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The purpose of this work is to present the difficulties of the superstructure when related to EI (Energy Integration) process in South America. The methodology aims to give emphasis to related projects within a binational and multinational scope. Methodologically there is the consideration of deterministic indicators, such as: project costs, installed capacities, financing sectors and politics strategy. These results in quantitative evidences that less developed countries from Latin America (LA) are precisely the ones that consume less electric power per capita and that have large reserves of energy resources, available to be commercialized with countries that have high demands and lack of reserves. Results also demonstrate that EI carries factors of development (national and regional) that ensure supply, reliability and efficiency in this region, which minimizes the dependency for only one energy source and reduces store costs. A conclusive element refers to relevant economic gains for countries that commercialize their energy resources or electricity surplus, which includes the possibility of development of other structural areas. Once established the region’s physical integration, the enhancement of trade, political, social and cultural relations between their members are greatly expanded.
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Journal of Business and Economics, ISSN 2155-7950, USA
January 2016, Volume 7, No. 1, pp. 21-43
DOI: 10.15341/jbe(2155-7950)/01.07.2015/003
© Academic Star Publishing Company, 2016
http://www.academicstar.us
21
Analysis of Energy Integration and the Transboundary
Superstructure in South America
Miguel Edgar Morales Udaeta, Vinícius Oliveira da Silva, Luiz Claudio Ribeiro Galvão, Fernanda Neri de Souza
(Energy Group of the Electric Energy and Automation Engineering Department,
Polytechnic School, University of São Paulo, Brazil)
Abstract: The purpose of this work is to present the difficulties of the superstructure when related to EI
(Energy Integration) process in South America. The methodology aims to give emphasis to related projects within
a binational and multinational scope. Methodologically there is the consideration of deterministic indicators, such
as: project costs, installed capacities, financing sectors and politics strategy. These results in quantitative
evidences that less developed countries from Latin America (LA) are precisely the ones that consume less electric
power per capita and that have large reserves of energy resources, available to be commercialized with countries
that have high demands and lack of reserves. Results also demonstrate that EI carries factors of development
(national and regional) that ensure supply, reliability and efficiency in this region, which minimizes the
dependency for only one energy source and reduces store costs. A conclusive element refers to relevant economic
gains for countries that commercialize their energy resources or electricity surplus, which includes the possibility
of development of other structural areas. Once established the region’s physical integration, the enhancement of
trade, political, social and cultural relations between their members are greatly expanded.
Key words: energy integration; transboundary projects; energy planning; South America; integrated resource
planning; supranational bodies
JEL codes: F020, O210
1. Introduction
South America (SA), see Figure 1, is a subcontinent that comprehends the southern portion of America. Its
surface corresponds to 17.819.100 km², representing 13.7% of Earth’s surface. Its natural boundaries are the
Caribbean Sea to the north; Atlantic Ocean to the east; northeast, southeast and Pacific Ocean to the west. It
concentrates a population of approximately 407 million inhabitants, 6% of world population, which 84% lives in
urban areas and 16% in rural areas. It has a population density of 22.8 inhabitants per km², Gross Domestic
Product (GDP) of 4.368 billion (currently US$), about 6% of world GDP (WDI, 2014) and Human Development
Index (HDI) of 0.740, see Table 1, which, according to UN, is a high human development index (HDR, 2014).
Miguel Edgar Morales Udaeta, Ph.D., GEPEA/EPUSP, Energy Group of the Electric Energy and Automation Engineering
Department, Polytechnic School, University of São Paulo; research areas/interests: energy (renewal & no-renewal); energy planning;
energy systems; sustainable energy consumption; MDL and sustainable development. E-mail: udaeta@pea.usp.br.
Analysis of Energy Integration and the Transboundary Superstructure in South America
22
Figure 1 South American Projection
SA has abundant natural resources but still presents serious socioeconomic problems. Since the beginning of
its colonization, the continent has served as raw material supplier, at first for its metropolis and currently for
developed countries and China, staying at the sideline of technological and social development.
The economy is concentrated in beneficiation of agricultural products, in production of consumer goods,
mining, steel mill, extraction and petroleum refining.
Regarding the energy sector, SA has big petroleum reserves, with 322.4 billion of bbl, highlighting
Venezuela with 92% from the total, and natural gas reserves, with 7,097 Gm³, highlighting Venezuela and Bolivia
(Olade, 2011). Besides that, SA has the biggest water system in the world, in which the mainly basins are the
Amazon, Orinoco and Plata systems. These three systems, together, drain an area of 9,583 MM km² (54% of SA
territory), and big lakes like Titicaca and Poopó, Andes region, and Maracaibo lake, in Venezuela. This
characteristic ensures this region a great hydroelectric potential (583 GW), which only 25% (144 GW) of the total
is used nowadays (IEA, 2012), see Figures 2-4.
Table 1 Countries and Dependencies in South America
Country Area km² Population (2013) GDP (x10³ current US$ 2013) HDI (2013)
Argentina 2,791.810 41,446.246 611.755 0.808
Bolivia 1,098.581 10,671.200 30.601 0.667
Brazil 8,514.877 200,361.925 2,245.673 0.744
Chile 756.950 17,619.708 277.199 0.822
Colombia 1,141.748 48,321.405 378.148 0.711
Equator 256.370 15,737.878 90.023 0.711
Guyana 214.970 799.613 3.076 0.638
French Guyana¹ 86.504 209.000 - -
Paraguay 406.750 6,802.295 29.949 0.676
Peru 1,285.220 30,375.603 202.296 0.737
Suriname 163.270 539.276 5.231 0.705
Uruguay 176.220 3,407.062 55.708 0.790
Venezuela 916.445 30,405.207 438.284 0.764
AS 17,809.715 406,696.418 4,367.942 0.740
World 129,733.917 7,124,543.962 74,909.811 0.702
SA/W Rel 13.7% 5.7% 5.8% -
Note: ¹Territory entirely integrated to France
Source: own elaboration, data from WDI, 2014, HDR, 2014.
Analysis of Energy Integration and the Transboundary Superstructure in South America
23
In the current context of increased demand for mineral and energy resources in Brazil and SA, caused by
economic growth and expanded access to electricity by poorest and geographically isolated populations, which,
economically, expand the need for energy and raw material for companies to extract and process their products
and, socially, improve people’s lives by adding lighting, heat and transportation. So, it is inherent the need of
energetically integrating the region, since lots of these resources are exhaustible and not distributed in a
homogeneous way in that space. Energy planning becomes important in a way to guarantee security and energy
efficiency, in a long term, in the whole area.
Figure 2 Distribution of SA Petroleum Reserves (Olade, 2011)
Figure 3 Distribution of SA Natural Gas Reserves (Olade, 2011)
Figure 4 South American Hydroelectric Potential (Olade, 2011)
In EI it is necessary to discuss and understand specific and regional needs of the nations, as well as diplomatic
history between them, because the current political conjuncture of SA overlaps its economics facilities, since energy
is one of the foundations of economic integration in the globalized world. Therefore, EI aims to determine what the
Analysis of Energy Integration and the Transboundary Superstructure in South America
24
energy sector, characteristic of each country, can offer to the process of social and economic development in
national policies and regional integration scope.
Within Latin America (LA) context, the dynamics of SA integration will be presented with more emphasis
since it is the study focus and many times these relations will occur with Central America and North America
countries, because they have historical, political, economic and social similarities.
2. Methodology
This work consists in the analysis of SA integration, through bibliographic and historic survey of bilateral and
regional agreements, identifying:
Main involved agents (public and private);
Supranational Organisms;
Existing, implanted and planned integrations.
From this survey, analyze EI studies and projects in South America, considering the kind of project, involved
countries, funding source, investment amount and implantation area, and, thus, identify the future perspective of SA
integration.
