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REN21 10 Years Report

31 01 Wind power has experienced the fastest growth in recent years, with Brazil and Mexico leading the way. Generation costs have fallen rapidly in large part due to the entry of more efficient designs and larger tower capacities. Since 2004, the hydro- power sector in the region has matured considerably. In Central America, the need for a diversified electricity mix to reduce vul- nerability to a changing hydrological profile is driving interest to invest in other abundant renewable energy resources. In Brazil, hydropower expansion is expected to become increasingly constrained by environmental sensitivity and the remoteness of much of the remaining water resource. However big hydropower projects continue to be developed; Argentina in particular has plans for some big projects; smaller scaled projects are planned in Peru and Urgugay. Geothermal remains a viable resource that has not been fully tapped. Mexico is currently the world’s fifth largest producer of geothermal electricity with almost 1 GW of installed capac- ity. Collectively Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua have almost 500 MW of installed capacity. There have been no geothermal projects developed to date in South America, although Argentina is planning a 100 MW plant and Colombia, Ecuador and Panama are actively exploring develop- ing this resource. n MILESTONES OF THE PAST DECADE The public sector call for new, grid-connected renewable capacity was a milestone in the region. Funding provided by the Brazilian development bank (BNDES) and the Interamerican Development Bank (IADB) coupled with some investment from local and national banks (through the issuing of bonds) helped spur grid integration of renewables across the region. National government commitment to renewables first, through the development of FITs in early 2000s, followed by targets led to increased renewable energy capacity in Argentina, Brazil, Chile, Peru and to a lesser degree, in Uruguay. n MAIN CHALLENGES FOR RENEWABLES Increasing interest in renewable energy in the Latin America region is reflected in ambitious targets and policy support, which have in turn led to rapidly growing investments in renewables, beyond the traditional hydropower sector. By early 2014, at least 23 countries in the region had renewable energy policies, and at least 23 had renewable energy targets, mostly for electricity generation. However to-date, differences in electricity market structures and regulations have constrained efforts to integrate electricity markets regionally; a lack of transmission infra- structure has also delayed the development of some projects. Increased cooperation and sharing of experience are needed to help support the penetration of renewable energy technologies in the region. n GENERAL OVERVIEW There has been a substantial shift in the interest in and deploy- ment of renewable energy in the MENA region in the last five years. Historically, renewables have played a minor role in the region due to its abundance of low-cost and typically subsidized oil and gas. However, as fossil-fuel prices have skyrocketed, the region’s net oil and gas importing countries (NOGICs) have turned to renewables to reduce energy costs and increase energy secu- rity. Significantly, net oil and gas exporting countries (NOGECs) now also have a strong business case for renewables. Greater use of renewables would free up oil and gas supplies for export, which would otherwise be sold at submarket rates domestically. As a result, since 2008 modern renewable electricity produc- tion has grown at a much faster rate than conventional sources. Tellingly, the six Gulf Cooperation Council countries alone have announced over 60 GW of solar, wind, geothermal, and waste- to-energy projects. The MENA region has accordingly also seen a rapid evolution of renewable energy markets and policy frame- works – a trend that is likely to intensify in the foreseeable future. n MAIN DRIVERS FOR RENEWABLES Energy costs and security concerns have been the main driver for the expansion into renewable energy in the MENA region. Oil and gas prices have reached unprecedented highs, while renew- able energy costs have decreased significantly. For countries that burn oil for power, renewables are substantially cheaper – and can allow increases in lucrative oil exports. This is all the more important owing to the region’s exponential growth in energy demand. Population increases, urbanisation trends, and economic progress have led to high exposure to fossil fuel

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