Climate change and hydropower generation: the Latin America case

According to news published by the World Meteorological Organization in February 2014, parts of the world have witnessed a series of extreme weather conditions in the first six weeks of 2014, continuing a pattern that was set in December 2013.

Much of the U.S. has experienced cold waves and major winter storms, whilst California remains gripped by drought. The United Kingdom has seen its wettest December-January period on record, with severe, widespread and prolonged flooding. A combination of strong winds, storms and high tides caused damage and flooding in other coastal areas of Europe. There has been unusually heavy snowfall in the Southern Alps. Monthly mean temperatures were extremely high from eastern Mongolia to eastern China. In the Southern hemisphere, Australia, Argentina and Brazil experienced extended heat waves.

Source: Japan Meteorological Agency Tokyo Climate Center

In Argentina, the period of unusual heat, which started in December 2013, continued through January and into February, especially in central and northern regions, with a number of local heat records being set. Parts of Brazil experienced the hottest January on record. An energy blackout early February affected six million people and hit eleven states of Brazil, six of which are scheduled to host the 2014 World Cup next June. Apparently a peak of demand caused by a heat wave had the grid down.

Water is a threatened resource. Scientists agree that changes in water supply will be among the first and most dramatic impacts of climate change in Latin America & Caribbean countries (LAC), because of the extreme weather events (droughts, hurricanes, floods) and hydrological changes related to El Niño are expected to increase with rising temperatures, and the accelerated melting of Andean glaciers, which have shrunk by 30% during last 30 years; many could disappear by 2030.

Hydropower production is the main energy sector in LAC, with hydroelectric dams providing 70 percent of the energy. Water provides 68% of all electricity generation (more than 80% in Brazil) compared to global averages of less than 16%. LAC has 8% of global population but it controls 31% of total freshwater resources, whereas Asia has 60% of population, and only controls 28% of water. Another key data, LAC earned $68 billion in mineral and metal exports in 2008, but mining requires huge quantities of water.

Diminished access to water caused by drought forces hydropower production to drop production. This causes people face a stark choice to cut down on their energy use or be cut off completely. In the last 10 years historic droughts have caused critical reductions in electricity production in Brazil, Argentina, Chile, and Peru. When lack of rain lowers the Desertvolume of water in reservoirs, the utility must turn to thermal generation, which has a higher cost and requires oil purchases.  And when the price of oil is high, generation costs become even more expensive. That creates problems for consumers and for the national budget.

However, despite this, hydropower is efficient and economic, given the topographic setting, and has a low carbon footprint. Hydropower production is projected to increase on a very large scale to the east of the Andes, where 151 new dams greater than 2 MW are planned over the next 20 years, constituting more than a 300 percent increase in production.  These dams would include five of the six major Andean tributaries of the Amazon and have potentially significant ecologic impacts along the Andes-Amazon nexus.

According to the International Hydropower Association the largest hydroelectric markets include Brazil, Chile, and Colombia. Researching some information concerning these countries from the U.S. Energy Information Administration:

  • Brazil had 114 gigawatts of installed generating capacity in 2010, with the single largest share being hydroelectric capacity. In 2011, the country generated 531 billion kilowatthours (kWh) of electric power. Hydropower accounted for 80% of this generation, with smaller amounts coming from fossil fuels, nuclear, other renewables, and other fuel sources.
  • Chile had 16 gigawatts (GW) of installed electric capacity as of 2010. Approximately one-third of Chile’s electric capacity and generation are attributable to hydroelectric plants that provide much of the electricity to Chile’s largest grid, the Sistema Interconectado Central (SIC).
  • In October 2013, Colombia had 14.4 gigawatts (GW) of installed electricity generation capacity, over 60% derived from hydropower. In October 2013, Colombia generated 5.3 terawatt hours (TWh) of electricity. Of electricity generated, hydroelectric plants provided 68%, gas accounted for 18%, coal accounted for 8%, oil accounted for less than 1%, and the remaining percentage was from other sources.

In 2001 Brazil was hit by severe droughts that crippled the hydroelectric facilities that were supplying 87 percent of its electricity. Faced with the prospect of mass blackouts, the government implemented an innovative energy efficiency plan that offered financial rewards to consumers who cut back on electricity consumption—and expensive penalties to those who didn’t.

When a prolonged drought brought on the country’s energy crisis of 2002, the government looked towards diversifying Brazil’s predominantly hydropower-based generation capacity by promoting more bio-energy, small hydro and wind, through the PROINFA model.

From 2007 through 2009 the reform of PROINFA was debated, due to its limited outcomes for wind power. The successful outcome of the first wind-only auction in December 2009 increased the opportunities for wind power in Brazil. Six more auctions have been organized. However, the electricity prices awarded to wind projects reduced dramatically in the last five years, and the tariffs are half their value under PROINFA, due to the direct competition with conventional energy sources. The latest energy auction showed that wind projects can compete successfully with hydropower.

Meanwhile, soaring energy costs are sapping the strength of the region’s economies—particularly in countries that import the bulk of their energy. In Central America, which is almost completely dependent on fossil fuel imports, the “oil bill” doubled between 1998 and 2004, measured as a percentage of the region’s GDP. No industry or service is immune. The public water and sanitation provider in Nicaragua, for example, is being crippled by the soaring cost of the electricity it uses to run pumps. Food prices everywhere are rising because of the higher energy costs associated with transportation, fertilizer and processing.

All this is forcing the region’s governments to consider both emergency measures and long-term solutions to curbing energy demand. Under modest GDP growth assumptions, the demand for electricity in Latin America and the Caribbean would more than double by 2030. This will be challenging for the Region to meet future electricity demand.  In order to meet the demand for electricity in Latin America and the Caribbean, it´s needed not only to build new generating capacity by the expansion of hydropower and natural gas, but to rely on an increased supply of non-hydro renewables, expanding electricity trade, and making use of supply and demand-side energy efficiency to lower the overall demand for electricity. It’s needed strength regulations and market design of hydropower and gas power generation projects and design supportive policies to develop renewable energy technologies and promote energy efficiency measures.


News on “Extreme Weather in parts of the world”, World Meteorological Organization, February 2014

Integrated Drought Management Programme (IDMP) by World Meteorological Organization (WMO) and the Global Water Partnership (GWP), March 2013 

U.S. Energy Information Administration, Country energy information, detailed and overview 

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