The projects selection goes after the following criteria:
(1) Projects linked to IIRSA (Initiative for the Integration of the Regional Infrastructure of South America);
(2) Having the purpose of EI;
(3) Binational or Multinational;
(4) Having physical infrastructure of electricity generation or transmission;
(5) Being concluded or in an execution phase.
3. Supranational actors involved in South America Integration
Throughout history several regional organisms in SA were suggested, at first for defense and arbitration
cooperation of external policies, like the ABC pact 1915, formed by Argentina, Brazil and Chile, with the aim of
minimizing United States’ influence at the region and establishing consultation mechanisms. Posteriorly, these
agreements had the feature of promoting trades and regional production and, after that, of South America
integration.
In Latin America, nowadays, there are several supranational organisms linked to regional integration, like
Andean Community of Nations (CAN) and Southern Commom Market (Mercosur), which are small regional blocs
formed, mainly, by Andean countries and Southern countries, respectively. There are even bigger blocs, like Union
of South American Nations (UNASUR) and Latin American Integration Association (ALADI), the biggest bloc in
LA, formed by thirteen countries. In truth, all blocs aim internal and regional development of their societies.
Regarding EI process, as well as the regional integration, there are several supranational organisms, like
ARPEL, ECLAC (United Nations Economic Commission for Latin America and the Caribbean), CIER (in Spanish
Comisión de Integración Energética Regional), OLADE (Latin American Energy Organization) and IIRSA. These
organisms have the role of contributing to the integration process as a whole, since they can represent a support in
regional countries decision making through studies, debates promotion, standards setting, regulatory framework and
information handling, thus ensuring energy markets integration with the purpose of achieving efficiency in
resources utilization, infrastructure functioning of transportation network, regulatory and contractual framework.
Analysis of Energy Integration and the Transboundary Superstructure in South America
25
Establishment and good functioning of these three assumptions are extremely important, since petroleum and
natural gas reserves, as well as watersheds are not distributed uniformly, hydrological regimes between the north
and south of the continent are complementary. Therefore, common regulatory framework establishments between
all the areas guarantee a good functioning of all energy chain, enhancing resources and energy flow and favoring all
integration chain.
EI in LA occurs through uni-bilateral investments between countries of the region, like the cases of binational
hydroelectric power plants case, gas pipeline construction connecting two or more countries case or simply energy
exportation from one country to another, because it is usual an area of the country having a specific energy resource,
but not funds to develop an energy generation and/or transmission project. On the other hand, there are countries
that need energy and have capital to invest, but that have no energy reserves to explore, so they need the surplus of
their neighbors. Because of this complexity, several agents, in all dimensions, are involved in negotiations, like
political (national and supranational states) agents, economical (banks and development agencies) agents,
companies (public, private, national and multinational) and civil society.
3.1 Latin American Regional Blocs
(a) Andean Community of Nations (CAN)
CAN is a South American economic bloc formed by Bolivia, Colombia, Equator and Peru. Chile left the bloc
in 1977 due to political issues linked to Augusto Pinochet dictatorial period and Venezuela left it in 2006 due to an
agreement firmed by the bloc and the USA without the presence of Bolivia and Venezuela, which changed the 266
article about the free trade in medicines. One month after Venezuela had left the bloc, Chile was reincorporated as
an associate member.
The area has big reserves of hydrocarbon, petroleum and natural gas, besides a huge and underexplored
hydroelectric potential. Countries like Venezuela, Equator and Colombia, being the first two members of OPEC
(Organization of the Petroleum Exporting Countries), have big petroleum reserves. Regarding natural gas, there is
Bolivia and, once again, Venezuela with big reserves. This factor permits these countries to be big hydrocarbon
suppliers in the area, since their productions surpass the domestic consumption and let the excess of their reserves to
be exported. Argentina, Brazil, Chile and Peru are big regional importers of these hydrocarbons, highlighting Chile,
for it demands lots of energy quantity and has small reserves. Such dependence makes Chile search for a bigger
stimulation of regional interconnections, focusing on them with Colombia to access lines from Central America
region (ME, 2012).
Regarding the electrical interconnections, CAN has the biggest advancement between SA blocs, which,
through the Decision n°536, adopts the general framework for sub regional interconnection of electrical systems and
intercommunity exchange of electricity, ensuring legal and regulatory conditions of electricity commercial
transactions between member countries and leading harmonization and utilization of energy resources of the region
(OLADE, 2010). Despite the big advance in regional context of SA, the bloc was suspended due to internal political
factors of CAN members.
(b) Southern Common Market (Mercosur)
Mercosur, see Figure 5, is a customs union, i.e., a free trade zone formed by five countries of SA, Argentina,
Brazil, Uruguay and Paraguay. The last one returned to the bloc after April 2013 elections, after its suspension due
to the coup d’état that toppled the president Fernando Lugo in June 2012. Venezuela was the last country to join the
bloc, in July 2012, which occurred right after Paraguay been suspended, for this country had vetoed Venezuela’s
admission. Bolivia is in accession process as a full state and integrated to the bloc.
Analysis of Energy Integration and the Transboundary Superstructure in South America
26
Beside those five countries, the bloc has associated members like Chile, Colombia, Equator, Guiana, Peru and
Suriname. Chile is currently in a process to become a full member, but before it the country is in diplomatical
discussions on territorial problems with Argentina.
Mercosur is seen as a weapon against the American influence, because it has a large sales and diplomatic force
in the region. It is easy to see its extension when analyzing numbers: in 2011, Brazil had exported US$ 256.04
billion, of which US$ 27.9 billion (with a balance of U$8.5 billion) were exported only to Mercosur (MDIC, 2012).
Besides free trade agreements between members and associated countries, Mercosur has agreements with
Israel and Egypt.
The big market asymmetry has been causing misunderstandings inside the bloc. The Brazilian GDP
representing 63% of bloc’s GDP, this hampers commercial relationships and the creation of a single currency for the
bloc, among other issues. Several misunderstandings have been happening along the bloc’s history, for example,
Paraguay and Uruguay claiming economic concessions since commercial exchange in the bloc were twenty times
lower than the one conducted by Argentina.
Brazil is the leading economy of the bloc, which has been causing some friction and diplomatic struggle
between its members, for every year this country has a surplus trade when comparing to the other member countries.
Brazil-Uruguay: In 2007, Brazil had exported to Uruguay US$ 1.5 billion; products were diesel oil, cars, auto
parts and cellphones. On the other hand, Uruguay had exported U$ 818 million and the products were agricultural
commodities and plastic bottles.
Brazil-Argentina: In 2007, Brazil had exported US$ 14.7 billion to Argentina; products were white line, cars,
auto parts and cellphones. On the other hand, Argentina had exported U$ 9.55 billion and the products were
agricultural commodities (mainly wheat) and naphtha.
Figure 5 Mercosur Countries (Mercosul, 2014)
Brazil-Venezuela: In 2007, exports reached US$ 4.96 billion and Brazil had the surplus of US$ 3 billion.
Brazilian exports to Venezuela are basically manufactured products, chicken meat and sugar. Products that lead the
Brazilian importation are 28% jet fuel, 23% petrochemical naphthas and 11% diesel oil.
Analysis of Energy Integration and the Transboundary Superstructure in South America
27
Brazil-Paraguay: the commercial unbalance between these two countries are even bigger, with exports
reaching US$ 1.92 billion and Brazil with a surplus higher than US$ 1 billion. Brazilian exports are based on diesel
oil, fertilizers, tires and charge cars. Paraguay exports agricultural commodities as wheat, corn, cotton and soy. In
this context, Itaipu’s energy is not recorded, since the energy purchase is not linked to Mercosur agreements (Mdic,
2012).
Bloc’s EI started with resolution N32/98, which stimulates the parts to extend the electricity exchange in order
to complement their energy resources, optimize the supply security, realocate energy surplus and rationalize the
installed capacity of its members. This resolution did not make any progress, for it was beneath the ANC integration,
normative number 536.
