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Hydroelectric capacity to double in 10 years in Peru and to be the primary source of energy

Hydroelectric capacity to double in 10 years in Peru and to be the primary source of energy

Peru is clear that if it wants to continue growing and remain competitive, it needs to secure the power supply and support a sustainable energy policy. In fact, annual investment in electricity generation in the last four years accounted to 1,200 million euro. Its great potential is hydropower with a goal of 70,000 MW of installed capacity.

Peru has approved the National Energy Plan 2014-2025 that has the goal of doubling the production of hydropower in the next seven years in line with its sustainability aims. According to the deputy minister of Energy Edwin Quintanilla, “if the country is not competitive, investment will not flow, while energy security is important since a source could be very economical but insecure, and the country cannot take the risk of running out of power at anytime”.

Hydropower development

Investments in power generation totaled 1,200 million euro annually over the past four years, of which over 95% was private capital channeled through public auctions.

The country has great potential for hydropower, which is one of the most renewable in the world, and currently produces 3,300 MW with this technology, but the potential is estimated at 70,000 MW.

In the coming years about 3,500 MW will come on line, with the infrastructure required for its use being currently built. The current demand of the country is 6,000 MW but according to economic growth forecasts this demand is set to increase.

“In ten years we have to do what was done in the previous hundred years,” said the country’s Deputy Minister of Energy. Actually, additional 1,200 MW to be awarded during the first half of next year are being tendered through the Agency for Promotion of Private Investment (ProInversión) . “Thus we have planned to double the country’s hydroelectric capacity within the deadline,” he said.

Other technologies: natural gas

On the other hand, natural gas appears as the main competitor of hydropower, as Peru has three major resources: minerals, natural gas and renewable resources (mainly hydro).

Other goals of the National Energy Plan include doubling the production of natural gas in South Peruvian Pipeline (GSP) and the network of pipelines to be subsequently built, and reach 100% of the electricity coverage nationwide.

Peru’s energy future

As we already reported, Peru, the third largest country in South America, is in a privileged political and economic situation with growth rates of between 6% and 9% in the last three years. The increase in electricity demand expected for the next five years is 10% per year, boosted by the booming mining sector.

The mix of primary sources for electricity generation is approximately 60% from hydroelectric sources, more than 35% thermal (natural gas) and less than 5% of non-conventional renewable energy. According to the study of New Sustainable Energy Matrix for Peru (NUMES) with a horizon to 2040, the composition will be 42% thermal, hydro 39% and 17% RER.