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Why does Peru not prioritise renewable energy, including geothermal energy?

Lima, Peru (Source: Flickr, CC, By: M M)
Alexander Richter 23 Mar 2018

Without changes to its legislatory and policy framework, including guaranteeing favourable prices for renewable energy and in particular base-load geothermal energy, Peru is far from its renewable energy targets or any of its peers in the region.

A recent article in Peruvian papers, it is reported that currently only 2.7% of energy comes from renewable energy sources. A greater diversification will be imperative for 2021, otherwise, economy and environment would be gravely effected.

Chile , Colombia and Ecuador project that by 2025, 20% of their energy matrix should be based on renewable energy technologies (wind, solar, geothermal, among others). Meanwhile, Peru maintains a more humble goal for the next five years. The country plans with 5%; a number that, however, does not seem realistic either. At the end of 2017, only 2.7% comes from renewables, according to the Peruvian Society of Renewable Energies (SPR).

“We are one of the countries with the greatest potential to develop this type of energy, but we are not taking advantage of it. We have a highly polluting fossil fuel system that we have prioritized for years, “says Juan Coronado, president of the SPR .

In this context, the profitability of a clean energy project is currently not guaranteed, says Día1 Pedro Lerner, general manager of Celepsa, a company that is conducting studies for a wind power plant and another solar power plant.

“It is difficult to compete with the gas-based generation, which has a low cost and a market structure with favorable regulation,” says the vice president of Peru 2021 .

Given this situation, both the SPR and Enel Green Power Peru (EGPP), one of the main players in the country’s electricity sector, agree that starting in 2021, Peru will necessarily require new sources of energy generation.

“The demand for energy will increase considerably. If we do not diversify the sources, we will have to use our oil reserves, which is highly polluting and also has a high price, “says Coronado.

With 68 million tons of CO2 produced annually, Peru ranks 50th among the 220 countries that emit the most particles, according to the Global Carbon Atlas . In South America, Ecuador (66), Bolivia (87), Uruguay (116) and Paraguay (124), are located in a healthier position within this list.

Enel Green Power participated in the fourth RER renewable energy auction, winning the concession for three renewable generation projects: solar, wind and hydraulic, with an investment of US $ 400 million.

To promote the use of non-conventional energies in Peru,  EGPP indicates that the recognition of firm power (reliability indicator for different types of energy) will allow them to compete on equal terms with other technologies, than the global trend of decreasing prices for these technologies is consolidated in the country, and these benefits, in price and quality, “are transferred to the final customers”.

To inspire action around the issues of sustainability and equity that require greater attention in Peru, the UN , Peru 2021 , KPMG and El Comercio launched the Peru initiative for Sustainable Development Goals (pods.pe), which seeks to make known the 2030 Agenda and the 17 objectives that structure it, among them, reaching a country with an equal situation for women and men.

For geothermal energy the future looks rather grim as well. Without the right legislatory and policy framework, big ambitions by the country and the only remaining geothermal developer, EPC, are on hold. The key hurdle seems to be a focus on auctions for renewable energy bases solely on price, which does not provide any bonus or incentive for baseload-capacity geothermal energy.

Source: El Comerico