(c) Union of South American Nations (UNASUR)
UNASUR is the intergovernmental union between Mercosur and CAN. This union is part of the South
American process integration and is formed by all independent countries of South America plus Mexico and
Panama as observer countries, see Figure 6.
The integration of these two blocs was signed in 2008 with UNASUR Constitutive Treaty. The bloc intends to
structure the community in a European Union way, i.e., adopt unique passports, parliament and currency.
The integration mark is based (Unasul, 2010) on common market and elimination of rates for products
considered non-sensitive until 2014 and for sensitive products until 2019, in infrastructure cooperation through
IIRSA (Initiative for the Integration of the Regional Infrastructure of South America), a program that aims to
promote the South American integration through physical integration with the modernization of transportation,
energy and telecommunication infrastructure with estimated investments of US$ 38 billion. Financing agents of this
program are Inter-American Development Bank (IDB), Development Bank of Latin America (CAF), The Brazilian
Development Bank (BNDES) and Financing Fund for the Development of the Rio de la Plata Basin (FONPLATA).
Bloc’s monetary policy is ruled by South Bank, created by the bloc itself, and one of its goals is to establish a
single currency. Defense policy includes the creation of a military integration between members of the bloc as a way
of protecting the area, as well as creating an arms industry exchange of these countries. The bloc is committed to
democracy through defense mechanisms of member countries against coups to the civil power legitimately
constituted. In occurrence of such violations, the bloc provides political and diplomatic sanctions as suspension of
the right to participate in UNASUR and partial or total closure of land borders of the state that caused the conflict.
The bloc provides free circulation of people, ensuring freedom to member countries citizens to stay until 90
days with the presentation of nothing but the identity card.
Obstacles in the bloc consolidation are due to individuality and rivalry between some countries. Argentina
suffers from the loss of regional power to Brazil due to aggravation of its economic crisis. Brazil, on the other hand,
has increased its partnerships with neighbor countries due to commercial dynamics practiced in recent years by
current government that aim to reduce economic dependence of the USA, searching for new partners and signing
new agreements with old partners. Chile has some political differences with Argentina, Bolivia and Peru due to past
wars that resulted in a loss of territory for Argentina, take of Bolivia and Peru territories and, more recently, due to
gas crisis between Argentina and Chile - thanks to cancellation of natural gas supply by Argentina that needed it for
intern consumption. Besides that, there is a big political problem between Colombia and Venezuela due to
Colombia’s military alliance with USA (“Colombia Plan”) to fight drug traffic and to disrupt the country guerrilla.
In the last years, this caused some diplomatic dispute due to Colombian trops invasion of Venezuelan territory to
fight the Revolutionary Armed Forces of Colombia (FARC).
Analysis of Energy Integration and the Transboundary Superstructure in South America
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Figure 6 UNASUR Member States (UNASUL, 2012)
(d) Latin American Integration Association (LAIA)
LAIA, the biggest Latin American bloc, is an intergovernmental organism with head office in Montevideo,
Uruguay, that aims the promotion of Latin American region integration and the guarantee of the social and
economic development of its members (ALADI, 2012).
Initially, LAIA was called LAAFT, Latin American Association of Free Trade, which was an unsuccessful
attempt of Latin American integration in the 60’s.
The first members were Argentina, Brazil, Chile, Mexico, Paraguay, Peru and Uruguay. Already in the 70’s,
LAAFT expanded with new members adhesion: Bolivia, Colombia, Equator and Venezuela. In 1980, LAAFT
became LAIA; in 1999, Cuba affiliated and, in 2012, Panama affiliated, totalizing thirteen member countries, see
Figure 7.
Inside the vision of integration process, the bloc provides gradual elimination of obstacles to reciprocal trade
from member countries, impulsion of solidarity bonds and cooperation between Latin American people, promotion
of economic and social development of the region in a harmonious and balanced way to ensure a better life level for
its people, renovation of Latin American integration process and establishment of mechanisms applicable to
regional reality, creation of an area of economic preferences that has as an ultimate goal the establishment of Latin
America common market through three mechanisms: regional tariff preferences applied to products originated in
the member countries against tariffs in force for third countries, agreements of regional range common to all
member countries and agreements of partial range with the participation of two or more countries from the region.
Analysis of Energy Integration and the Transboundary Superstructure in South America
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Figure 7 LAIA Member Countries
Bloc’s agreements cover various economic, social and environmental niches, such as: trade promotion,
economic complementation, agricultural trade, financial, tax, customs and health cooperation, environment
preservation, scientific and technological cooperation, tourism promotion and technical standards.
3.2 Economic Agents Linked to Latin American Integration
Economic actors in LA and SA act like economic enablers of infrastructure implantation of region integration,
since these works are expensive, making projects not viable for economically smaller countries in the region. Main
economic agents that operate in the area are public entities of its countries or blocs, as BNDES, FONPLATA and
CAF, or international agents as IDB and World Bank (WB).
(a) Banco del Sur
It’s a monetary fund linked to UNASUR and developed to lend money to social and infrastructure programs of
nations from South America. This bank is an alternative to IMF, WB and IDB, because they have a bad image
among the region countries. They performed loans to these countries and contracted debts to develop projects linked
exclusively to multinational companies.
This bank creation intends to cultivate a bigger integration between UNASUR countries, helping companies
and member states to borrow money to develop projects without having to be victims of perverse conditions of
international banks. Besides that, of course, the intention is also to become the central bank in case UNASUR
integration comes true.
(b) Development Bank of Latin America (CAF)
CAF is a financial organism that encourages and foments the Andean region integration. It is an Andean
foment bank founded in 1968 after Constitutive Agreement signature, giving the entity the role of a multilateral
bank that promotes development and Andean integration, but only in 1970 its operations were formally started.
Nowadays, CAF is formed by 18 countries from Latin America, Caribbean and Europe, see Table 2, in addition
to 14 private banks from Andean region. Its investments are based by credit operations, aids and support in financial
and technical structure of projects from LA public and private sector with investments in infrastructure area, social
development, environment, public policy, research, financial and corporate sector.
Analysis of Energy Integration and the Transboundary Superstructure in South America
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Table 2 CAF Member Countries (CAF, 2012)
Country Member / Stocks
Argentina 2011 / 6.9% (U$ 643 MM)
Bolivia Founder 1970 / 6,1% (U$ 511 MM)
Brazil 2006 / 6.3% (U$ 907 MM)
Chile 2009 / 0.9%
Colombia Founder 1970 / 6.2% (U$ 2.05 bi)
Costa Rica 2002 / 0.5%
Equator Founder 1970 / 6.2% (U$ 873 MM)
Spain 2002 / 2.5%
Jamaica 1999 / 0.03%
Mexico 1990 / 0.8%
Panama 1997 / 1.2% (U$ 198 MM)
Paraguay 1997 / 0.5% (U$ 199 MM)
Peru Founder 1970 / 21.6% (U$ 2,29 bi)
Portugal 2009
Dominican Republic 2007 / 0.9%
Trinidad and Tobago 1994 / 0.1%
Uruguay 2001 / 2.1% (U$ 241.2 MM)
Venezuela Founder 1970 / 21.6% (U$ 627 MM)
(c) Financing Fund for the Development of the Rio de la Plata Basin (FONPLATA)
FONPLATA was founded in 1974 by its current members, Argentina, Bolivia, Brazil, Paraguay and Uruguay,
that joined by the need to increase efforts and reach development and integration among them. FONPLATA defrays
studies, projects and programs executions that develop physical integration of Rio de la Plata Basin and its
influence area. This way, the fund acts in different programs in the region, as intergovernmental committee
Paraguay-Parana waterway and IIRSA. The capital structure of member countries is presented in Table 3.
