 countries, most of them in the developed North, have instituted policies for the use of hydrogen. In Latin America, Chile has the potential to produce this resource at low prices and that can be a mitigation measure for a cleaner electrical matrix, according to its Undersecretary of Energy, Francisco López.

Itaipu, the largest hydroelectric power station in the Americas, shared by Brazil and Paraguay on their Paraná river border. Credit: Mario Osava / IPS

By Rene Roger Tissot
VERNON, Canada, Sep 22 2020 (IPS)

Can the “energy transition” in Latin America help address the risks caused by greenhouse gases (GHG) on the climate, and the economic depression caused by the pandemic?

Energy transition refers to the shift from fossil-based systems of energy production and consumption — including oil, natural gas, and coal — to renewable energy (RE) sources like wind and solar, etc. Proponents of investments in RE highlight investments’ impacts on jobs and industrialization opportunities.

RE deployment implies a trade-off between the objectives of energy and industrial policies: The energy policy would seek the reliable supply of electricity at low cost while industrial policy would pursue an expansion and diversification of manufacturing capabilities impacting production costs.

Local Content Requirement Concept

Local content requirements (LCR) is a policy tool used to promote industrial development. The justification of LCR is based on the expectation that it increases economic linkages with local businesses resulting in more jobs locally. Any investment would have a “natural” level of local content, defined by the share of local procurement and jobs the investor would contract in the absence of LCR.

Latin America could achieve lower levels of GHG while also keeping electricity generation costs low by connecting regions with renewable energy surplus potential to demand nodes through transnational grids
That investment would generate a certain level of spillovers and learnings with the local businesses. Those spillovers can be expanded by requiring the initial level of investment to increase its local procurement level above its natural level.

However, there is an optimal level of LCR in which those linkages are maximized, beyond that point the costs of LCR would results in lower output or investment delays. If the gains from the linkages in terms of local procurement and job creation expected from LCR are higher thant the negative effects caused by their higher production costs, then LCR would be justifiable.

Most jobs in RE value chain are in the manufacturing of components. In the European Union, manufacturing accounts for 55% of all the jobs of the value chain. (Sooriyaarachchi, et al. 2015). Manufacturing of RE components requires the use of complex technologies and a skilled workforce.

Latin America’s experience.

Latin America’s GHG emissions from electricity generation are lower than world averages due to the reliance on hydroelectricity. But the region’s electricity generation matrix hides significant differences between countries.

Brazil, Colombia, or Costa Rica for example relied on hydroelectricity, while fossil fuels are the main source of electricity generation in the Caribbean, Chile, Argentina, Bolivia, or Mexico. However, Latin America’s supply of hydroelectricity is becoming less reliable due to changing weather patterns, requiring an increasing use of fossil fuels to meet growing demand.

Moreover, hydroelectric projects encounter increasing communities’ opposition and environmental challenges. RE expansion would then have to consider both levels of dependency (hydro and fossil fuels) while keeping prices low and ensuring that intermittence challenges from RE are addressed. Until recently most of the growth of RE was on biofuels, then wind power and more recently solar energy.

Latin America could achieve lower levels of GHG while also keeping electricity generation costs low by connecting regions with RE surplus potential to demand nodes through transnational grids. Regional integration is believed to lessen the need for national investments while reducing overall GHG and electricity generation costs (Guimaraes 2020).

However, efforts of regional electricity interconnection have not always provided the expected results. Large cost overruns, expensive cost of capital, construction delays, and the tendency for governments to protect their own markets makes regional electricity integration and unlikely alternative.

RE deployment in Latin America has prioritized the expansion of installed capacity at the lowest cost over local manufacturing development.

Employees work on the solar panels of the El Romero plant, with a capacity of 196 megawatts, in the desert region of Atacama in northern Chile. CREDIT: Acciona

Market driven instruments such as auctions have been the preferred option for RE deployment since they tend to achieve lower prices by stimulating competition. Auctions have not included LCR clauses, but Mexico and Brazil adopted other mechanism promoting LCR in their RE deployment efforts.

Brazil’s LCR operated indirectly by offering companies that complied with the stringent local content access to preferential loans from Brazil’s National Development Bank (BNDES). Securing low cost of capital was an important competitive advantage during the auction process, encouraging companies to comply with the LCR.

The measurement of LCR was based on weight. Since a tower represents approximately 80% of the total weight of a wind turbine, it implied that developers would have to build in Brazil or acquire the towers from a local manufacturer the towers.

Manufacturing towers locally increased production costs since Brazilian steel was about 70% more expensive than imported one (Kuntze and Moerenhout 2012). The use of weight as a measurement for LCR helped to expand the manufacturing base, but it benefitted mostly a well-established industry (steel) as opposed to the development of new and more complex activities.

Mexico RE policy objectives were multiple but emphasis was given on capacity expansion and low cost of supply (Tyeler and Schmidt 2019). The government also opted for the use of auctions, but the development of a local value chain was not explicitly included in the design of the auctions.

Auctions attracted strong interest from large foreign RE firms. Smaller local developers struggled competing with foreign firms which had access to lower cost of finances from their home countries. Local manufacturers also had difficulty adapting to the discipline foreign buyers brought in terms of market competition and due diligence skills.

Many companies grew used to work through non-competitive procurement processes with CFE. Wary of the risks of entering a new market, foreign power generators opted to reduce risks by controlling what they could control such as their own supply chain.

Mexico meets several conditions for the expansion of solar power generation and the use of LCR to expand its manufacturing activities: The country’s photovoltaic and solar thermal resources are among the world’s best, it has a large market potential, and a strong industrial base. Since 2013 it developed a regulatory framework that, based on market response, was successful at attracting investments.

Even more, Mexico is well positioned to benefit from US re-localization of value chains. However, following the election of President Andres Manuel Lopez Obrador (2018-2024) the outlook for RE expansion looks uncertain. The elected president preferred to support oil and gas activities, and protect the commercial interest of Pemex, even if that implied selling fuel oil to CFE although the power utility had already started to use RE sources as a viable source of energy. (Grustein 2020).

The government’s decision creates significant regulatory uncertainty, questioning the future of the entire RE deployment strategy, and the expansion of a local value chain.

Contrary to electricity generation, the main source of GHG emission in Latin Americas are from agriculture, forestry, and land use (AFOLU). This is where the region should focus its efforts (Guimaraes 2020).

The use of LCR in RE to expand manufacturing jobs of RE components has been modest. Most of the job opportunities from RE expansion would be on construction, operation, and maintenance.

As such, Latin America’s energy transition in electricity generation is unlikely to be the main solution to reduce GHG, nor will it be a significant source of jobs in the manufacturing of components if the priority is – as it should be- to ensure a supply of electricity at competitive prices.

This, however, does not mean RE deployment should be ignored. On the contrary, efforts should be on strengthening the stability of the regulatory environment on RE electricity generation to reduce dependency on hydroelectricity and fossil fuels.

To capture more jobs, focus should be on improving and expanding workforce’s technical skills on RE activities. As such, universities, and technical centers working in coordination with RE power generators and EPC companies should develop proper certification programs according to the expected market potential of each country.

Rene Roger Tissot, Energy Fellow Institute of the Americas, PhD Student University of British Columbia Okanagan, expert on energy economics and local content development programs. M.A. Economics, MBA, CMA.