Latin America has already identified the projects that could become the backbone of regional energy integration by 2040.
The Regional Electrical Interconnection Plan presented by the Latin American and Caribbean Energy Organization (OLACDE) and the countries of the Community of Latin American and Caribbean States (CELAC) defined a preliminary portfolio of 16 interconnections.
The initiatives total 5835 MW of capacity and 4830 kilometers of networks , with an estimated investment of close to USD 3 billion for an integrated network from Central America to South America.
“At some point back, the term Pan-American Electricity came up (...) And the objective of the study is to determine the optimal portfolio of investments in electrical interconnections at the regional level until the year 2040,” explained Rodrigo Moreno , head of the study for OLACDE and academic at the Faculty of Engineering and Sciences and at the Business School of the Adolfo Ibáñez University.
“It goes beyond making bilateral interconnections; we are thinking about a system for the region and what investments within that framework maximize value,” he added.
Among the projects considered are two corridors between Bolivia and Brazil , new connections between Argentina and Chile , Bolivia and Paraguay , Chile and Bolivia , Ecuador and Peru , Panama and Colombia , as well as seven projects in Central America.
Of the total, 14 correspond to alternating current links, while the Bolivia-Brazil Phase II and Panama-Colombia projects are developed using direct current.
The study also concludes that 12 of the 16 projects appear consistently in all evaluated scenarios , thus forming the optimal portfolio for regional expansion.
The exceptions are concentrated in Central America, as the Guatemala-Honduras and Nicaragua-Honduras links gain value in scenarios of high fuel prices; Honduras-El Salvador is incorporated when there are adverse hydrological conditions.
Meanwhile, Guatemala-El Salvador is becoming attractive both in the face of increased electrification of demand and regional water restrictions.
Economic benefits and greater use of renewables
The analysis identifies both operational and investment benefits, whether from using existing infrastructure more efficiently, reducing renewable generation spillovers, and taking advantage of lower-cost energy resources available in other markets.
“When you interconnect the region, there are benefits in terms of OPEX. There may also eventually be CAPEX benefits. What does this mean? It means that one could affect investment in local generation and storage as a result of the interconnections,” Moreno stated.
According to the study's results, the net benefits for the region — considering operational and infrastructure savings less the cost of the new lines — range between USD 1 billion and USD 5 billion per year .
“Furthermore, the annual cost of that investment is around $270 million, which means it is around $3 billion in terms of actual investment, not annualized,” explained the head of the study for OLACDE.