Fund investments stand out with infrastructure works of social welfare, as programs against floods, warning
and disaster preparedness, urban infrastructure, public housing, besides road, shipping and rain transport
infrastructure and studies about Guarani aquifer and Paraguay-Parana waterway.
Table 3 FONPLATA Capital Structure in US$ (FONPLATA, 2010)
Countries Integrated capital Executable capital Capital total Participation %
Argentina 149,743.812 13,334.000 163,077.812 33
Bolivia 49,904.126 4,444.000 54,348.126 11
Brazil 149,743.812 13,334.000 163,077.812 33
Paraguay 49,904.126 4,444.000 54,348.126 11
Uruguay 49,904.126 4,444.000 54,348.126 11
Total 449,200.000 40,000.000 489,200.000 1000
(d) The Brazilian Development Bank (BNDES)
BNDES is a Brazilian federal public company. Currently is the main instrument of long-term financing for
investments realization in all economic segments, covering a policy of social, regional and environmental
dimensions (BNDES, 2012).
Founded in 1952 to support agriculture, industry, infrastructure, commerce and services, nowadays it offers
conditions to micro, small and medium companies, besides owning lines of social investments directed to education,
Analysis of Energy Integration and the Transboundary Superstructure in South America
31
health, family agriculture, sanitation and urban transportation.
Financing is based on projects investments, purchasing of equipment and exports of goods and services. In
addition, the bank has a modality called non-reimbursable funding, that consists on making financial investments
without requiring refund, it is about social, cultural (teaching and research), environmental, scientific and
technological investments. The bank acts like a Brazilian company’s provider in projects inside Brazil or abroad, as
long as it is destined for Brazilian companies.
BNDES disbursed R$ 94.6 billion between January and September of 2012, an increase of 3% regarding the
same period in 2011. Industry and infrastructure were responsible, together, for 68% of total, highlighting paper and
cellulose, chemical, petrochemical, mechanics and transport material (BNDES, 2012).
Therefore, BNDES invests in organizations and individuals enterprises following criteria that prioritize
development with social inclusion, job and income creation and generating foreign exchange.
Figure 8 Evolution of BNDES Disbursement in R$ Billion (BNDES, 2012)
(e) Inter-American Development Bank (IDB)
IDB is a bank created in 1959 to finance development projects of Latin America and Caribbean countries. The
bank’s shareholder picture is formed by 48 countries, in which 26 are from Latin America and Caribbean and have
majority share.
Besides making loans, IDB provides donations, technical assistance and researches in the area. Due to its
shareholder base, IDB is able to borrow from international markets with competitive rates and transfer this benefit to
26 Latin American and Caribbean countries (BID, 2012).
Besides that, IDB has a fund to special operations (FSO), which provides subsidized financing for more
vulnerable member countries as: Bolivia, Guyana, Honduras and Nicaragua. Haiti receives donations from IDB
Donations Fund. Due to democratic criteria, Guatemala and Paraguay receive a smaller part from FSO financing,
because of the coup d’etat that these countries suffered. Traditionally, IDB finances projects in LA region, and since
its foundation it invested more than US$ 40 billion (McElhinny, 2008), but this participation has decreased due to
appearance of other financing agents in the region, as CAF and FONPLATA, and of national banks as BNDES. This
reduction reflects economic growth and fortification of countries from this area.
3.3 Actors Involved in Latin America Energy Integration
Just as political and economic actors, LA and SA have organisms directly linked to energy market. These
organisms aim to provide favorable market and regulation conditions to energy companies that desire to invest in the
region, in addition to conducting studies and to assist EI’s infrastructure implementation.
Analysis of Energy Integration and the Transboundary Superstructure in South America
32
(a) Regional Association of Oil, Gas and Biofuels Sector Companies in Latin America and Caribbean
(ARPEL)
ARPEL was created in 1965 and is formed by 35 companies and institutions from hydrocarbons sector that
operate in LA, holding more than 90% of region sector. It is an interactive forum for ideas, experiences and
knowledge exchange in order to identify issues that may affect the development of hydrocarbon industry, i.e., it is an
association developed to perform lobby with region governments.
ARPEL includes EI, environment, security and regulation as themes, elaborating proposals of its demands for
governments’ formal analysis. In 2003, ARPEL promoted a symposium that highlighted the importance of Regional
Organisms coordination and boosted the creation of EI Regional Forum. The second symposium was held in 2004
and it consolidated EI Permanent Regional Forum, with the participation of all organisms linked to EI of this region
(ARPEL, LAIA, OLADE, CIER, ECLAC), highlighting that none of these actors could be protagonist and their
contributions should be considered keys. However, the leadership of the integration process should be of
governments.
(b) United Nations Economic Commission for Latin America and the Caribbean (ECLAC)
ECLAC was created in 1948 by United Nations Economic and Social Council and it is one of five UN
commissions with head office in Santiago do Chile. This commission cooperates to collaborate and coordinate along
with other organisms, regional and sub regional, working in the energy sector of LA and offering advice to
governments in regulation (water and energy), electricity laws, hydrocarbons, natural gas, rational use of energy and
new and renewable sources. Posteriorly, its work expanded to Caribbean countries and it incorporated the goal of
promoting social and sustainable development. Currently, this commission monitors policies aimed at promoting
economic development of LA, advices actions directed to its promotion and contributes to strengthen and support
area countries relations and economic growth, between each other and with other world nations, considering the
social policy rule, treatment of environmental and demographic aspects, educational strategy, need of technical
progress to insert itself in a competitive way in the global context. It consolidates the stability of the region
economies (CEPAL, 2012).
(c) Latin American Energy Organization (OLADE)
OLADE was created in 1973, in the context of the international energy crisis of the 70’s, due to the big increase
in the oil barrel prices, strongly affecting LA and Caribbean countries, that lack energy policies; given the need to
face this crisis, OLADE initiated a political mobilization in this region, with the creation of that organization.
OLADE is formed by 27 member countries, twelve from South America (Argentina, Bolivia, Brazil, Chile,
Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay, and Venezuela), six from Caribbean (Barbados,
Cuba, Granada, Haiti, Jamaica, Trinidad and Tobago, and Dominican Republic), seven from Central America
(Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama), one from North America
(Mexico), and one participant country (Algeria). Algeria is a participant country because it is not on the Latin
America and Caribbean region, having access to the products and services provided by the organization, and being
allowed to show its voice, but not voting (OLADE, 2012), see Figure 8.
OLADE is a political and technically supportive organization, in which its member States take common efforts
to the EI of the region, always seeking sustainable development with advice and cooperation of all the members.
Analysis of Energy Integration and the Transboundary Superstructure in South America
33
(a) (b)
Figure 9 (a) Member countries and (b) participant country in the OLADE
(d) Comisión de Integración Energética Regional (CIER)
CIER was created in 1965 with the support of South American companies from the power sector. Currently, it
is a non-governmental organization that includes power companies and non-profit organizations united with the
bodies of the electricity sector of the member States. That commission is formed by 10 members (Argentina, Bolivia,
Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, Uruguay, Venezuela) and by the CECACIER (Regional CIERs
Committee to Central America and Caribbean) formed by Costa Rica, El Salvador, Guatemala, Dominican Republic
and Panama, totaling 263 companies related to the power sector. Moreover, it possesses an associated member, the
UNESA (Spanish association of electric industry). Each member country has a national committee formed by
representatives of electric companies from each country.
Currently, there are five areas that cover the electric power companies in the commission (generation,
transmission, distribution, commercialization, and corporate area).
The products and services the CIER provides are database, technical work, memorials and articles of the
commission events and electric bills, training courses, development projects, information and technology exchange,
but all connected to the electric industry. The projects developed by CIER are financed by the foundation and in
some cases are supported by WB, CAF and the European Community.
