South America | A robust cornerstone
Although climate change is having an impact on hydropower production in some South American countries, the future continues to look bright in others
Below: In July 2023, IDB approved financing to support the modernisation of the Salto Grande, a 1890MW binational hydropower complex in Argentina and Uruguay ©
reisegraf.ch / Shutterstock. com
PROVIDING 45% OF SOUTH America’s electricity supply, hydropower stands “as a cornerstone of the region’s energy infrastructure”, the International Hydropower Association reports in its 2024 World Hydropower Outlook. With total hydro generation reaching 728TWh in 2023, an increase of around 16TWh from 2022, the IHA says it remained a “robust source of energy throughout the year”, despite drought conditions causing a temporary drop in generation in the first half. Challenges faced by the region last year have highlighted the need for greater resilience in hydropower infrastructure in the face of climate change. As Uruguay’s worst drought for over 70 years impacted several hydropower reservoirs, Brazil also had to temporarily halt hydropower operations at the 3568MW Santo Antonio plant due to low water levels. The IHA says that investing in the modernisation of ageing hydropower plants across the continent, where more than 50% of installed capacity is over 30 years old, will increase climate change resilience and ensure hydropower continues to play a key role in energy production here. Foreign direct investment (FDI) in South America’s
hydropower sector is also reported to have declined in recent years. From 2005 to 2022, the IHA says hydro only attracted 4% of total FDI in the renewable energy sector, despite considerable Chinese investment where, for example, Chinese firms acquired stakes in 304 Brazilian hydropower plants, equal to 10% of the country’s national energy generation capacity. Bolivia,
Brazil, Ecuador and Peru have also received significant Chinese investment. As the IHA report states, investor hesitancy due
to environmental and social concerns associated with large-scale hydropower initiatives is one of the factors associated with such a decline. In addition, the investment landscape has been further complicated by the evolving challenges posed by climate change – such as shifting rainfall patterns and prolonged droughts. Innovative regulatory frameworks are needed to address these and to ensure they no longer act as a deterrent to potential investors from committing to long-term projects.
Argentina Looking across the region, Argentina, along with an
increasing number of other South American countries, is facing up to the challenge of renewing hydropower agreements that are set to expire in the next five years. Four Argentine hydropower projects, equating to 4380MW or 42% of the nation’s total hydropower capacity, faced contract termination in late 2023. Although the country’s Secretary of Energy granted an extension for these it raised concern about future operational continuity. As the IHA report states: “The uncertainty regarding the government’s next steps – whether to reassume control or initiate new concession bidding – adds complexity to ensuring sustained energy infrastructure reliability.”
26 | August 2024 |
www.waterpowermagazine.com
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