Ranked as the fourth-largest electricity exporter in the world, after France, Germany and Canada, Paraguay is using this competitive advantage to solidify its economy
B R I E F I N G / BY Jorge Marengo Camacho
If one thing distinguishes Paraguay from the rest of the continent, it is the way it handles energy production and management. Paraguay itself produces four main sources of energy, all of which are renewable. The biggest of these is hydropwer, which accounts for 69.7% of the total, then fuelwood (19.5%), followed by green waste (e.g. biofuel) at 6.1%, then other types of biomass at 4.6%. Aside from this, the country imports petroleum products (diesel, motor fuels and liquid gas) to make up national energy needs.
Within the field of electricity generation, almost 99% of the country’s electricity is generated by hydropower stations, a figure that is way ahead of Brazil and Colombia, whose energy usages from hydropower are 69% and 67% respectively. Paraguay’s electricity production capacity is one of its great strengths. The Itapú Hydropower Station, a partnership with Brazil, is considered one of the dams with the greatest electricity generating capacity in the world, and the Yacyretá-Apipé Station, which is shared with Argentina, is estimated to have a capacity of 3,200MW, representing 22% of Argentina’s energy demand. In both cases, production is fairly distributed.
These two bi-national dams, not only cover total internal consumption, but the surplus can reach up to 88% of production. So it is no surprise that Paraguay is the world’s fourth largest exporter of electricity after France, Germany and Canada, with a capacity that reached 46,120kWh in 2013; while interestingly Brazil has the same world ranking as an importer of energy, creating a strong relationship between the two countries in the energy sector.
Like Brazil, Argentina is one of the top 25 importers of electricity. This gives Paraguay a competitive advantage, allowing it to fill its neighbours’ energy deficits (36,300GWh and 2,400GWh respectively) and offer more economic costs to a business sector that only consumes 1/30 of what it produces compared with its competitors.
Despite these encouraging figures, its virtually unique advances in the hydropower sector make the country vulnerable to climate change, as was the case in 2014, when drought caused the surplus destined for the Brazilian market to fall by 16.7% after 2013. Paraguay is also totally dependent on importing products derived from petrol, which represent 11% of its total imports, costing the country US$1.3 billion in 2014. In fact, 35% of these imports were supplied by the Brazilian government.
Another major challenge relates to electricity supply for Paraguayan homes. Although since 2012 98.2% of the country’s homes have electricity, in 1990 it was only available to 86% of families. Even today, most Paraguayans with no electricity supply are spread across the western region of the country (El Chaco), which in addition to being the largest area, is the least developed, due to its poor soil, ill-suited to agriculture, and to scarce water resources.
For this reason, wind power is seen as an alternative source of energy, which on a small scale could help communities in the region, provided they have the right conditions. It has already been noted that in El Chaco there are options for both small and large-scale wind power development, where the region has seen encouraging examples of farm owners buying wind generators for domestic use.
The commitment to solar energy in the region has also been positive, with different successful solar energy projects, including bringing electricity to Indigenous communities of El Chaco, which involved a donation by the Itapú Binational Company of 32 solar panel systems to 35 communities centres.
When it comes to the management of its precious and vital water supply, Paraguay’s challenge is how to preserve and distribute it. Even though South America has some of the greatest hydropower resources in the world (26% of the total), and despite Paraguay being the country in the region with the greatest hydropower potential, not everyone has access to drinking water. In addition, only 11% of Paraguay’s population has access to the sewage network.
The government was able to increase the drinking water supply from 64% of the population in 2014 to 71% in 2015. And the Sanitation and Drinking Water Programme for El Chaco and Medium-Sized Cities in Paraguay’s Eastern Region is also seeking to increase these figures. This programme has funds of US$88 million from the Spanish Fund for Technical Cooperation for Water and Sanitation in Latin America and the Caribbean, the IDB and the state.
In conclusion, in order for Paraguay’s energy system to continue successfully, it needs greater diversity from alternative energy sources and an increase in dam constructions. The advances achieved in the electricity supply to El Chaco with no transmission towers, not only offers an alternative for Paraguay, but for any other Latin American area that has a similar population distribution. On the other hand, the benefits of nuclear energy could also be explored. On 15th November 2015, Argentina signed agreements with China to build nuclear power stations. Despite not being a well-regarded energy source, it is believed by specialists to be clean.
Paraguay’s major capacity for hydropower is equivalent to 67 million litres of water per inhabitant. For this reason, production capacity from dams cannot be dismissed, despite concerns over climatic factors. Nevertheless, certain new guidelines should be followed. The construction of dams with an output below 30MW and a low environmental impact, offer a major alternative for Paraguay’s electricity supply.
1-Ayala Ernesto Baez, Executive Coordinator of the Itaipú Corporate University at : www.abc.com.py/edicion-impresa/suplementos/economico/paradojas-de-nuestro-consumo-energetico-1348454.html
2-These countries are ranked 24th and 27th in the world in terms of internal supply from dams. (www.cia.gov/library/publications/the-world-factbook/rankorder/2238rank.html#pa)
4-The National Electricity Administration (ANDE) owns the Acaray hydropower station with an output of 210 MW. ANDE also has low capacity thermal electricity generators totalling 6.1MW. Ministry for Public Works (www.ssme.gov.py/vmme/index.php?option=com_content&view=article&id=1216&Itemid=603)
8-World Bank: www.datos.bancomundial.org/indicator/EG.ELC.ACCS.ZS?display=map%3Fcid%3DEXT_BoletinES_W_EXT
9-Ministry for Public Works and communications: www.ssme.gov.py/vmme/index.php?option=com_content&view=article&id=1629&Itemid=766
10-This is without counting glaciers or permanent snow. UNESCO (www.unescoetxea.org/ext/manual_EDS/pdf/04_recursos_castellano.pdf)
13-Figure from the Ministry for Public Works and Communication
15-Ernesto Ayala Baez Executive Coordinator for the Itaipú Corporate University at: www.abc.com.py/edicion-impresa/suplementos/economico/proyecto-de-la-itaipu-como-aporte-al-sector-energetico-del-pais-1379492.html