(e) South American Council of Infrastructure and Planning (COSIPLAN)/Initiative for Integration of Regional
Infrastructure in South America (IIRSA)
COSIPLAN is a UNASUR body created in 2009 during a presidential meeting of UNASUR, when it was
defined the substitution of the IIRSA Executive Direction Committee for a Council at ministry level. With this
measure, the member countries sought to give greater political support to the activities developed in the
infrastructure integration area, to ensure the necessary investments for the execution of priority projects defined in a
Strategic Action Plan for the next 10 years in the Priority Projects Calendar that functions as a promoter of regional
infrastructure integration, strategic for the South American development.
The COSIPLAN replaced IIRSA, designed as a forum for coordination and exchange of information about
infrastructure among the twelve countries of the region (Ministry of Planning, 2012).
IIRSA, in order to promote the development of transport, energy and communication infrastructure within the
regional context through intergovernmental actions, arises from the meeting of the twelve heads of state of South
America in 2000; at the time, joint initiatives were approved to boost the political, economic and social integration
process in the region, including the modernization of regional infrastructure, and the development of isolated
regions (MP, 2012).
The idea of its foundation stemmed from the Brazilian experience in territorial planning, known as Axis Study,
Analysis of Energy Integration and the Transboundary Superstructure in South America
34
conducted by the Ministry of Planning (MP) with BNDES in 2000, that planned the country from regions identified
by their economic inter-relationship.
IIRSA not only performs coordination mechanisms through strategic designs, but seeks to promote the
exchange of information between the governments involved to boost development. The initiative has certain
principles involving the approach between the countries that are based on open regionalism, contemplating the need
to minimize internal barriers to commerce, bottlenecks in infrastructure and regulatory systems and operation, in the
Integration and Development Axis (IDA) which are distributed on the South American space in multinational
groups that concentrate current and potential trade flows to promote the development of business and productive
chains, the economic, social, environmental and political-institutional sustainability (MP, 2012).
IDA is a special division of the South American territory organized into 10 axes (Andean, Amazon,
Peru-Brazil-Bolivia, Capricorn, Guyanese Shield, South Andean, Central Interoceanic, MERCOSUR-Chile,
Parana-Paraguay Waterway and South), see Figure 10.
Figure 10 Integration and Development Axis (IIRSA, 2012)
IIRSA, over ten years, and currently the COSIPLAN, developed important projects, with a portfolio of 579
projects, see Table 4, in study (23.5%), pre-running (28.8%), running (29.2%) and completed (18.5%), with an
approximate investment of US$ 163.069 billion (IIRSA, 2014). According to the latest report of COSIPLANs
projects portfolio (2013), the energy sector concentrated 59 projects, of which 27 (46% of the total) are aimed at
generating, representing 75% of the total investment, and 32 interconnections projects. These projects receive
investment especially from public/private partnerships (68% of total investments) followed by the public sector
(25%), see Table 5; this characteristic is due to the high value of the individual projects and the fact that they are
structuring, with market opening bias, creating conditions for businesses and society to have access to new regions
and can dispose their productions. Projects in the energy sector are mainly based on the construction of new
interconnections, 52.5% of the total projects and 25.1% of investments. Hydroelectric plants, because they are
characterized as large enterprises of electricity generation, hold 27.1% of the projects portfolio and 63.8% of
investments see Table 6.
Analysis of Energy Integration and the Transboundary Superstructure in South America
35
Table 4 Projects Portfolio of COSIPLAN (IIRSA,2014)
Year Number of projects Estimated investment (x10³ US$)
2004 335 37.425
2007 349 60.523
2008 514 69.000
2009 510 74.542
2010 524 96.119
2011 531 116.121
2012 544 130.139
2013 583 157.731
2014 579 163.069
Table 1 Characteristics of the Type of Financing (COSIPLAN, 2013)
Energy sector Projects Investment
Number % (MM US$) %
Private 7 12% 3.435 7%
Public 38 64% 12.871 25%
Public/ Private 14 24% 34.524 68%
Total 59 100% 50.830 100%
Table 2 Kinds of projects from Energy Sector (COSIPLAN, 2013)
Energy sector Projects Investment
Number % (MM US$) %
Generation 27 45.8% 37.965 74.7%
Hydropower 16 27.1% 32.418 63.8%
Thermoelectric 5 8.5% 2.476 4.9%
Nuclear 2 3.4% 1.740 3.4%
Other 4 6.8% 1.332 2.6%
Interconnections 32 54.2% 12.865 25.3%
New 31 52.5% 12.740 25.1%
Adaptation 1 1.7% 125 0.2%
Total 59 100% 50.830 100%
4. Electrical Integration in South America
Interconnections are physical unions, a set of equipment to link the power systems, allowing the exchange of
energy between the interconnected electrical systems through plants and transmission lines, containing equipment
such as control of substations (with or without transformation), voltage regulation equipment and frequency
converters.
Cross-border interconnections are no different from the internal transmission system of a country, such as the
National Interconnected System (SIN) in Brazil, see Figure 10, that due to its large size, ensures the
complementation of energy resources distributed throughout the country, improving security of supply to users
through access to a more efficient electrical service, by providing energy surpluses and use of installed capacity to
the neighboring countries. SIN, if replicated to the South America, would ensure the hydrothermal and hydro
geographic complementarity due to the dispersion of water basins and natural gas reserves in the region, in addition
to the non-simultaneity of maximum demands for hourly and seasonal difference of four time zones. For these
Analysis of Energy Integration and the Transboundary Superstructure in South America
36
interconnections to occur, it is necessary to grant authorizations, permits and concessions for the construction,
operation and exploration of interconnections that join the electrical systems of different countries. Ideally, the rules
would reach to facilitate free trade of electricity between power companies between countries, respecting the
technical and environmental regulatory standards as well as the principles of non-discrimination and reciprocity, to
ensure the support of the projects.
Currently, the distribution of cross-border interconnections in South America, see Figure 11, can be divided
into two regions: the Andean countries (Colombia, Ecuador, Peru and Venezuela), and MERCOSUR countries plus
Chile. Apart from these two regions, it is worth highlighting the interconnection between Brazil and Venezuela that
links Guri (Venezuela) to Boa Vista (Brazil). These interconnections provide the purchase and sale of energy,
improving of the use of generation resources, increase the reliability of electrical systems and, especially, enable the
promotion of infrastructure in economically in deficit countries.
Figure 11 SIN (ONS, 2014).
The interconnections of the Andean region are characterized by service on an emergency basis, mainly due to
network stability problems; in the MERCOSUR region, because it has large electrical links with large hydroelectric
binational power plants (Itaipu, Yacyreta and Salto Grande) and their lines of transmission, energy trading
operations are constant.
Analysis of Energy Integration and the Transboundary Superstructure in South America
37
Figure 12 Cross-border Interconnections in South America (CIER, 2010)
4.1 Underway Projects
According to the database COSIPLAN (2014), there are 12 EI projects in progress, totaling $27.327 billion, of
which three are consistent with the criteria established in the methodology, the others being primarily related to
plant electricity generation.
(a) Electrical Interconnection Ecuador-Peru
This implemented bi-national project is intended to carry out the electricity exchange synchronously to
harmonize regulations, ensure energy supply, and develop mechanisms to importation and exportation between
Ecuador and Peru through this construction, with 500 kV voltage level.
The type of funding is public, with the participation of the two countries through their national treasures;
studies on the interconnection were made by CELEC EP, electric corporation of Ecuador which covered all costs.
This structure will be part of the framework of the initiative of the Andean Electrical Interconnection System (AEIS)
(COSIPLAN, 2014).
(b) Electrical Interconnection Colombia-Venezuela
This bi-national scope project involves the construction of an electrical interconnection of 34.5/13.8 kV
between San Fernando de Atabapo in Venezuela until Inírida, Guainía department in Colombia.
This line will provide the electricity produced by the power plant of Inírida, Colombia, by offsetting the costs
generated by the supply of Venezuelan fuel for the domestic price of San Fernando de Atabapo, since the energy will
serve to feed this city (COSIPLAN, 2014).
(c) Electrical Interconnection Uruguay-Brazil
This ongoing project is a binational project to build an electricity interconnection line between Uruguay and
Brazil which aims to diversify the electricity trade as much uninterrupted as through firm contracts tied with
Argentina.
This project enables more export markets for any surplus of Uruguayan plants, and stops the Brazilian
secondary energy at times of surplus hydroelectric and thermal generation associated with unused plants. The
Analysis of Energy Integration and the Transboundary Superstructure in South America
38
holding companies of this line are the Brazilian companies Eletrobras and the Uruguayan ETE.
The type of funding is public with the amount of US$ 349 million, and the stakeholders are:
CAF, with US$ 30 million approved;
The National Treasury of the two countries, with US$236 million in progress;
FOCEM, fund tied to MERCOSUR, with approved US$ 83 million.
The project includes the construction of a 500 kV network; totaling 60 km from San Carlos, in Uruguay, until
the frequency conversion station, since the two countries operate with frequency of 50 (Uruguay) and 60 (Brazil) Hz,
and another network of 230 kV with 9 km to the substation President Medici in Brazil.
ELETROBRAS is responsible for the work and has received authorization from ANEEL to import and export
electricity through this line by Authorizing Resolution No. 2,280 / 2010.
The National Coordination (CN) of the project are the Ministry of Transport and Public Works (Uruguay) and
the Ministry of Planning (Brazil).
4.2 Completed Projects
According to the database of COSIPLAN (2014) of EI, we have completed 21 projects, totaling US$22.617
billion; only two of these projects are consistent with the criteria established in the methodology, since two of them
are dams already built, pre-formation of IIRSA (Itaipú and Yacyretá), and the third, because it is a pipeline
(Nor-Peruano) between Ecuador and Peru.
(a) Electrical Interconnection Project Colombia-Ecuador
The bi-national scope project to build a 230 kV transmission line between the substations Pasto (Colombia)
and Quito (Ecuador) came into operation in 2007. The project goal was to provide energy to Ecuador in times of
rationing and replace the generation of electricity from fossil fuels, and in the rainy season export power to
Colombia.
The line is 213 km long with an initial capacity of 200 MW; in 2009 energy exports to Ecuador totaled 1,076
GWh.
Project funding came from the National Treasury of both countries, providing US$ 45.400 million (IIRSA,
2012).
The export of electricity to Ecuador in 2009, even with water scarcity in Colombia, was 1,077 GWh, a figure
higher than the first two years of line operation, when there was no shortage of water.
The responsible for the project are the Ministry of Transport and Public Works (Colombia) and the National
Planning Department (Ecuador).
(b) Electrical Interconnection Project Colombia-Venezuela
The bi-national scope project consisted on the adequacy of the interconnection line Cuestecitas y El Corozo -
San Mateo, with 230kV.
Funding for this project was public, with the participation of national treasures of both countries, with invested
amount of US$ 125.2 million.
Exports to Venezuela through this interconnection amounted to 222.25 GWh in 2009; in 2010 there was no
exchange of energy because of water scarcity in the period; in 2012 ISAGEN, Colombian electric company, and
CORPOELEC, Venezuelan Electric Corporation, established a monthly supply contract of 30 GWh from Colombia
to Venezuela.
(c) 500 kV Transmission Line (Itaipu - Asuncion)
The bi-national scope project consisted of the construction of a line of electricity transmission between Brazil
Analysis of Energy Integration and the Transboundary Superstructure in South America
39
and Paraguay, to improve the quality of service and reliability of supply, correcting the low system voltage, and
reducing the high transmission technical losses, which reach 10% during peak hours.
Transmission lines are already operating at 85% capacity, and interconnection transformers Itaipu are already
operating on the edge since 2011.
The construction consisted in a transmission line of 500 kV from Itaipu to Villa Hayes, station area of Asuncion,
and the expansion of the Villa Hayes station. The additional transmission capacity will increase the exchange of
energy with Argentina through the 220kV interconnection. The system has a length of approximately 345 km.
The project financing was public and investments amounted to US$ 555 million distributed among (IIRSA,
2012):
The National Treasure of the two countries, with US$155 million in implementation;
FOCEM, with US$ 400 million running.
The completion of the project took place in 2013 and the responsible for the project are the Ministry of Public
Works and Communications (Paraguay) and the Ministry of Planning (Brazil).
4.3 Future Projects
In this context, we will cover construction projects for future hydroelectric facilities and transmission lines in
South America.
(a) Construction of Hydroelectric Plant Corpus Christi
The project aims to build a binational hydroelectric plant. This plant will be built in the Paraná River, the
natural border between Argentina and Paraguay. The estimated cost for this construction will be US$4.200 billion
and will be funded by the national treasure of the two countries.
The discussion of its construction dates back to the same period as the construction of Itaipu and Yacyreta, but
Paraguay and Argentina chose to carry forward the signing of the Treaty of Yacyretá and not of Corpus Christi,
because at the time that construction would cripple the Itaipu project. To reach a diplomatic agreement the three
countries signed a tripartite diplomatic agreement in 1979 (Oxilia, 2007).
Study completed in 1984 estimated that the installed capacity of the plant will be 4,608 MW generating annual
average of 20,100 GWh. This project added to Itaipú, Yacyretá and Itacorá-Itatí, will achieve a generation of energy
greater than 123,000 GWh/year. This project is a big step for MERCOSUR’s EI.
Until today the two countries are completing the basic studies and preparing the treaty for the execution of the
project. The environmental impact study has already been done.
(b) Hydroelectric Binational Garabi-Panambi - Argentina-Brazil
Hydroelectric plants Garabi and Panambi, see Figure 13, of binational level, aims to harness the potential of the
Uruguay River, with a total installed capacity of 2,200 MW at a cost of US$ 5,202 million.
The hydroelectric plant Garabi, has 1,152 MW of installed capacity and generation capacity of 5,970
GWh/year, with total investment of US$ 2,728 billion; Hydroelectric power plant Panambi, on the other hand, will
have 1.1048 MW of installed power generating capacity of 5,475 GWh/year, requiring investment of US$ 2,474
million. These two projects will be funded by the public sector of both countries, in which case the Brazilian side the
work is part of the GAP 2 (growth acceleration program) being financed by BNDES (COSIPLAN, 2014).
In November 2012, the governments of Argentina and Brazil showed the feasibility study schedule of
hydroelectric exploitations of Garabi and Panambi that began in 2013, and is expected to start operation in 2020
(Eletrobras, 2012).
Analysis of Energy Integration and the Transboundary Superstructure in South America
40
Figure 13 Hydroelectric Plants Garabi and Panambi (Eletrobras, 2012)
The project has the Joint Technical Committee (CTM), responsible for feasibility studies and basic designs,
environmental studies and social communication.
(c) Project Peru-Brazil
Currently the Brazilian government is studying the feasibility of building hydroelectric plants in seven
countries in South America: Argentina, Bolivia, Colombia, Guyana, Peru, Suriname and Venezuela. The plants
would generate about 12,000 MW and would be built by local contractors to supply both the domestic market of the
country as well as the Brazilian. Eletrobras will be responsible for the construction and financing would come from
BNDES.
Among the projects, six plants are in Peru: Inambari (2,000 MW), Sumabeni (1,740 MW), Paquitzapango
(2000 MW), Urubamba (940 MW), Vizcatán (750 MW) and Cuquipampa (800 MW); together these plants would
total approximately 9,000 MW of installed capacity (Eletrobras, 2009).
In 2010, the presidents of both countries signed an agreement for the construction of these plants with US$15
billion investment. However, Peru has canceled the provisional license of the Inambari consortium, earlier design,
due to protests in Puno department claiming that the plants would be more beneficial to Brazil than to Peru, since the
environmental cost would be borne only by Peru.
The Inambari power plant, in terms of power generation, will be the largest dam in Peru and the fifth largest in
Brazil, with a reservoir of 413 square kilometers. It is not yet set, but it is estimated that 80% of the energy produced
Analysis of Energy Integration and the Transboundary Superstructure in South America
41
will be exported to Brazil and much of the resources used for its construction would come from the BNDES.
This plant is strategic for Brazil, not only for its energy supplies, but to be upstream of the Madeira river,
damming water to promote the best hydroelectric utilization Jirau and Santo Antônio during periods of drought
(Furnas, 2010).
Companies involved in this building are: Odebrech Peru, and Andrade Gutierrez, OAS, Eletrobras, Eletrobras
Furnas.
(d) Other projects via Eletrobras (Brazil)
Eletrobras, a public company controlled by the Brazilian government operates in the generation, transmission
and distribution of electricity (Furnas, 2010).
This company is important in the EI scenario because holds half the capital of Itaipu Binational.
In the six countries cited in the text, Eletrobras studies (Eletrobras, 2012):
Bolivia: implementation of hydroelectric waterfall Hope with 800 MW and the Binational Guajará-Mirim
3,000 MW, with an estimated investment of US$ 5,000 million;
Guyana: feasibility of a plant with 1,500 MW, and be mapping the hydroelectric potential the country,
estimated at 8,000 MW;
Suriname, Venezuela, and Colombia: are still in studies on the hydroelectric potential.
The generation provided by energy produced in Guyana would be imported into Brazil to the state of Roraima,
to supply the state that uses mainly electric thermal fuel oil and imports from Venezuela. This state is an isolated
system, so it is not connected to the SIN.
5. Conclusions
After the various data provided, it was observed that the integration of South America will be a difficult task,
given that over the last 60 years various bodies of regional cooperation were created. These organizations held
numerous agreements and political, economic and social treaties as a means of integration of the region, and over
time many of these initiatives ended due to diplomatic problems or the annexation by larger supranational bodies.
UNASUR, the greatest organism in South America, has a great convergence among member countries, such as
Argentina, Brazil, Bolivia, Ecuador, Uruguay and Venezuela, protectionist countries in the bloc, as Chile and
Colombia are more aligned to the neoliberal line.
UNASUR, due to legacy and annexation of IIRSA, an institution that through technical work together with the
12 member countries has a portfolio of 579 integration projects for the region; it allowed the countries to discuss and
structure in a common language. On the one hand its technical nature can create such resources, on the other hand, it
cannot give sequence to the implementation of projects, despite the large inflow of encouragements agencies and
regional banks such as the IDB, CAF and BNDES for the preparation of projects, because it does not have financial
support for feasibility of the projects.
EI in the region, specifically in the implementation of binational hydroelectric, the negotiation process between
countries is very complex, because it touches on issues related to environmental impacts, sovereignty and funding.
Large binational plants were only built thanks to a convergence of political ideals present in South America between
the 60’s and the 80’s. These ideals approached countries as they were aligned with the US, which facilitated the
sources of financing (via WB and IDB), technical and diplomatic support. Another very important factor of the
season was the emergence of large public companies that took the lead of large projects, thus enabling the
Analysis of Energy Integration and the Transboundary Superstructure in South America
42
negotiations and borrowing.
Today, large EI projects related to hydropower belong to Eletrobras, as part of the international expansion plan
of the company, for the supply of electricity from the Southeast and isolated northern states of the country. Most
studies on potential energy and construction of transmission networks are being made in countries such as Suriname,
Venezuela, Bolivia and Peru, with planned capacity of over 20 GW.
The South America EI is an extremely important factor as it ensures energy security of the region. For countries
with limited access to loans and low domestic demand in the short and medium term, EI provides investment and
construction of the project, and in the long run makes possible the sale of energy to other countries in the region
and/or domestic consumption. In this matter, Brazil has a strong political and economic clout in the region, a fact
proven only with the analysis of the number of projects and investment in the project presented by the BNDES and
Eletrobras, and the trade surplus of the country in relation to neighboring countries.
There is quantitative evidence that the least developed countries in South America, with the lowest HDI, which
consume less electricity per capita, are precisely those that have large energy reserves. This feature allows the
marketing of its resources with the countries of the region with high energy demand and lack of reserves, thus
ensuring the reliable and efficient supply for energy consumers, reducing the dependence on a single energy source
and reducing supply costs. The economic gains for countries that sell their energy resources or their excess
electricity enable the development of other structural areas, and once established the physical integration in the
region, the enhancement of trade relations, political, social and cultural relations between its members are enlarged.
Therefore, the EI needs articulation of rules and congruent policies, such as agreements, frameworks and
regulations aimed at opening markets and supply assurance. This congruence appears with the creation of common
rules to the region’s countries, facilitating transactions and investment of state capital, private national and
multinational, through the reduction of differing interests among States and stakeholders.
Acknowledgements
To the graduate students of 2012 class in the discipline of “Energy Integration: Systemic Advanced Analysis
for Latin America (PEA 5899-EPUSP)” because some individual works content was considered for the manuscript
in its development. To Jaqueline Camara Ramos for the English translation.
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... area of economic integration, the creation of the Union of South American Nations (UNASUL), the Southern Common Market (MERCOSUL) and Andean Community of Nations (CAN), plus others bilateral and multilateral initiatives aimed to the use of shared energy resources (ES) or trade them (Reis, 2014;Udaeta, da Silva, Galvão & de Souza, 2016;de Abreu, 2015). ...
... In the last century it has been noticed an important increase of the energy projects on the SA, hugely associated with the Initiative for the Integration of Regional Infrastructure in South America (IIRSA) resulting in economic growth in the region, which in turn impacted on the increase of energy demand (Udaeta, da Silva, Galvão, & de Souza, 2016). Indeed, studies of the the World Energy Council (WEC) (WEC, 2004) and International Energy Agency (IEA) (IEA, 2010), proved that the energy demand (ENERDATA, 2012) of developing countries have increased due to the considerable growth of their economies (IMF, 2012), so much so that the title of the Human Development Report 2013 drawn up by United Nations Development Program (UNDP) was The Rise of the South: Human Progress in a Diverse World (UNDP, 2013). ...
... The access to ES involves different varieties of interests between countries that can be conflicting. Thus, a reasonable alternative, it is considered that policies aimed at energy integration (EI) can meet interests involved (Reis, 2014;Udaeta, da Silva, Galvão, & de Souza, 2016). ...
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p class="Abstract"> T he objective of this study is to evaluate the energy resources (ER) and the regulatory framework of the South American countries aiming at the sustainable development and to develop the South America Energy Integration (SAEI) in the long term focusing on structures such as transmission lines and pipelines. The methodology is based on the IERP (Integrated Energy-Resources Planning) and the analysis of the EI existing in South America. As result, the regulatory assessment provided evidence that the current structure is already in place with binational hydroelectric plants and transnational pipelines that promote energy integration. On the other hand, SAIE still needs an institutional evolution that gives more integration and quicker solutions to international arbitration. Finally, the construction of the attributes and sub-attributes and their respective valuations aiming at a SAEI strategy is not trivial, there is a need for the complete assessment of all the attributes and sub-attributes of the four dimensions established in the IERP methodology of the expansion of the SSERs analyzed to provide a strategy for the SAEI. </p
... Even through this process of economic and power integration began in Europe, the concept was quickly spread throughout the world, including in South America. From the second half of the 20th century onwards, mechanisms of economic integration in the area were developed, such as the Andean Community (CAN), Southern Common Market (Mercosur) and the Union of South American Nations (UNASUR), as well as some bilateral initiatives [1,2]. ...
... The first interconnections in South America were motivated by the construction of great hydroelectric binational endeavors: Salto Grande in 1979 (Argentina and Uruguay), Itaipu in 1984 (Brazil and Paraguay) and Yaciretá in 1998 (Argentina and Paraguay). Other motivators were agreements of selling electricity, such as those between Brazil-Argentina, Argentina-Chile, and Brazil-Venezuela [2,3]. ...
Conference Paper
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Since resources are not homogenously distributed throughout the planet, commerce of raw material between countries becomes a necessity. The present work analyzes the commerce of electricity between South American countries under the environmental perspective, using Life Cycle Assessment. The year 2012 was chosen to sketch the scenario of exportation and importation of electricity among the South American countries because it is the most recent data. To assess the electricity matrix of the countries, six categories of environmental impact were chosen: climate change, terrestrial acidification, freshwater eutrophication, particulate matter emission, natural land transformation, and fossil depletion. Among these categories, Paraguay was the best rated country, with the lowest environmental impact in five categories — except in natural land transformation, in which it had the highest, because of its hydroelectric-based matrix. The impact categories were divided into three groups: global pollution, local pollution, and depletion of natural resources. In the case of global pollution, energy integration of the continent can favor the global reduction of greenhouse gas emissions. As for local pollution, it is worth noting that countries exporting electricity consider the environmental impact within the country itself when negotiating MWh sales prices; it is necessary to internalize the externalities. Regarding the depletion of natural resources, the analyzed environmental impact categories are not critically important to these countries in the present moment. Energy integration in South America can be a vector to promote sustainable development in the region but it is necessary that environmental and social issues are duly considered in the decision-making processes.
... Portanto, a existência de complementaridade energética é fator fundamental para a proliferação de processos de integração nessa seara. Este conceito pode ser entendido como a existência de países com grande produção e baixo consumo e outros com alto consumo e baixa produção em uma mesma região geográfica, o que favorece as trocas energéticas entre países ricos em recursos energéticos e com baixo consumo, como Bolívia e Venezuela, coexistem com países como Chile, que tem baixa produção de energia e alto consumo [4] [1]. A existência dessa complementaridade favorece as trocas, já que pode haver ganhos econômicos e estratégicos por meio da cooperação no setor [3]. ...
Conference Paper
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O Trabalho tem o objetivo de analisar como a formação dos blocos econômicos UNASUL e MERCOSUL impactam na integração energética (IE) e na formação de preço no mercado livre de energia de países da América do Sul, com foco no estudo de caso da comercialização de eletricidade Brasil-Argentina e Brasil-Uruguai. A metodologia se baseia na fundamentação regulatória da formação de preço da eletricidade e do seu intercâmbio entre países da América do Sul (AS). Os resultados demonstram que a exportação de eletricidade brasileira ocorre (i) somente quando há excedente de energia no Sistema Interligado Nacional (SIN); (ii) o preço de venda da eletricidade é pré-definido no edital de convocação e possui um valor fixo acrescido de uma parcela variável atrelada ao Preço de Liquidação das Diferenças (PLD); e (iii) em média anual o Brasil importa 46% a mais do que exporta para os dois países. Conclui-se que há necessidade de definição de metodologia para formação de preços e tarifas, além de uma legislação que garanta a segurança jurídica da IE na região.
... Voltando à AS, quase todo o GN produzido no continente sul americano é consumido, o que pode ser demonstrado em uma análise em conjunto com a Tabela 1, produção de GN no continente entre 2004 e 2014 e Tabela 2, consumo de GN no continente entre os mesmos anos. Dentro deste contexto se colocam como atores de IE, dentre outros, os Governos nacionais do continente, através do desenvolvimento diplomático e político entre as nações, bancos de desenvolvimento, por exemplo, Banco Nacional de Desenvolvimento Econômico Social (BNDES) e Banco Interamericano de Desenvolvimento (BID), responsáveis por fomentar projetos de infraestrutura, organizações não governamentais, por exemplo a Organização Latino-Americana de Energia (OLADE) e Comissão de IE Regional (CIER) (Udaeta et al., 2016) e companhias com fins lucrativos, sejam elas ligadas diretamente aos estados nacionais, por exemplo, Petrobrás e Pdvsa, como também aquelas que são totalmente independente de qualquer não, por exemplo, Repsol, Total, Exxon Mobil etc. ...
Conference Paper
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The purpose of this article is to describe the role of private actors in the process of energy integration in South America, through the gas sector. The continent is rich in energy sources, however, not equally distributed, thus the energy integration process is extremely important in order to keep enough energy supply throw the countries of the continent. The paper covers the countries located in South America, with the exception of Paraguay, Suriname and Guiana, that don’t have gas activity, and French Guiana, due to be considered as French territory. Even if there are already gas trading among some countries of the continent, example the Gasbol, the continent keep being very attractive to companies that operate with this hydrocarbon through exploration projects, production, refining etc. The paper can prove that the private actors are responsible in supporting the energy integration in South America, due to sharing technologies, planning and knowhow among the companies that work as partnership in different countries.
... Actualmente, OLADE tiene proyectos en temas de hidrocarburos, integración energética, acceso a energía, energías renovables, cambio climático y eficiencia energética. Los componentes que se desarrollan en todos los ejes son: producción y servicios de información para la toma de decisiones; fortalecimiento de capacidades en el sector energéticos de los países miembros; desarrollo energético sostenible y, apoyo a los proyectos de integración energética regional [12]. ...
Article
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The aim of this paper is to analyze the regulation of energy integration (EI) in Latin America, and to consider new EI scenarios. To do this methodologically, a concise and descriptive time line with milestones in the contemporary history of environmental, climatic and energy policies in Latin America is established in the period 1940-2015; Systematization of the promulgation of international treaties and of the significant events that have an impact on the governance of supranational policies, through consideration of their endogenous pillars as enablers of energy integration; Including evaluating a precursor state for EI in each country based on established legal frameworks and the incidence of socio-legal phenomena, where conditions of social, political, legal and economic stability are determinant for development of consolidation of the EI processes, which in due course determine the emergence of the fifth generation laws, in gestation, in the region.
Thesis
How to insert imported energy resources in energy planning? This question underpins the objective of this thesis - o develop a model for evaluating the energy resources (ER) available in the geography and time, which allows satisfying the planned internal demand of a country and presenting surpluses, enabling long-term exports, to be internalized in the energy planning from an importing country. With this objective in mind, the model developed within the context of the transnational energy integration of South American (TEI-SA) countries will be applied, considering their energy potentials, socio-environmental characteristics, and endemic energy policies, to determine the energy resources available for the transnational energy integration of long term in the region. The methodology used is based on the bibliographic review of the current state of the TEI-SA and on the bibliometric and systematic review of existing energy planning models and tools. From these revisions, the base elements and the existing bottlenecks are illuminated, and an evaluation model of the imported REs is built. The results of the reviews demonstrate the existence of a transnational integration infrastructure that comprises binational hydroelectric power plants, transmission lines and transnational gas pipelines. On the other hand, the TEI-SA still needs an institutional evolution for quick solutions to international arbitration and a long-term predictability regarding the access and offer of ERs. As for the model developed and the evaluation of thirteen ERs, it appears that the construction and calculation of attributes and sub-attributes is not trivial, since: there is a need for a broad database – not consolidated for the region –; use of input data of some attributes from the output of other attributes, namely, there is a need to calculate all attributes and sub-attributes due to the intersection between the different dimensions. However, after all dimensions have been calculated, the ERs can be translated into ranked indices, which range from 0 to 1, allowing the comparison between them and the identification of the ER that best responds to the demands of sustainable development. Therefore, it is concluded that the model developed allows the evaluation of ERs in all dimensions that sustainable development demands, and can be applied not only to the TEI, but also to exclusively national, subnational and market Energy Planning.
Organização Latino-americana de Energia
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A IIRSA em uma encruzilhada: indicativos de mudança e implicações para a adovocacy
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